ANOTHERHELPFULGUIDEFROMINTRAFOCUSStrategyMaps

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TableofContents

TableofContents................................................................................................1

WhatisaStrategyMap?.....................................................................................2

HowtoBuildaStrategyMap..............................................................................4

MissionandVision...........................................................................................4

Perspectives.....................................................................................................5

StrategicThemes..............................................................................................5

StrategicObjectives.........................................................................................7

Software...........................................................................................................9

Appendix–SampleStrategyMaps....................................................................11

Publicsectorexample....................................................................................11

Basicemptytemplate....................................................................................12

Focusoninternalthemes...............................................................................12

Withprominentmissionandvision...............................................................13

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WhatisaStrategyMap?

In2001KaplanandNorton1published“TheStrategyFocusedOrganisation”whichintroducedtheStrategyMapasanintegralpartoftheBalancedScorecardperformancemanagementsystemthustransformingitintoastrategicmanagementsystem.

AStrategyMapisadiagramthatdescribeshowacompanyororganisationcancreatevaluebylinkingstrategicobjectivesinacauseandeffectrelationshipbasedonthefourBalancedScorecardPerspectives:Financial,Customer,InternalProcessesandLearning&Growth.ThekeyelementoftheStrategyMapisthatitislinkedto‘scorecards’thatmonitorprogresstowardstheStrategicObjectives.The‘scorecards’willinclude:metrics,targetsforthemetricsandstrategicinitiativestodriveperformancetowardsachievingthemetrics.Anexampleofagenericstrategymapcanbeseenbelow:

Note:editablePowerPointtemplatesforalloftheStrategyMapsshowninthisdocumentcanbefoundinthe‘Resources’sectionoftheIntrafocuswebsite.

1DrRobertKaplanandDrDavidNortonarealsotheauthorsofTheBalancedScorecard–TranslatingStrategyintoAction,HarvardBusinessSchoolPress1996

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ClearlyfortheabovediagramtobeusefulthegenericneedstobespecifictothecompanyororganisationthattheStrategyMapisbeingproducedfor.However,asaframeworkand‘strawman’theaboveisveryuseful.Thefirstinsighttobegainedisthatanentirecompanyororganisation’sstrategycanbeplacedonasinglesheetofpaper(orsinglescreen).

ThisisoneofthemostinvaluableaspectsofaStrategyMap,itprovidesatalkingpoint,somethingthattheexecutive,managementandinfacteveryoneinacompanycanlookat,examineandrelateto.Inaninstant,themeanstocommunicateacompanystrategyhasbeencreated.

Overall,therearefourmajorreasonswhyaStrategyMapshouldbecreated:

1. Itprovidesaclearandconcisemeanstocommunicateacompanystrategy.Researchhasshownthatlessthan10%ofemployeeshaveaclearunderstandingoftheircompany’sstrategy2.Thesameresearchhasalsoshownthat50%ofexecutivesspendlittleornotimeonstrategicdiscussion.

2. Itfocussesattentiononkeystrategicobjectivesandconsequentlykeystrategicmetrics.EarlyuseofBalancedScorecardshadalowsuccessrateasthemetricswerechosenfromoperationalmetricsalreadyinuseratherthanmetricstodrivestrategy.

3. Itprovidesagoodmodelforwhatisactuallydrivingthestrategy.Withthefocusonmeasurableobjectivesandstrategicinitiativescomesfeedbackonwhatworksandwhatdoesnotandthereforechangescanquicklybemadetoreinforcethestrategy.

4. Clearstrategicobjectivesdriveclearstrategicinitiatives.Atatimewhenbudgetshavetobemanagedcarefully,theStrategyMapprovidesthemeanstoidentifyexactlywherestrategicfundingshouldbeappliedforthebestresults.

2KaplanandNorton,TheExecutionPremium:LinkingStrategytoOperationsforCompetitiveAdvantage,HarvardBusinessPress,2008

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HowtoBuildaStrategyMapMissionandVisionAStrategyMapcannotbecreatedwithoutmeaningfulmissionandvisionstatements.TheybecomethefoundationoftheStrategyMap;theyaretheover-archingstatementsofpurposethatencapsulatetheultimategoal(s)ofthecompanyororganisation.Traditionallya‘Mission’describeswhatacompanydoesbesteverydayanda‘Vision’iswhatthefuturelookslikebecausethemissionisdonesowell.

ForMissionthink:Managingwithgreatnessandstrength,improvingeverythingdaily.

