Having Trouble with Your Strategy?
Then Map It
by Robert S. Kaplan and David R Norton
The key to executing your strategy is
taking your troops into foreign territo have people in your organization tory. Obviously, you would need detailed maps showing the important towns and understand it - including the crucial villages, the surrounding landscape, key structures likebridges and tunnels, and but perplexing processes by which the roads and highways that traverse the intangible assets will be converted region. Without such information, you couldn't communicate your campaign into tangible outcomes. Strategy maps strategy to your field officers and the rest can help chart this difficult terrain. of your troops.
HARVARD BUSINESS REVIEW September-October 2000
IMAGINE THAT YOU ARE A GENERAL
Unfortunately, many top executives are trying to do just that. When attempting to implement then business strategies, they give employees only limited descriptions of what they should do and why those tasks are important. Without clearer and more detailed information, it's no wonder that many companies have failed in executing their strategies. After all, how canpeople carry out a plan that they don't full> undtisiand? 147
TOOL KIT • Having Trouble with Your Strategy? Then Map It Organizations need tools for communicating both their strategy and the processes and systems that will help them implement that strategy. Strategy maps provide such a toot. They give employees a clear line of sight into how their jobs are linked to the overall objectives of theorganization, enabling them to work in a coordinated, collaborative fashion toward the company's desired goals. The maps provide a visual representation of a company's critical objectives and the crucial relationships among them that drive organizational performance. Strategy maps can depict objectives for revenue growth; targeted customer markets in which profitable growth will occur; valuepropositions that will lead to customers doing more business and at higher margins, the key role of innovation and excellence in products, services, and processes; and the investments required in people and systems to generate and sustain the projected growth. Strategy maps show the cause-andeffect links by which specific improvements create desired outcomes - for example, how faster process-cycletimes and enhanced employee capabilities will increase retention of customers and thus increase a company's revenues. From a larger perspective, strategy maps show how an organization will convert its initiatives and resources-including intangible assets such as corporate culture and employee knowledge- into tangible outcomes.
Why Strategy Maps?
In the industrial age, companies created value bytransforming raw materials into finished products. The economy was primarily based on tangible assets-inventory, land, factories, and equipment-and an organization could describe and document its business strategy by using financial tools such as general ledgers, income statements, and balance sheets. In the information age, businesses must increasingly create and deploy intangible assets-forinstance, customer relationships; employee skills and knowi-
The Balanced Scorecard Strategy Map
Revenue Growth Strategy build the franchise revenue from new sources
Improve Shareholder Value
• return on copital employed
• share price
Productivity Strategy improve use of assets iJiit;! utilization
increase value to customers ' customer profitabilityimprove cost structure • operotiny cost per unit produced
Customer Value Proposition Customer Intimacy
' customer acquisitior), retention, and satisfaction
build the franchise through innovations
increase customer value through customer management processes
achieve operational excellence through...