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Strategy Maps And Balanced Scorecards
A Strategy Map is a diagram showing the causal relationships between strategic objectives according to the four perspectives (financial and customer perspectives, internal process, learning and growth). Strategy Maps are the cornerstones of the framework of the Balanced Scorecard project. They are the focal point of the system.
- Our view is that Norton & Kaplan’s book Strategy Maps, (which was published in 2004) was a plea for people to understand the importance of Strategy Maps in the whole Balanced Scorecard approach: a role that many had missed from the earlier books, “The Balanced Scorecard” and “The Strategy focused Organization”.
- Drix5 Student (University), Zimbabwe Differences Between Balanced Scorecard and Strategy Map. Strategy maps help clarify the strategy and the related strategic objectives, whereas balanced scorecards are used to establish metrics and targets to measure and manage the performance of the organization against those strategic objectives.
SYNOPSIS
90% of business strategies fail due to poor execution, according to Business 2 Community, which means effective strategy maps are especially important for the ultimate success of a business. With our Strategy Maps with Balanced Scorecard collection, you can document and hone in on your priorities, as well as visualize your organization’s plans implementation, so that all team players understand how to work together and know where they fit in.
SLIDE HIGHLIGHTS
To create greater long-term value for shareholders, the business must constantly work on improving its revenue growth and productivity. Use slides, such as this one, if you need a specific map for financial measures and drivers.
Bottlenecks and a lack of clarity hide opportunities for process improvement. Process mapping, on the other hand, helps to gain more visibility into operations. This slide lets you easily create and share process map with your team.
Take advantage of the Balanced Scorecard indicator dashboard. Note that the dashboard is adopted more to operations, so in it, the process starts with the determination of pertinent metrics and control of their value.
APPLICATION
Michael Gunther, the founder of Collaboration Business Consulting, suggests keeping in mind the following when mapping out your strategy:
Strategic plans don't solve problems – as natural problem solvers, leaders often subconsciously choose tactical strategies to find solutions. “There's a certain level of comfort in trying to solve problems versus determining what types of risk your company needs to take to achieve the next level of financial performance. Instead of focusing on solutions during strategic planning, focus on increasing the company's odds of success,” Gunther says.
Ensure the strategic plan is outward-focused – the main purpose strategic maps should serve is identifying the ways in which the venture wants to position itself in the market, taking in consideration the target customers’ needs and preferences.
Determine where your company exists – determine your target customer and market. When you have these two factors figured out, list strategies that will help you and your team to attract and retain those customers. Gunther says: “Include conversations on how to roll with an evolving marketplace, how to fill unmet needs of key stakeholders, which market dynamics will impact the company, and identify opportunities in the market for the company's products/services.”
Establish achievement goals – one important stop on your map should be creating a compelling value proposition for the target audience. This is when you should focus on setting clear goals, rather than creating tactics. Here, consider the drivers and barriers of acquiring new business, determine customer perception of your company versus its competitors, then establish a positional stance and decide which best practices can be employed.
Stay straightforward – strategic maps should be brief and precise. Keep your map to one page and include only the key choices that will be important for the company's revenue drivers.
Use clear logic – list the processes that your venture needs to change to achieve the main strategic goal. Add the information about the target audience, the industry's shifts, the competitive landscape analysis and your company's realistic capabilities. When your map is ready, move on to your implementation plan. “The implementation plan should answer the following questions […] What do we hope to accomplish and why? How will we plan to accomplish this task? How can we incorporate measurement tools to ensure the goal is achieved?” Gunther says.
CASE STUDY
Nike
Nike Inc. uses strategy maps to incorporate leadership responsibility into its day-to-day business practices. 'As we try to integrate corporate responsibility, it's really about systematic change in terms of how we do our contract manufacturing and the decisions that go into it,' Lee Weinstein, Nike’s spokesperson told Portland Business Journal.
As a part of the initiative, Nike implemented a balanced scorecard strategy approach, which means that contract manufacturers are being evaluated based on health and safety, as well as environmental and labor-management standards. Although Nike reviews its unique balanced scorecard criteria monthly, the company Director of Global Apparel and Corporate Responsibility, Mike McBreen, admits that the most challenging part of the process is establishing the performance measures. 'We are communicating the set of measures by which we hold ourselves accountable,' McBreen said. And in one of his corporate responsibility newsletters, McBreen wrote that business partners meeting Nike's goals will witness increased, higher-margin business and industry recognition for better performance.
The Balanced Scorecard system connects the dots between big picture strategy elements and more operational elements. Strategy elements includes: mission (our purpose), vision (what we aspire for), core values (what we believe in), strategic focus areas (themes, results and/or goals). Operational elements includes: objectives (continuous improvement activities), measures (or key performance indicators, aka KPIs, which track strategic performance), targets (our desired level of performance), and initiatives (projects that help you reach your targets).
Balanced Scorecard (BSC) – template Excel spreadsheet
How is the Balanced Scorecard useful?
The Balanced Scorecard tool, known as BSC, was developed in the 90s by the Americans Robert Kaplan and David Norton.
Its purpose is to develop a strategic plan and measure a company’s performance in addition to accounting and financial indicators. Its creators observed that the economic value and financial result happen when combined with the work of determining factors, such as process efficiency, customer satisfaction, people development, among others, in a way that aligns themselves with an organization’s strategic vision.
The Balanced Scorecard (BSC) is a strategic planning and management system that organizations use to:
– Communicate what they are trying to accomplish
– Align the day-to-day work that everyone is doing with strategy
– Prioritize projects, products, and services
– Measure and monitor progress towards strategic targets
STRATEGIC VISION:
The BSC suggests that we view the organization from four perspectives, and to develop objectives, measures (KPIs), targets, and initiatives (actions) relative to each of these points of view:
FINANCIAL:
Often renamed Stewardship or other more appropriate name in the public sector, this perspective views organizational financial performance and the use of financial resources.
CUSTOMERS:
Strategy Map And Balanced Scorecard Example
This perspective views organizational performance from the point of view the customer or other key stakeholders that the organization is designed to serve.
INTERNAL PROCESS:
Views organizational performance through the lenses of the quality and efficiency related to our product or services or other key business processes.
LEARNING AND GROWTH:
Views organizational performance through the lenses of human capital, infrastructure, technology, culture and other capacities that are key to breakthrough performance.
The BSC Strategic Map
The strategy map is a graphical representation that consists of a summary of the objectives for each Balanced Scorecard theme.
Combine this free template with other tools:
Porter’s five forces
SWOT Analysis
4P’s of Marketing
Cash flow statement
Business Model Canvas