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Published on May 10, 2019 |
You’ve recruited a strong team, provided motivation and resources, and shared your vision for success. So why has growth stalled and morale plummeted? The solution might be as simple as drawing a diagram. Learn how strategy maps and scorecards can help you clarify your goals and show your team how to work together to turn objectives into results.
A coach would never send his team into a game without the playbook of unique strategies that will drive key players across the goal line. As a business owner, your job is not much different. Whether sketched on a napkin or formalized using proprietary software, mapping your business strategy will help your team visualize how certain incremental actions move them toward specific goals.
Organizations need business tools that not only communicate goals but also provide clear plans for achieving those goals. Strategy mapping, along with scorecards that measure effectiveness, shows these connections through the lens of four key perspectives: financial, customer, internal process, and learning and growth. Much like the incremental plays that push a football team toward the goal line, the objectives you assign to these four areas will create a cause-and-effect chain where each objective and corresponding action informs the next. Ready to build your strategy map? Here’s how it works:
Identify the ultimate goal of your business strategy. Although you can incorporate elements of your mission statement, this objective should be more specific and measurable. Many organizations cite an increase in shareholder value as their overriding strategic goal.
Keeping your goal in mind, assign objectives (or smaller goals) to each of these four perspectives:
Financial Perspective. Your financial objectives should also be specific and measurable and must contribute to the overarching goal of your organization. More advanced strategy maps subdivide this perspective into two tracks: Revenue Growth (new markets, products, and customers; deeper relationships and value for existing customers) and Productivity (reduced expenses; improved efficiencies). A balance of these two tracks can give your strategy a more robust approach.
Customer Perspective. Identify the objectives related to your customers that will directly influence your financial objectives. Choose one of the following value propositions to inform your customer objectives and use the remaining two as supporting standards: Operations: Your company’s performance and cost efficiencies set it apart from competitors. Offering: Your product or service performs better than competitors’ and offers functions and features far superior. You will continue to innovate to develop new products and services. Relationship: You know your customers, engage with them, and provide better service and solutions than others in your industry. You also have plans to penetrate new markets.
Internal Process Perspective. Now think about what you will do internally to fulfill your customer-related objectives. Create internal objectives while considering aspects like production efficiencies, retention, satisfaction, and product innovation.
Learning and Growth Perspective. What competencies and resources (in terms of resources, space, and technology) will you need in order to fulfill your internal process objectives? Align intangibles, like corporate culture and public image, with tangible resources, like equipment and workforce.
Work from the bottom of your strategy map to show the incremental cause-and-effect connections between each perspective. Which objective under learning and growth will help you fulfill an internal process objective? How will that objective, in turn, inform one or more of your customer-related objectives? Working upward, use arrows, boxes, or other illustrations that make sense to your organization to convey the relationship between all the objectives until you reach the top of your map: your overarching goal.
Each objective should have a corresponding measure of success, and your method of measure should directly reflect the result you are working to achieve. For example, determine whether it makes more sense for sales numbers to be taken from orders or from receivables. Will these numbers be pulled directly from your financials? How often and by whom?
Every map is unique to the business it represents, and your map will continuously evolve to meet the changing needs of your organization. No matter how you choose to design it or which objectives you include, the strategy map is a powerful tool for planning, explaining, and measuring how your business will advance from its current position to a more desirable one closer to the goal line.
Bridge the gap between planning and execution with strategy mapping and scorecards. Ensure your strategy map checks all these boxes: