Strategy maps - the missing link

Many a times we come across situations where organizations may have made great strategies, but could not implement them. Also at times we find that organizations outgrow their strategic plans without even implementing them. Such instances are not an exception today but they are more of routine phenomena across the industries. There is a void between strategy formulation and strategy deployment. Few people know the company’s strategy much less understand it and none have the knowledge of the role they are going to play in the strategic game plan of the company. This void is filled by strategy map of a company. The concept and framework of strategy maps has been coined by Robert S Kaplan & David P Norton, which brings out a much desired connection between strategy and its implementation.

Strategy maps provides a framework through which one can view strategic measures not as mere performance measures across the four perspective model of balanced score card, but as a series of cause and effect relationship among the four perspectives. Graphical representation of this cause and effect relationship across the four perspectives is strategy map.

The exercise of creating strategy map clarifies the logic by which the company’s strategic goal will be achieved and visually communicate different components or elements of strategy. The framework of strategy maps links short term and long term financial aspirations of a company to the differentiated value that the company needs to provide to the customers to ensure their loyalty both in current and future time frame. This value for customers is created by the internal processes by aligning outcome of these processes with the value proposition of the targeted customers. Learning and growth perspective identifies the intangible assets that are required to support the processes to deliver the value proposition to the customers. These processes, that create value or support or direct the value creating processes can be termed as the key processes for the company. Focus is on these processes to achieve the strategic goals of the company.

Strategy maps apart from clarifying the strategy of the company through cause and effect relationship also help in identification of:

• Targeted customers and the attributes of the products and services that they value
• Key processes of the company that deliver the company’s strategy
• Identification of intangible assets that would support the processes that deliver a company’s strategy

Identification of intangible assets is one of the most important aspects of strategy maps, as most organizations fail to establish a link between their intangible assets and fulfillment of their strategic goals. Often it is seen that HR has little or no alignment with the strategic goals of the company.

Robert S Kaplan & David P Norton in their book Strategy maps – converting intangible assets into tangible outcomes have classified intangible assets into three categories:

• Human capital (employee skill and knowledge)
• Information capital (databases, information systems, networks and technology infrastructure)
• Organizational capital (culture, leadership, employee alignment, teamwork and knowledge management)

The value of intangible assets can not be directly or independently measured but their value derives from their ability to help the organization in implementing its strategy, which can be ensured through strong linkages created by strategy maps.

The clarity and understanding provided by strategy maps drives the involvement and commitment of people in achieving organizational goals. In a nut shell strategy maps provide the missing link between strategy formulation and strategy implementation.