What is a strategy map?
A strategy map breaks down your company’s strategy into building blocks, the 4 perspectives of the Balanced Scorecard. It is also a useful tool for analyzing key information.
A strategy map is a tool that helps translate strategy into action in a visual way.
Below you can find how to make a strategy map with an airline example.
- The mission: what does your organization want to be and for whom?
- The cubes: represent your organization’s most critical processes.
- The arrows: represent the dependencies between the different cubes.
Figure 1: With the mission “To fly as much as possible for as many people as possible,” this airline developed a strategy map that communicates the strategy in a powerful way.
The power of a strategy map
All the cubes and arrows in the strategy map make up the organizational strategy. By visually balancing the various cubes with each other, you quickly gain insight into the most critical processes and their interrelationships. This gives you insight into what their influence is on the objectives to be achieved. And so you also gain insight into your business model.
These interrelationships are represented by the arrows. At the highest level, the cubes are often still abstract. It is then important to ensure that these abstract cubes are recognizable and can appeal to people. When descending to the lower levels, we automatically arrive at blocks that have to do with behavior, culture and competencies, the quadrant learning & growth from the Balanced Scorecard.
What else can a strategy map help with?
This map is also great for changing strategies in times of necessary change. In scenario planning, you assume alternative strategies in the strategy map. By looking closely at the critical processes in the cubes, you also get a clear picture of the Key Performance Indicators (KPIs). The strategy map can also be used well in:
- exploring the future by drawing up scenarios
- performing an information analysis
- drawing up investment decisions
Strategy map as an instrument for scenario planning
The strategy map is therefore also an excellent tool for changing strategies in times of necessary change. Then we are actually talking about scenario planning, alternative strategies – which we include in the strategy map but which we do not yet consciously direct – that we can employ when the situation demands it. The previous example of the real estate company reflects this.
Strategy map as an aid to information analysis
The cubes represent the most critical processes of an organization and by looking at them carefully, a clear picture can be obtained of the Key Performance Indicators on which managers and employees must steer. The strategy map can therefore be put to good use as a tool in information analysis for the development of a performance management system. Or for the realization of a Business Intelligence solution.
Strategy map as a framework for investment decision
There is another function of a strategy map that can help you increase the effectiveness of your organization and improve your margins. In almost every organization, budget rounds are held every year: activities, FTEs and projects are budgeted. Often we see performance management disconnected from the budgeting process. With a strategy map, this is a thing of the past. Ask your managers and employees to budget along the critical lines in the strategy map. Investments in people, ICT and changes then give the strategy much more body and strengthen it.
To sum up, a strategy map proves to be a versatile tool, offering valuable assistance not only in scenario planning, information analysis, and business intelligence but also in enhancing the alignment of budgeting processes with strategic objectives.
What are the benefits of a strategy map?
- Powerful visualization of your business strategy
- Insight into your organization, its processes and KPIs
- Tool for scenario planning and investment decisions
- Tool for developing the organization and its employees
- Clear communication
- Powerful and higher performance, thus more satisfied customers
- Better margins and more sales
What can a strategy map do for your employees?
If the different cubes in the strategy are recognizable and appeal to your employees, they will better understand what their contribution to the strategy is. In addition, setting up a PDCA cycle for each block, and securing it in the regular management process, creates a powerful impulse for higher performance.
Do you also want to get started with strategy maps?
Passionned Group’s specialists have over 15 years of experience in making organizations more intelligent. An important tool for this is visualizing the strategy in a clear strategy map. Feel free to contact us for strategic advice or more information.