ForVisionthink:Leadingwithinspirationandcourage,obsessedwithfuturepossibility

Thesetwostatementssuggestthatboththemissionandvisionshouldbeinspiring,theyshouldbesomethingthateveryoneinacompanywantstogetbehindandbelievestobetrue.Alltoooftenmissionandvisionstatementsaregenericanduninspiringorworselongandlaborious.AnexampleofagoodmissionstatementcomesfromNike:

• “TobringinspirationandinnovationtoeveryathleteintheWorld”

TheNikevisionstatementhoweverleavesalottobedesired:

• “Tobethenumberoneathleticcompanyintheworld”

Interestingly,theNikevisionstatementofthe60’swassomewhatmoreinspiringifnotalittleaggressive:

• “CrushAdidas”

Therearemanygoodbooksonhowtodevelopastrategicfoundationincludingmissionandvisionstatements.Althoughtheymaydifferinmethodology,withoutexception,allagreethattheseniormanagementteammustbeactivelyinvolvedintheactivity.ThisisalsotrueoftheStrategyMap.Thisisnotanactivitythatshouldbedevolvedtomiddlemanagementoranexternalconsultantandthen‘signedoff’bytheexecutive.Justastheseniorexecutivesownthestrategy,theymustalsoowntheStrategyMapanddiscussandagreeitscontent.

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PerspectivesThelinkbetweentheBalancedScorecardandtheStrategyMapbecomesimmediatelyapparentupontheintroductionoftheKaplan/Nortonfourperspectives.Itisthis‘balance’thathasproventobesosuccessfulinthemethodologyoverthepastdecadeorso.Relyingonfinancialmeasurescanonlytakeabusinesssofar,whilefinancialmeasuresareessential,theycanonlymeasureresults,i.e.whathashappenedinthepast.Theyarenotpredictiveandthereforecannothelpdriveabusinessstrategy.

TheclassicBalancedScorecardincludesfourperspectives:Financial,Customer,InternalProcessesandLearning&Growth.Strategically,forprofitorientedbusinesseswecanseethatthisorderisimportantbyaskingaseriesofquestions:

• Whatdoourfinancialresultshavetobetosatisfyourstakeholders?

• Whatmustweachievewithourcustomersandthemarketplacetosuccessfullyreachourfinancialresults?

• Whatmustweachievewithourinternaloperationsforsuccesswithourcustomersandmarketplace?

• Whatmustourpeople,culture,intellectualcapitalandITbetosucceedwithourinternaloperations?

Inthiswaywecanseethatstrategicobjectivesinthelowerlayersoften(butnotalways)feedintotheupperlayers.Fornon-profitorganisationsthismaynotbethecase,itmakessenseforsomenon-profitorganisationswithfixedbudgetstoputthefinancialperspectiveatthebottom.

Thenamesoftheperspectivesmaynotfitacompanyculture;againthisismoreoftenthecasewithnon-profitorganisations.Itisperfectlyacceptabletore-nametheperspectiveorindeedtoaddperspectiveswhereaspecificareaisofgreatimportancetoacompany.Inrecentyearstheadditionofan‘Environment’perspectivehasfrequentlybeenseen.

StrategicThemesThesubjectofStrategicThemesisoftenhotlydebated.WehavetobeverycarefulnottoaddunnecessarycomplexitytotheStrategyMapbyaddinglayersofnon-actionableinformationwhileatthesametimeprovidingameans

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forallpartsofanorganisationtoidentifywithandbepartofthecompanystrategy.

ThefocusoftheStrategyMapistohighlightthevitalfewstrategicobjectives,thethingsthatwhenimplementedwillcontributetothestrategy.Theseobjectiveswillalmostcertainlyberelatedandthereforecanbecombinedintostrategicthemes,thequestionisdoesthishappenbeforeoraftertheevent?

Thepuristwouldarguethatthestrategicthemesarethemain,highlevelbusinessstrategiesthatformthebasisforanorganisation’sbusinessmodel.ThereforethethemeshavetobedefinedbasedontheVisionandbeforestrategicobjectivesareputinplace.However,itiscanbearguedthatstrategicthemesarebytheirverynatureall-encompassingandvaguethattheyactuallyaddlittlevaluetotheprocessofdefiningstrategicobjectives.Examplesoftypicalstrategicthemesinclude;businessgrowth,operationalexcellence,customerservice,innovation,sustainability,serviceexcellence,productdevelopmentleadershipandcontinuousimprovement.Ascanbeseenfromtheseexamples,withoutstrategicobjectivesandaccompanyingmetricsthestrategicthemesarealldesirableandcouldbeappliedtoanybusiness.Theydonothowevergiveusaclueastowhatshouldbedonespecificallytoimproveabusiness.

Astrategicthemedoesprovidethemeanstobundleandmanagestrategicobjectives.Thiscanbeausefultooltolimitthenumberofstrategicobjectivesthatappearaspartofastrategy.Duringstrategicplanningsessionsthedesireto‘addanotherproject’isalwayshighandstrategymapsoftenendupwiththirty,fortyoreventfiftyobjectives.

