Strategy Maps - Aligning the Firm

Why now? How do we want to explain our strategy?

You may be asked to map your strategy, to model it. There are many approaches: key relationships, your financial routes using discounted cash flow, action plans usually with a Gantt chart, and others.

The Harvard faculty have promoted two styles of "strategy mapping": one focused on coordination inside the organization and the other focused on the business landscape. Both styles wish to present complex relationships, using graphics, so folks can quickly comprehend their roles. Will your planning effort concentrate on implementing a plan (balanced scorecard) or adapting to market changes and opportunities (the business landscape)?

The Balanced Scorecard

Robert Kaplan and David Norton, co-creators of the Balanced Scorecard, adapted it to create strategy maps. Their map demonstrates the objectives, initiatives, targets markets, performance measures and links all the critical success factors — it shows how the firm is aligned. There are four fundamental critical success factors:

• Financial - revenue and productivity growth strategies
• Customers - operational excellence, customer intimacy and product leadership strategies
• Internal Processes - innovation, operational, logistic, regulatory compliance and environmental management
• Learning and Personal Growth - employee competencies, technology and corporate culture

Each these critical success factors work bottomup, each level supports the one above and like a critical path, the key links describe the core strategy (in the example from R&D employees to productivity). The graphics on a well crafted BSC describes how the firm works, the business design.

The BSC is a frequently used method used in strategy formulation. I was the facilitator when 7-Eleven developed their Balance Scorecard and it made it easy to explain a strategy to their employees, franchisees and the financial community. It is a superb alignment method.