A strategy map is a diagram that is used to document the primary strategic goals
being pursued by an organization or management team. It is an element of the
documentation associated with the Balanced Scorecard, and in particular is
characteristic of the second generation of Balanced Scorecard designs that first
appeared during the mid-1990s. The first diagrams of this type appeared in the
early 1990s, and the idea of using this type of diagram to help document
Balanced Scorecard was discussed in a paper by Drs. Robert S. Kaplan and David
P. Norton in 1996. The strategy map idea featured in
several books and articles during the late 1990s by Robert S. Kaplan and David
P. Norton and others, including most notably Olve and Wetter in their 1998/9
book Performance Drivers. Across this broad range of published
sources, there are only a few common attributes. Strategy maps show:
Each objective as text appearing within a shape
Relatively few objectives Objectives are arrayed across two or
more horizontal bands on the strategy map, with each band representing a
'perspective' Broad causal relationships between
objectives shown with arrows that either join objectives together, or placed in a
way not linked with specific objectives but to provide general euphemistic
indications of where causality lies. The purpose of the strategy map in
Balanced Scorecard design, and its emergence as a design aid, is discussed
in some detail in a research paper on the evolution of Balanced Scorecard
designs during the 1990s by Lawrie & Cobbold.
Origin of strategy maps The Balanced Scorecard is a framework
that is used to help in the design and implementation of strategic performance
management tools within organizations. The Balanced Scorecard provides a simple
structure for representing the strategy to be implemented, and has become
associated with a wide selection of design tools that facilitate the
identification of measures and targets that can inform on the progress the
organization is making in implementing the strategy selected, and also provide
feedback on whether the strategy is having the kind of impact on
organizational performance that was hoped for. By providing managers with
this direct feedback on whether the required actions are being carried out,
and whether they are working, the Balanced Scorecard is thought to help
managers focus their attention more closely on the interventions necessary
to ensure the strategy is effectively and efficiently executed.
One of the big challenges faced in the design of Balanced Scorecard based
performance management systems is deciding what activities and outcomes to
monitor. By providing a simple visual representation of the strategic
objectives to be focused on, along with additional visual cues in the form of
the perspectives and causal arrows, the strategy map has been found useful in
enabling discussion within a management team about what objectives to choose,
and subsequently to support discussion of the actual performance achieved.
Perspectives Early Balanced Scorecard articles by
Robert S. Kaplan and David P.Norton proposed a simple design method for
choosing the content of the Balanced Scorecard based on answers to four
generic questions about the strategy to be pursued by the organization. These
four questions, one about finances, one about marketing, one about processes,
and one about organizational development evolved quickly into a standard set of
"perspectives". Design of a Balanced Scorecard became a process of selecting
a small number of objectives in each perspective, and then choosing measures
and targets to inform on progress against this objective. But very quickly
it was realised that the perspective headings chosen only worked for specific
organisations, and during the mid to late 1990s papers began to be published
arguing that other sets of headings would make more sense for specific
organization types, and that some organisations would benefit from using
more or less than four headings. Despite these concerns, the 'standard'
set of perspectives remains the most common, and traditionally is arrayed on
the strategy map in the sequence "Learning & Growth", "Internal Business
Processes", "Customer", "Financial" with causal arrows tending to flow "up" the
page. Links between the strategy map and
strategy development The strategy map is a device used to
communicate the strategy, focus organization efforts, and choose
appropriate measures to report on an organisation's progress in implementing
a strategy. Over the years many have suggested that it should be used as a
strategy development tool - including Kaplan & Norton in their book "The
Strategy Focused Organisation" who argue that organisations could adopt 'industry
standard' templates if the managers can't work out a strategy for
themselves. This type of approach is fraught with problems.
See also Third-generation balanced scorecard
References External links
Strategic decision making and national differences [1]
Strategy Maps - A Guide and Strategy Map Templates [2]