Itisworthnotingatthispointhistoryhasshownitisbettertofocusonasmallnumberofthingswhereastructurecanbeputinplacetoinfluence/changebehavioursandoutcomesratherthantospreadtheworkloadsothinlythatnothinggetsachievedatall.Thereisanoldbusinessstrategyadagethatstates–ifyourstrategyhas3objectivesyouwillsucceedinall3,ifithas4-10objectivesyouwillsucceedin1-2,ifitcontainsmorethan10objectivesyouwillsucceedinnone–asimplecaseofthelawofdiminishingreturns.

Afirstcullcanbemadebyaskingthequestion“doesthisobjectivecontributetoourVision?”Thesecondcullcanbemadebyaskingthequestion“doesthisobjectivecontributetoourStrategicTheme?”.

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ItisdowntoindividualpreferenceastowhetherornotstrategicthemesareincludedinaStrategyMapandiftheyare,shouldtheybedefinedbeforeoraftertheevent.Whateverthechoice,keepthestrategicthemestoaminimum,donotspendtoomuchtimeonthemandfocusyourattentiononstrategicobjectives.

StrategicObjectivesAstrategicobjectivemustcontributetothevisionandthereforethestrategy.Anorganisationwillhavelotsofactivitybeingundertakenaspartofitson-goingoperations,caremustbetakenavoidreflectingtheoperationalmapintheStrategyMap.RemembertheStrategyMapisaboutfulfillingthevision;thevisionisastatementofwherethecompany/organisationwantstobeinthefuture.

ThebasicruleisthattheStrategyMapshouldcontainthecriticalfewfinancialandnon-financialobjectives,whichcanbemeasuredandwilldeliverthesuccessofthecompany/organisation.Lookingatsomesuccessfulcompany’sStrategyMapswecanseethattheyhavekeptthenumberofobjectiveslow.Forexample,oneoftheUK’slargestretailershas20objectives,AUKhighstreetbankhas12andaglobaladvertisingagencyhas12aswell.

AnotherkeystrengthofaStrategyMapistheabilitytovisualisethe‘causal’relationshipbetweenstrategicobjectives,thatis,howonestrategicobjectivenotonlyinfluencesthevisionbutexertsinfluenceoveranotherstrategicobjectives.Typicallywefindthattheinfluenceflowsfromthebottomofthemaptothetopbutoftenitcanflowfromsidetosideandoccasionallyinbothdirections.Anexampleofacompletedstrategymapwithcausalarrowscanbeseenbelow.

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AlthoughtheStrategymapshouldbeableto‘standup’byitself,asacompany/organisationcommunication,itisofutmostimportancethateachofthestrategicinitiativeshasanassociatedcompletedescriptionthatincludes:

• Afullandconcisedescriptionoftheobjective

• Exactlywhatistobeachievedi.e.theexpectedoutcome

• Whentheobjectiveshouldbecomplete

• Howprogresswillbemeasuredi.e.theassociatedmetric(s)

• Whoownstheobjectiveandthereforeassociatedinitiative(s)

ThekeyquestionsaroundtheassociatedmetricsandownershipwillturntheStrategyMapintoaliving,breathingstrategyratherthananacademicexercisedestinedtotheshelfuntilthesametimenextyear.

Itisforthisreasonthatwestronglyrecommendthatcompanies/organisationslookatperformancemanagementsoftwaretohelpensuretheon-goingmanagementoftheprocess

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SoftwareTheproductionandmanagementofaStrategy(andaStrategyMap)canbeundertakenthroughthenormalmanagementprocessofreviewsandaidedthroughtheuseofdocuments,presentationsandspreadsheets.However,overthepastfewyearsseveralsoftwarepackageshaveemergedthatnotonlyremovetheburdenofcreatingtemplatesinthefirstplacebutprovidethemeanstocreateStrategyMaps,collectandtrackmetrics,collatestrategicobjectives,managestrategicinitiativesandgeneratereports.Mostsystemsalsoincludealertingmechanismstoensureownershipisassignedandinformationiskeptuptodate.AnexampleofaStrategyMapcreatedbyasoftwareproductfollows:

SomeinterestingthingstonoteaboutStrategyMapscreated/generatedbysoftware:

• Theobjectivesarecolour(R/A/G)coded,thisstatusindicatorwillchangeautomaticallywhenthemetricsassociatedwiththeinitiativesareupdated.

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• Thereare‘trend’arrowswhichindicatethestatusoftheobjectiveduringthepreviousreportingperiod;thesoftwarewillretainausefulhistory.

• EachitemintheStrategyMapcanbe‘clicked’ontotaketheviewertothenextlevelofinformationandusuallyallthewaythroughtoassociatedmetrics,initiativesandreports.

Theautomatedstrategicmanagementprocesscanbeeasilyintegratedintoexistingmanagementprocessesthereforekeepingthe‘strategy’aliveandontheexecutiveagendathroughoutthebusinessyear.

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Appendix–SampleStrategyMapsThefollowingexamples(andmore)canbefoundontheIntrafocusresourceswebsite

Publicsectorexample

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Basicemptytemplate

Focusoninternalthemes

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Withprominentmissionandvision