Strategy maps are an excellent way to visualize and communicate the company strategy and its management. In the public sector we usually talk about policy instead of strategy. Passionned Group believes that a strategy map isn’t only useful in the context of performance management, but also as an instrument for scenario planning, organizational development, and making investment decisions.
The parts of the strategy map
A strategy map can consist of several different parts. Firstly there is the organization’s mission, which communicates (as concretely as possible) what the organization wants to be, where and for whom. It’s essentially a short text describing the essence of the organization. Secondly, there are the blocks, which display the most critical processes of the organization. Thirdly, there are the arrows. These arrows display the dependencies between the blocks. This is displayed in the image below.
The power of the strategy map
The power of the strategy map is in visually balancing the various strategic dimensions in a way that people can relate to. The most critical processes that contribute to achieving goals are visualized in the blocks. There should also be cohesion between the critical success factors and the strategic goals. These links are displayed by the arrows. On the highest level, the blocks are usually abstract. It’s important to make sure that those abstract blocks are made recognizable and relatable. When we get to the lower blocks we’ll automatically get to areas like behavior, culture, competencies, and the learning and growth perspective from the balanced scorecard.
Learning to grow is developing: an example
We can clarify this using an example. A certain healthcare institution has a mission: delivering high-end care to children and youths who suffer from arrested development. The institution thinks it can fulfill this mission by ensuring the highest possible treatment effectiveness. To achieve this, they need to ensure the quality of the contextual conditions, because they can get in the way of treatment. To that end, the institution wants to organize the care around the child, and support the child and their parents with multi-disciplinary teams of specialists that can ensure warmth, safety, and a healing environment. One of the critical factors in this is that the caregivers share knowledge. Aside from training and education, a development-focused culture is important, as is an expert-system that makes it easy to find research results from various countries. The previous factors are about the development of the organization, people, and smart systems. For the short and long term, these are the most critical parts of an organization. These things can regularly be found in the learning and growth perspective on the balanced scorecard.
Your organizational strategy in blocks
All the blocks of the strategy map put together form the organizational strategy, but this can change over time. A housing corporation, for example, could steer on cashing in on rising real estate value in times of strong housing markets. But when the housing market is locked down, they could choose to minimize operational costs, or maybe switch to strategic purchasing when housing prices are falling.
Strategy map as an instrument for scenario planning
The strategy map is also excellently suited to switching strategies in times of necessary change. This puts us in the area of scenario planning, alternative strategies – that are integrated into the strategy map but we aren’t primarily steering on – that can be used when the situation demands. The previous example of the housing company illustrates this.
Strategy map as aid for information analysis
The blocks are the most critical processes of the organization, and by studying them closely you can get a good image of the key performance indicators (KPIs) – those which managers and employees should drive. The strategy map can also be used in information analysis for the development of a performance management system, or for the realization of a Business Intelligence solution.
Strategy map as framework for investment decisions
There is another function of the strategy map that can help you increase the effectiveness of your organization and improve margins. There are yearly budget rounds in just about every organization: activities, FTEs, and projects are budgeted. We often see performance management being decoupled from the budgeting process. That’s a thing of the past with a strategy map. Ask your managers and employees to budget along the critical lines of the strategy map. Investing in people, ICT, and changes give the strategy more body and strengthen it. Ideal!
You can get more information about this subject from Daan van Beek.