Strategy Maps: Converting Intangible Assets Into Tangible Outcomes

This is a well written and comprehensive book on the concept of strategy mapping. In this book, Kaplan and Norton explains that among the most significant reason for poor strategy implementation is that leaders who formulate strategies for the organisation are not able to communicate their vision in a way that others can share it and leaders can mobilise everyone necessary for the achievement of that vision. While the vast majority of organisations have well defined procedures for developing strategic plans, there is a major disconnect between the formulation and execution phases of strategy. The ability to cascade an organisation's vision, mission and core strategies into the actionable behaviours that achieve critical objectives is a challenging undertaking. Kaplan and Norton explain that strategy maps provide a way for organisations to describe and communicate their strategies. Evolving as a breakthrough in second-generation Balanced Scorecards, the underlying concept of strategy maps is based on the premise that "a picture is worth a thousand words." The visual nature of the strategy map allows employees and other stakeholders to identify with the big picture and take up their role in strategy implementation. Strategy maps describe how organisations create value by building on strategic themes such as "growth" or "productivity". These themes determine what specific strategies organisations will adopt at their customer, process, and learning and growth levels. Well constructed maps describe how the organisation plans to meet its specific customer promises through a combination of employee, technology and business processes that satisfy customer expectations and meet shareholder demands. Kaplan and Norton illustrate the need for a strategy map by giving an example of a general taking his troops into a foreign territory. The general would need detailed maps showing the important towns and villages, the surrounding landscape, high and low ground, obstacles like rivers or marshes, key structures like bridges and tunnels, and the roads and highways that traverse the region. Without such information, the general cannot communicate the campaign strategy to the field officers and the rest his troops. The authors point that, many top executives are attempting to implement their business strategies, by giving employees only limited descriptions of what they should do and why those tasks are important. Without clearer and more detailed information, unsurprisingly many companies have failed in executing their strategies. People cannot carry out a plan that they do not fully understand. Organisations need tools for communicating both their strategy and the processes and systems that will help them implement that strategy. Kaplan and Norton point out that strategy maps are a tool to give employees a clear line of sight into how their jobs are linked to the overall objectives of the organisation, enabling them to work in a coordinated, collabo

If this book were a Hollywood film, it might be titled "Son of Balanced Scorecard" or even "Balanced Scorecard III." This book, however, is no mere spin-off or sequel. In two prior works, "The Balanced Scorecard" (which you may wish to read before reading this book) and "The Strategy-Focused Organization", authors Robert S. Kaplan and David P. Norton introduced the powerful concept of measuring the elusive intangibles that affect organizations. This information-dense book was born when the authors observed that CEOs instinctively draw arrows to explain their goals. This led to a breakthrough realization: "Objectives should be linked in cause-and-effect relationships." The graphic display of these relationships is a "strategy map." This book breaks new ground by providing a template so executives can be sure that their strategic planning omits nothing. It expands the concepts of "strategic themes" and "value-creating processes," and explains a system for aligning your organization's strategy with its intangible assets. However, the real-world examples may be lost on CEOs who are unfamiliar with MBA-style case studies. If you're implementing a "Balanced Scorecard" initiative or planning your firm's future, we say this is a blockbuster you don't want to miss.

Kaplan and Norton co-authored an article which was published in the Harvard Business Review (January/February 1992). In it they introduce an exciting new concept: the balanced scorecard. They have since published three books: this one, preceded by The Balanced Scorecard: Translating Strategy into Action (1996) and The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment (2000). Here's some background on the two books before we shift our attention to Strategy Maps. In The Balanced Scorecard, as Kaplan and Norton explain in their Preface, "the Balanced Scorecard evolved from an improved measurement system to an improved management system." The distinction is critically important to understanding this book. Senior executives in various companies have used the Balanced Scorecard as the central organizing framework for important managerial processes such as individual and team goal setting, compensation, resource allocation, budgeting and planning, and strategic feedback and learning. When writing this book, it was the authors' hope that the observations they share would help more executives to launch and implement Balanced Scorecard programs in their organizations. Then in The Strategy-Focused Organization, Kaplan and Norton note that, according to an abundance of research data, only 5% of the workforce understand their company's strategy, that only 25% of managers have incentives linked to strategy, that 60% of organizations don't link budgets to strategy, and 85% of executive teams spend less than one hour per month discussing strategy. These and other research findings help to explain why Kaplan and Norton believe so strongly in the power of the Balanced Scorecard. As they suggest, it provides "the central organizing framework for important managerial processes such as individual and team goal setting, compensation, resource allocation, budgeting and planning, and strategic feedback and learning." After rigorous and extensive research of their own, obtained while working closely with several dozen different organizations, Kaplan and Norton observed five common principles of a Strategy-Focused Organization: 1. Translate the strategy to operational terms 2. Align the organization to the strategy 3. Make strategy everyone's job 4. Make strategy a continual process 5. Mobilize change through executive leadership The first four principles focus on the the Balanced Scorecard tool, framework, and supporting resources; the importance of the fifth principle is self-evident. "With a Balanced Scorecard that tells the story of the strategy, we now have a reliable foundation for the design of a management system to create Strategy-Focused Organizations." Those who have not as yet read The Balanced Scorecard and/or The Strategy-Focused Organization are strong urged to do so. Brief comments about them in commentaries such as these merely indicate the nature and extent of the brilliant thinking which Kap

