(the exibit prints better than it looks on screen. Click the link below to see a larger version)

Before I explain the process of building your map, I must caution you that a Strategy Map does not replace developing your company's strategy in the more traditional manner. It is a way to simplify and create a visual framework of the outcome of your strategy development process. Many of the traditional strategy analysis activities need to occur to develop an effective business strategy. For many entrepreneurial organizations, we tend to think of it more as strategy articulation since the leadership team often has a general sense of the direction for the business, but lacks the more formalized definition and articulation process. This is where Strategy Maps and the Balanced Scorecard are leveraged. They enable you to define the linkages between strategic initiatives and financial objectives and they facilitate the development of alignment and focus amongst your team. We have been able to develop an articulated strategy, Strategy Map and Balanced Scorecard for our clients in just a few days through our strategy workshops.

Strategy Maps
Financial Perspective: Building your strategy map begins with the financial strategy of the organization. This perspective should answer the question, "to financially sustain our mission, what must we focus on?" For public companies, building shareholder value is typically seen here. For public or private companies, there are two basic levers for their financial strategies: growing revenues and increasing productivity. From the example above, the macro financial objective was to grow net income 25% per year for the next five years. This growth was enabled by two supporting strategies of growing revenues 15% while reducing costs 10%.

Customer Perspective: The customer perspective is obviously at the core of most business strategies. It should answer the question, "to achieve our vision, how should we appear to our customers?" It should also define how a growth objective will be accomplished. How much will be accomplished through new customer acquisition and/or the cross selling of products and services to existing customers? The customer perspective defines how the organization will differentiate itself from the competition to attract and retain customers - its value proposition. According to research by Kaplan and Norton in their latest HBR article, "Having Trouble with Your Strategy? Then Map It.", 75% of executive teams do not have consensus on their company's value proposition. From the example, two core components of our client's customer perspective were that customers viewed them as being easy to do business with and that they offer competitive prices.

Internal Process: In order to deliver the customer perspective objectives, a company must develop very effective processes. This component of the Strategy Map answers the question, "to satisfy our customers, at which operational processes must we excel?" Since the growth of any company is extremely dependent on its ability to scale its core processes, we have found the definition of this perspective to be critical to the future success and growth of all companies. Linking to the earlier customer perspective example, our client's internal process objectives were to improve the selling and estimating process and to improve its delivery process.

Learning and Growth: Leadership teams acknowledge the importance of its people and their growth but rarely are there tangible objectives defined for them. This perspective is the foundation of the Strategy Map since it defines the core competencies, skills, technologies and organizational culture needed to support an organization's strategy. This perspective answers the question, "how will we sustain our ability to change and improve?" The objectives set here enable a company to align its human resources and information technology with its strategy. To improve the selling and estimating process, our client realized that without sales skills training, the selling process would not improve. Conducting selling skills training therefore became a learning and growth objective.

Balanced Scorecard: The Balanced Scorecard is the next natural link to the Strategy Map. For each objective in each perspective, measures of performance are identified, targets are set, owners are enlisted, initiatives on how the objectives will be accomplished are established and budgets are put in place. Although this is an oversimplified example, the development of the Balanced Scorecard will provide you with the measurement tool to manage the implementation of your strategy and objectives. It also becomes a great tool to communicate the company's strategy to the larger organization and a way for each department to establish their own Scorecards that link to the corporate Scorecard.

Developing your Strategy Map and Balanced Scorecard is not a complex or time-consuming process although it does take commitment from the leadership team to implement. For the client example listed above, the Strategy Map and Balanced Scorecard were essentially developed during our two- day Strategy Articulation Workshop. At the completion of the workshop, the leadership team had identified the objectives that they needed to accomplish to sustain their growth and had developed a visual framework (Strategy Map) and performance management tool (Balanced Scorecard) to enable it - all on one page.

If you would like to have your leadership team "on the same page" relative to the strategies and objectives necessary to grow your business along with a great tool to manage your performance relative to these strategies, Strategy Maps and the Balanced Scorecard are the best tools available. Feel free to contact me if you would like to learn more about how these tools can improve the performance and profitability of your company.