Strategy Maps and Balanced Scorecards 1 The benefits

"I can carry the strategy around in my pocket. If I want to discuss the strategy with another manager I simply say, hey, let's have a look at your strategy map"

On these pages we explain what strategy maps are, explain how strategy maps improve the design and effectiveness of balanced scorecards, and provide some strategy map examples. We also describe some common mistakes people make when designing strategy maps, and how to avoid them.

What is a strategy map?

Most poorly implemented balanced scorecards simply place measures in perspectives. If you are still using this diagram, throw it away. NOW! PLEASE.

This balanced scorecard framework dates back to 1992 when balanced scorecard perspectives were first developed. It was discarded as a model of balanced scorecards by Norton and Kaplan as early as 1995.

Why was it discarded? The arrows have no meaning, it has no cause and effect model that drives performance, it encourages collecting measures in perspectives, it is difficult to cascade and leads to measure mania where lots of measures are collected and categorised without any real structure or purpose. It leads to operational balanced scorecards that contain potentially hundreds of measures, for the sake of it. Ultimately this approach creates a culture of measurement rather than performance.

This old framework was replaced by the strategy map model of perspectives, which solves all these problems. Using a strategy map, can dramatically improve the effect of your balanced scorecard and make it a much more useful as a tool of strategy, rather than a mechanism of operational detail. Strategy maps sit above the scorecard and provide a structured description of the strategy and what drives performance.Strategy maps contain objectives, which are developed before measures are chosen. From the cause and effect model of objectives you can choose the most appropriate measures and targets.

Strategy maps are also a powerful visual tool. As you will see from the few examples we are able to publish, you can read the strategy very quickly from a strategy map. This means that you can communicate the strategy more effectively and easily so people will get it and be able to contribute to it and execute it for you.

What do strategy maps do?

They tell the story of the strategy

Well designed strategy maps enable you to tell the story of the strategy easily and allows people to read the story of the strategy as well. This dramatically increases understanding of the strategy so people can contribute to it.

They put the strategy on a single page

They are extremely powerful at creating a conversation around the strategy and checking understanding. Instead of strategy being in thick documents, it is on a single page. Many say this is the most powerful part of strategy maps.

They describe how the strategy will be executed with a simple cause and effect model

Strategy maps don't just say what you are trying to achieve. They explain very simply, how you plan to get there. because they contain a simple, but powerful cause and effect model, they explain what differences you want to make in the organisation, that will filter through to better results for your customers and ultimately improved financial outcomes.

They provide objectives rather than measures.

We have all seen examples of measure madness where organisations are inundated with measures, as well as dysfunctional behaviours caused by a poor choice of measures. Strategy maps help you avoid this by starting with objectives, so that you describe what you want to achieve (as well as how to measure it). That way, inappropriate measures get replaced with more suitable ones that better represent what you are trying to achieve.

They show the themes of the strategy

Strategy maps help you explain the themes and components of your strategy. Quite often you will have a strategy with tensions and internal pressures: build more sales, but don't increase costs, or improve quality and service with less people. Most strategies have these tensions, otherwise they would not be interesting or challenging.

Strategy maps help to explain these on a single page, so that the organisation does not become like a car with the brake and accelerator being used alternatively.

They also provide the framework for designing and managing the programmes of change in an organisation.

They ensure balanced scorecards can be cascaded.

If you have ever tried to cascade measures through an organisation you will have hit problems relatively quickly. Whilst some do drill down easily, others are incompatible with different departments, functions, areas, and levels of management.

In contrast strategy maps deal with objectives and so at each level you are asking, how we we achieve this objective, or how do we contribute to this objective? From these questions, you can ask, "What is the best way to measure these objectives at this level?"

So strategy maps are a powerful way to cascade objectives through the organisation so people can understand them and contribute to them.

They can be used to review progress against the strategy

Strategy maps are not static tools. They are tools of management that get refined and developed as management learn from their strategy and the strategy evolves.

When management teams use strategy maps in their meetings the conversation rises to a highest level, there is less operational detail and more time spent reviewing whether the strategy is working or not, and why.

This also raises the heads of people in the organisation who are also then able to discuss, understand and contribute to the strategy so that it is more likely to be delivered.

If you are interested in improving your organisation's performance, talk to us

To learn more go to: Strategy mapping: Some examples,

We are real experts in strategy mapping. We have been using and developingteh approach since 1996. We have some of the deepest and most varied experience available anywhere.

To get advice on how to develop your own strategy maps, contact us.