The strategy map is a graphical representation that consists of a summary of the objectives for each Balanced Scorecard theme. Click here to download our Free Balanced Scorecard Template Example Combine this free template with other tools. A Strategy Map is a diagram showing the causal relationships between strategic objectives according to the four perspectives (financial and customer perspectives, internal process, learning and growth). Strategy Maps are the cornerstones of the framework of the Balanced Scorecard project. They are the focal point of the system.

1. Strategy Maps And Balanced Scorecards
2. Strategy Map And Balanced Scorecard Example

To instantly download this presentation, enter your email address below. This Strategy Mapswith Balanced Scorecard deck is a 33-slide presentation available in Microsoft PowerPoint and Google Slides. Below you can read highlights of this collection.

SYNOPSIS

90% of business strategies fail due to poor execution, according to Business 2 Community, which means effective strategy maps are especially important for the ultimate success of a business. With our Strategy Maps with Balanced Scorecard collection, you can document and hone in on your priorities, as well as visualize your organization’s plans implementation, so that all team players understand how to work together and know where they fit in.

SLIDE HIGHLIGHTS

To create greater long-term value for shareholders, the business must constantly work on improving its revenue growth and productivity. Use slides, such as this one, if you need a specific map for financial measures and drivers.

Bottlenecks and a lack of clarity hide opportunities for process improvement. Process mapping, on the other hand, helps to gain more visibility into operations. This slide lets you easily create and share process map with your team.

Take advantage of the Balanced Scorecard indicator dashboard. Note that the dashboard is adopted more to operations, so in it, the process starts with the determination of pertinent metrics and control of their value.

APPLICATION

Michael Gunther, the founder of Collaboration Business Consulting, suggests keeping in mind the following when mapping out your strategy:

• Strategic plans don't solve problems – as natural problem solvers, leaders often subconsciously choose tactical strategies to find solutions. “There's a certain level of comfort in trying to solve problems versus determining what types of risk your company needs to take to achieve the next level of financial performance. Instead of focusing on solutions during strategic planning, focus on increasing the company's odds of success,” Gunther says.

• Ensure the strategic plan is outward-focused – the main purpose strategic maps should serve is identifying the ways in which the venture wants to position itself in the market, taking in consideration the target customers’ needs and preferences.

• Determine where your company exists – determine your target customer and market. When you have these two factors figured out, list strategies that will help you and your team to attract and retain those customers. Gunther says: “Include conversations on how to roll with an evolving marketplace, how to fill unmet needs of key stakeholders, which market dynamics will impact the company, and identify opportunities in the market for the company's products/services.” Cherchez le don and smokin' corey feldman.

• Establish achievement goals – one important stop on your map should be creating a compelling value proposition for the target audience. This is when you should focus on setting clear goals, rather than creating tactics. Here, consider the drivers and barriers of acquiring new business, determine customer perception of your company versus its competitors, then establish a positional stance and decide which best practices can be employed.

• Stay straightforward – strategic maps should be brief and precise. Keep your map to one page and include only the key choices that will be important for the company's revenue drivers.

• Use clear logic – list the processes that your venture needs to change to achieve the main strategic goal. Add the information about the target audience, the industry's shifts, the competitive landscape analysis and your company's realistic capabilities. When your map is ready, move on to your implementation plan. “The implementation plan should answer the following questions […] What do we hope to accomplish and why? How will we plan to accomplish this task? How can we incorporate measurement tools to ensure the goal is achieved?” Gunther says.

CASE STUDY

Nike

Nike Inc. uses strategy maps to incorporate leadership responsibility into its day-to-day business practices. 'As we try to integrate corporate responsibility, it's really about systematic change in terms of how we do our contract manufacturing and the decisions that go into it,' Lee Weinstein, Nike’s spokesperson told Portland Business Journal.

As a part of the initiative, Nike implemented a balanced scorecard strategy approach, which means that contract manufacturers are being evaluated based on health and safety, as well as environmental and labor-management standards. Although Nike reviews its unique balanced scorecard criteria monthly, the company Director of Global Apparel and Corporate Responsibility, Mike McBreen, admits that the most challenging part of the process is establishing the performance measures. 'We are communicating the set of measures by which we hold ourselves accountable,' McBreen said. And in one of his corporate responsibility newsletters, McBreen wrote that business partners meeting Nike's goals will witness increased, higher-margin business and industry recognition for better performance.

