Strategy maps are single-page, visual representations of organizational strategy. Their simplicity makes them ideal for communicating big-picture objectives to every employee in an organization – regardless of seniority or project involvement level. A strategy map is a visual representation of organizational objectives and how they relate to one another.
Generate a Strategy Map
Understanding strategy maps
Well-designed strategy maps articulate the role every employee will play in achieving the organizational strategy.
They also produce clearly defined objectives with measurable results. Importantly, strategy maps are built from the top down.
The organization must first define an overarching strategic objective before identifying the strategy and key performance indicators that will play a role in its achievement.
Most strategy maps are based on the four balanced scorecard perspectives of financial, customer, internal processes, and learning and growth.
We will take a look at these perspectives in more detail in the next section.
Using the four perspectives to construct a strategy map
On a strategy map, each strategic objective is represented by an oval or circle.
The number of strategic objectives must be kept under twenty since tracking too many objectives risks diluting the message or making the strategy difficult to communicate.
Each of the objectives is then grouped according to the four perspectives of the balanced scorecard.
This helps the business develop predictive, forward-looking strategies that are not solely based on financial performance.
The four perspectives are:
Finances
Encompassing strategies designed to increase shareholder value. Revenue growth and productivity are the two primary objectives measured under this perspective for most companies.
For non-profits, the customer or company mission is most important – financial performance is simply a means to an end.
For-profit companies tend to focus on either product leadership, operational excellence, or customer intimacy.
Processes
Which describe how financial and customer goals will be achieved.
Examples include innovation, market expansion, working toward operational excellence, improving customer relationships, and productive stakeholder relationships.
Learning and growth
The part of a strategy map detailing the employee skills and experience necessary to ensure processes run efficiently.
Company culture and intellectual capital are also important.
How to connect the four perspectives within the strategy map?
Arrows can then be used to illustrate the cause-and-effect relationship between strategic objectives.
Consider the example of an airline company strategy map.
With a properly trained ground crew (learning and growth), each flight has a faster turnaround time (processes).
Faster turnaround times then result in lower prices and fewer delayed passengers (customers), which increases profitability and lowers operating costs (financial).
When completing the strategy map, teams may find that some objectives do not fit neatly into a single perspective.
In this case, it may make sense to have them straddling two perspectives.
Teams should also realize that it is perfectly acceptable to deviate from the traditional strategy map framework to accommodate unique or particular goals.
Strategy Map vs. Balanced Scorecard
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.
Within a balanced scorecard, the strategy map can be used to as a visual representation of organizational objectives and how they relate to one another.
Thus, the tools can be used to assess an organization’s performance better.
Key takeaways:
A strategy map is a visual representation of organizational objectives and how they relate to one another.
A strategy map defines strategic objectives according to the four perspectives of the balanced scorecard: finances, customers, processes, and learning and growth. By analyzing the cause and effect relationships between different objectives, teams can develop forward-looking strategies free from a myopic focus on financial performance.
A strategy map must be built from the top down. With a primary goal or outcome identified, the business must work backward to identify how it will be achieved.
What are the four 4 perspectives in a strategy map?
Well-designed strategy maps articulate every employee’s role in achieving the organizational strategy through four perspectives (finances, customers, processes, and learning & growth). The strategy map, combined with other organizational structure tools, can help better define and monitor the achievements of a company.
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First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is valueinnovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
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A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
