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

Balanced scorecard

The Balanced Scorecard is a strategic performance management tool - a semi-standard structured report, supported by proven design methods and automation tools, that can be used by managers to keep track of the execution of activities by the staff within their control and to monitor the...

, 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 Kaplan & Norton in 1996 .

The strategy map idea featured in several books and articles during the late 1990 by Kaplan & Norton and others, including most notably Olve and Wetter in their 1998/9 book Performance Drivers

Across these broad range of articles, there are only a few common attributes: strategy maps show each objective as text appearing within a shape (usually an oval or rectangle); there are relatively few objectives (usually less than 20); the objectives are arrayed across two or more horizontal bands on the strategy map each band representing a 'perspective'; and broad causal relationships between objectives is 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 organisations. 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 organisation is making in implementing the strategy selected ("activities"), and also provide feedback on whether the strategy is having the kind of impact on organisational performance that was hoped for ("outcomes"). 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 Kaplan & 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" ("Financial", "Customer", "Internal Business Processes", "Learning & Growth"). 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 (small to medium sized firms in North America - the target market of the Harvard Business Review), 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 (e.g. Butler et al.) and that some organisations would benefit from using more or less than four headings (e.g. ).

Despite these concerns, the 'standard' set of perspectives remains the most common, and traditionally is arrayed on the strategy map in the sequence (from bottom to top) "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 context and illustrate the basis managers have used for choosing a subset of the available measures to report on an organisation's progress in implementing a strategy. As a device, it is not very helpful or appropriate as a strategy development tool. However over the years many have suggested that it could be used as a simple strategy development tool - including Kaplan & Norton in their book "The Strategy Focused Organisation" who argue that organisations could adopt 'industry standard' templates (basically a set of pre-determined strategic objectives) if the managers can't work out a strategy for themselves. This type of approach is fraught with problems (e.g. what is the competitive advantage arising from a strategy developed in this way).

External links

• Strategic decision making and national differences http://papers.ssrn.com/sol3/papers.cfm?abstract_id=952292
• Use of the Agile Strategy Map in an agile Enterprise Transition http://www.slideshare.net/lourenh1/adopting-scrum-an-enterprise-transformation