Senior management teams are prone to focus excessively on short-term financial results – information reported after the damage is done, for better or worse. This is why the balanced scorecard lives up to its name.

It gives management a broader, more balanced view of the organisation by incorporating non-financial operational measures – metrics that are related to customers; internal processes; and employee innovation, learning and growth. These influential non-financial measures are reported during the period when adjustments can be made and small problems can be addressed before they become big ones. These actions in turn lead to better financial outcomes.

But there’s inconsistency in how many companies apply the balanced scorecard. Indeed, some methods don’t do enough to satisfy the intended purpose of a balanced scorecard. That purpose is to improve the implementation of the executive team’s formulated strategy.

Some organisations, for instance, wrongly believe they have developed a balanced scorecard if they have successfully transferred their traditional table-based columnar management reports into visual dashboards with flashing red and green lights and directional arrows. Others may think that they should simply put their old measures on a diet by compressing them to a more manageable number of more relevant measures.

How does anyone know if the key performance indicators (KPIs) from those two methods support the strategic intent of the executive team? Are the KPIs the right measures? Or are they what can be measured rather than what should be measured? And is the purpose of the balanced scorecard only to better monitor the dials rather than facilitate the employee actions and decisions needed to move the dials?

Organisations need to think more deeply about what measures drive value and reflect achieving the direction-setting strategic objectives of their executive team.

The construction of a strategy map

Strategy Maps And Balanced Scorecards

Many organisations are familiar with the balanced scorecard, but fewer seem to be familiar with the term strategy map. The strategy map is perhaps more important than the balanced scorecard, which is merely a feedback mechanism. So it would behove executives to use a balanced scorecard in conjunction with a strategy map.

The executive team’s primary job is setting strategic direction. The strategy map, which is used to visually display the strategy’s causally linked strategic objectives, and its subsequent companion balanced scorecard help answer a different question: “How will we get there?” Their purpose, together, is to successfully implement the strategy.

Most executive teams are reasonably competent at defining a strategy, but many feel frustrated with coming up short in fully implementing their strategy. That is where the strategy map and its derived balanced scorecard fit in. Their combination is a navigational tool to guide the organisation to execute the strategy formulated by the executive team.

A strategy map is typically constructed with a set of 15 to 25 causally linked strategic objectives. Each strategic objective will contain associated projects to complete and processes or competencies to excel at. It will also include its appropriate KPI measures and targets, and it will take into account key risk indicators. For the purposes of this article, the focus is on KPI measures, which should be tailored to an organisation’s unique needs.

The strategic objectives are often organised from bottom to top in four sections from the strategy map:

1. Learning, growth and innovation.
2. Process improvement.
3. Customer satisfaction and loyalty.
4. Revenue growth and cost management financial goals.

There are dependency linkages in a strategy map with an upward direction of accumulating effects of contributions to achieve the strategic objectives. The KPIs are not reported in isolation but rather have context to achieve the mission and vision. The strategy map is like a force field in physics, as with magnetism, where the energy, priorities and actions of people are mobilised, aligned and focused. One can say that maximising shareholder wealth, which is what the executives seek, is displayed at the top of the strategy map. In this, it is not really a goal – it is a result.

An essential step in creating a balanced scorecard is to identify the mission-essential projects and initiatives that will achieve the strategic objectives. The presence of enabling projects and initiatives goes to the heart of distinguishing a strategic objective from just performing better at what you have already been doing. Old unit 4 agendamrs. colvilles math class.

Selecting and measuring KPIs are critical. You get what you measure, and strategy maps and scorecards serve a greater social purpose than a technical one (although information technology and software are essential enablers).

Performance measures motivate people and focus them on what matters most. They align employees’ priorities and work activities with strategic objectives. Performance measures enable every employee, from front-line workers up to the executive team, to ask and answer every day: How am I performing on the important objectives? How am I doing on what is important?

Note that the first half of this question can be easily displayed on a dial with a target; it is reported in a scorecard or dashboard. But it is the second half of the question that is critical – “on the important objectives” – and that is derived from the strategy map.

How are balanced scorecards and dashboards different?