Kaplan and Norton co-authored an article which was published in the Harvard Business Review (January/February 1993). In it they introduce an exciting new concept: the balanced scorecard. They have since published three books: this one, preceded by The Balanced Scorecard: Translating Strategy into Action (1996) and The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment (2000). Here's some background on the two books before we shift our attention to Strategy Maps.In The Balanced Scorecard, as Kaplan and Norton explain in their Preface, "the Balanced Scorecard evolved from an improved measurement system to an improved management system." The distinction is critically important to understanding this book. Senior executives in various companies have used the Balanced Scorecard as the central organizing framework for important managerial processes such as individual and team goal setting, compensation, resource allocation, budgeting and planning, and strategic feedback and learning. When writing this book, it was the authors' hope that the observations they share would help more executives to launch and implement Balanced Scorecard programs in their organizations. Then in The Strategy-Focused Organization, Kaplan and Norton note that, according to an abundance of research data, only 5% of the workforce understand their company's strategy, that only 25% of managers have incentives linked to strategy, that 60% of organizations don't link budgets to strategy, and 85% of executive teams spend less than one hour per month discussing strategy. These and other research findings help to explain why Kaplan and Norton believe so strongly in the power of the Balanced Scorecard. As they suggest, it provides "the central organizing framework for important managerial processes such as individual and team goal setting, compensation, resource allocation, budgeting and planning, and strategic feedback and learning." After rigorous and extensive research of their own, obtained while working closely with several dozen different organizations, Kaplan and Norton observed five common principles of a Strategy-Focused Organization:1. Translate the strategy to operational terms2. Align the organization to the strategy3. Make strategy everyone's job4. Make strategy a continual process5. Mobilize change through executive leadershipThe first four principles focus on the the Balanced Scorecard tool, framework, and supporting resources; the importance of the fifth principle is self-evident. "With a Balanced Scorecard that tells the story of the strategy, we now have a reliable foundation for the design of a management system to create Strategy-Focused Organizations."Those who have not as yet read The Balanced Scorecard and/or The Strategy-Focused Organization are strong urged to do so. Brief comments about them in commentaries such as these merely indicate the nature and extent of the brilliant thinking which Kaplan and Norton p

Robert S. Kaplan and David P. Norton are the innovators behind the Balanced Scorecard, which has proven to be a potent way of turning strategy into reality. Before the Balanced Scorecard, most strategies failed in execution . . . because people didn't know what they were supposed to do. With the Balanced Scorecard, a very high percentage of strategies are implemented and do succeed. In The Strategy-Focused Organization, Professor Kaplan and Dr. Norton explained the management processes that make implementing the Balanced Scorecard most successful. Strategy Maps now becomes another essential building block in strategy implementation. Importantly, this building block should be the starting point in your search for success. In the preface, the authors describe the three essential elements behind breakthrough results:You must first describe the strategy, then measure the strategy for what needs to be executed and then manage the strategy by the measurements. Describing the strategy is the task addressed in Strategy Maps, measuring the strategy is addressed in the Balanced Scorecard, and The Strategy-Focused Organization looks at managing the strategy by the measurements. Here's the philosophy the authors provide behind this conclusion:"You can't manage (third component) what you can't measure (second component) [and] [y]ou can't measure what you can't describe (first component)."In Strategy Maps, the authors have shown the way to communicate how each element of a company's activities contributes to the overall success of the strategy. Using the Balanced Scorecard, everyone in the organization knows what to be done. With Strategy Maps, each person will understand the context of what they must do and implementation improves.Here's what a template of a typical strategy map includes for a for-profit company in Strategy Maps. First, all of the information is contained on one page. Second, that page has four perspectives: Financial; Customer; Internal; Learning and Growth. Third, the financial perspective looks at creating long-term shareholder value, and builds from a productivity strategy of improving cost structure and asset utilization and a growth strategy of expanding opportunities and enhancing customer value. Fourth, these last four elements of strategic improvement are aided by changes in price, quality, availability, selection, functionality, service, partnerships and branding. Fifth, from an internal perspective, operations and customer management processes help create product and service attributes while innovation, regulatory and social processes help with relationships and image. Sixth, all of these processes are enriched by the proper allocation of human, information and organizational capital. Organizational capital is comprised of company culture, leadership, alignment and teamwork capabilities. Seventh, the cause and effect relationships are describe by connecting arrows. The book is a marvel of clarity. The author