Strategy Map

Strategy Maps were derived from the work on Balanced Scorecard. One of the problems with early scorecard implementations was deciding what measures should go on the scorecard - what measures were really critical to the success of a business.

The aim of the strategy map is to "tell the story" of a company's strategy. The standard strategy map uses the same four perspectives as the balanced scorecard - financial, customer, process and growth, arrayed from right to left. Other perspectives may be more applicable in some organisations, eg the public sector or individual departments.

For each perspective the key "do wells" are identified - typically 3 or 4 for each perspective. These are the things that the business must "do well" in order to be successful. A number of techniques are available to derive these do wells.

The crucial element of the strategy map though is that these do wells are causally linked on the diagram. This enables users to see which do well is effected by which others.

As with a scorecard the most appropriate metric for each do well is chosen, and used to drive a RAG status for each do well.

Then the power of the map becomes apparent. If a do well is green, but all its input do wells are red or amber, then it is likely that it won?t stay green for much longer. Similarly if it has one input red and another that is green, it becomes obvious where the focus should be to correct the problem.

The one danger with the strategy map is that it is easy to end up with a "generic" map, one that would apply to almost any commercial business; profit is driven by cost and revenue, revenue is driven by sales and happy customers, sales is driven by marketing, and customer satisfaction by good quality work, and good quality work is driven by a well trained and happy work force. Users should ensure that the map contains at least some elements which are unique to the business - and serve to differentiate it from any other business.

Strategy maps are an excellent way of documenting a strategy, and communicating that strategy to others. From the strategy map, anyone should be able to get a clear idea about what the businesses strategy is all about, and how well it is fulfilling its strategy.