Strategy Maps

Strategy maps are something I’ve used throughout my career. Robert Kaplan and David Norton (founders of the Palladium Group) invented strategy maps in the mid-1990s. The idea grew out of their work on the balanced scorecard, a means of tying strategy and performance management together, to better execute strategic plans – always a challenge.

They’re a useful complement to process mapping.

Four Components

A strategy map – and there are lots of different versions – has four horizontal components arranged in a vertical flow. At the top usually comes the financial perspective, then customer, process and learning and growth.

Each layer features a set of objectives. My preference is for between three and seven, represented as text inside a shape, usually an oval.

Objectives are linked across the perspectives by arrows. These linkages are known as strategic themes, cause and effect relationships that drive the achievement of objectives.

The financial perspective is about identifying a few meaningful high-level financial measures. For larger organisations it’s about answering the question “how do we look at shareholders?” For smaller ones, you need to focus on your financial objectives. Objectives might include cash flow, revenue growth, operating income, return on equity

The customer perspective is all about value. No surprises if you’ve listened to me before. What is important to your customers? Get this from your canvas or value model.

The process perspective is all about finding measures that answer the question “what must we excel at?” For example, cycle time, unit cost, yield.

Learning and growth is concerned with understanding “how can we improve, create value and innovate?” My latest book indicates that it is all about organisational learning. What is your investment in training? What return are you getting? Do you have now services or products coming through? Are you improving old ones?

Best Practice

Now this isn’t all academic thinking. I used a strategy map to drive performance in one of the enterprises i managed. It was a great means of communicating complex information to my board. As kaplan and norton explain in “the strategy focused organisation,” it’s been successfully used by all sorts of organisations of all sorts of sizes across the public and private sectors.

There’s a great opportunity to build these maps off key elements in your business model canvas and value model.

Why not try it?

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