What is a Strategy Map?
What is a Strategy Map? It is a drawing that enables you to link actions or objectives into a coherent, logical structure that shows the cause and effect link between your objectives or actions.
This type of diagram is a key step in creating a balanced scorecard which brings the management team together into a consensus and gives them a powerful tool to communicate the their strategy.
The mapping concept was first defined in the late 1990s by Robert S. Kaplan and David P. Norton. Their original book in 1996 "The Balanced Scorecard, Translating strategy into action", contained this type of diagram. In their second and third books "The Strategy Focused organization" and "Strategy Maps" describes in detail how to build them.
See this article "Having Trouble with Your Strategy? Then Map It"
It has the four perspectives of the balanced scorecard
- Financial or Shareholder - the financial results and survival
- Customer - what the customers want or need
- Internal Processes - the internal organisation and processes that deliver the customer needs
- Learning and Growth - the training, technology and knowledge needed to operate the processes or procedures successfully
In each perpective you define your top objectives and then link them together as the objectives feed into higher objectives
Note for each objective or group of objectives you can create monitoring create leading or lagging indicators (KPIs)
Software Company Strategy Map Example
See below this example:
Use the "What- How" Approach to Construct Your Map
How to Proceed - Use the 'What-How?' Approach
Start with the question What?
'What' do we want to achieve?
Maintain Profitability so,
'How' are we going to do that?
Improve Customer Satisfaction
So now repeat the process,
What do we want to achieve
Improved customer satisfaction,
How are we going to do that?
Reduce support calls
and so on.
In conclusion, this way of representing your objectives and linking them in a cause effect approach gives a powerful and simple representation that helps
- Check the integrity of the strategy
- Provides a ready and simple means of communicating your strategy to all stakeholders on one piece of paper.
Remember keep it simple - limit the number of objectives and links.
Use your SWOT analysis
to pick out the important things for your organization or business.
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