There can be confusion about what the difference is between a balanced scorecard and a dashboard. They have a tendency to confuse people and get used interchangeably. Each brings a different set of capabilities.

There is similar confusion differentiating strategic KPIs from normal and routine measures that can be referred to as just operational performance indicators (PIs). KPIs ultimately are decomposed into the PIs that employees can relate to and directly influence and affect. The adjective “key” of a KPI is the operative term here. When an organisation proudly proclaims it has 300 or more KPIs, one must ask: “How can they all be key?”

To use a radio analogy, KPIs are what distinguish the signal from the noise – the measures of progress towards executing the strategy.

Strategy Map And Balanced Scorecard Example

The difference between scorecards and dashboards comes from the context in how they are applied. Scorecards and dashboards are not contradictory. They both display measurements, but they serve different purposes. Scorecards are intended to be strategic. Dashboards are intended to be operational. KPIs should be displayed in a balanced scorecard, and PIs should be reported in dashboards.

A limitation with dashboards is that they do not communicate why something matters, why someone should care about the reported measure or what the impact may be if an undesirable declining measure continues. In short, dashboards report what can be measured. In contrast, a balanced scorecard provides the information lacking in dashboards. Scorecards do not start with the existing data, but rather they begin with identifying what strategic projects to complete and core processes to improve and excel in.

Here are some guidelines for understanding the differences between scorecards and dashboards:

Scorecards monitor the progress toward accomplishing strategic objectives. A scorecard displays periodic snapshots of performance associated with an organisation’s strategic objectives and plans. Directionally upward from the employee-centric innovation, learning and growth perspectives, KPIs should reveal the cumulative build of potential to realised economic value. There are two key distinctions of scorecards: First, each KPI must require a predefined target measure. Second, KPIs should include both project-based KPIs such as milestones, progress percentage of completion and degree of planned versus accomplished outcome, as well as process-based KPIs such as customer satisfaction and per cent on-time delivery against customer promise dates. Process improvement is important, but innovation and change is even more important. Strategy is all about change and not just doing the same things better.

Dashboards monitor and measure processes and outputs. A dashboard is operational and reports information typically more frequently than scorecards. The organisation’s traction and torque are reflected in the dashboard’s PI measures. PIs serve more to monitor trends across time or results against upper- or lower-threshold boundary limits. As PIs are monitored and responded to, the corrective actions contribute to achieving the KPI target levels with actual results. However, each dashboard measure is reported with little regard to its relationship to other dashboard measures. Dashboard measures do not directly reflect the context of strategic objectives. Dashboard information can be more real-time in nature, like an automobile dashboard that lets drivers check their current speed, fuel level and engine temperature at a glance. It follows that a dashboard should ideally be linked directly to systems that capture events as they happen, and it should warn users through alerts or exception notifications when performance against any number of metrics deviates from the norm or what is expected.

Strategy is more than performing better: It involves doing different things

A strategy is dynamic, never static, as executives appropriately shift directions based on their new insights and observations. The purpose of the strategic objectives in a strategy map is to re-direct the organisation from the tyranny of maintaining the status quo – doing the same things a bit better. Strategy is about constant change. If an organisation does not constantly change, then it is exposed to its competitors converging to offer similar products, services and processes. In short, strategic objectives define the changes an organisation should make to maintain a competitive edge.

As with any managerial improvement method, experience through use refines the method’s effectiveness and impact. The plan-do-check-act (PDCA) cycle is a great practice for organisations. With improvement methods, it is difficult to get it perfect the first time. There will always be a learning curve. Many organisations over-plan and under-execute. With regard to KPI and PI selection, first learn the principles, and then apply them through selecting, monitoring and refining the KPIs. Strategy maps and balanced scorecards are a craft, not a science.

—Gary Cokins (gcokins@garycokins.com) is the author of the CGMA bookStrategic Business Management: From Planning to Performanceand founder of Analytics-Based Performance Management, an advisory firm in Cary, North Carolina. He was a consultant with Deloitte and KPMG and is the former head of the National Cost Management Consulting Services for Electronic Data Systems (EDS). He also worked in business development with SAS, a leading provider of enterprise performance management and business analytics and intelligence software. He is scheduled to present at the AICPA Financial Planning & Analysis Conference in Las Vegas, Nevada, on July 22nd and 23rd.