A strategy map is an important tool for strategy development in an organization. It promotes thinking, communication and conversation. They say a picture speaks a thousand words and a strategy map functions on this principle. An organization can use a strategy map example to communicate ideas between different departments responsible for different roles.
Read on to find out more about strategy maps.
Strategy Map Meaning
A strategy map represents the entire strategy of an organization in a visual way. It shows a logical, cause-and-effect connection between various components of an organizational strategy. It’s a powerful tool in strategy development as it promotes communication and shows how value is created by an organization. It represents the objectives of an organization and the relationship between them. A strategy map helps in developing and implementing highly effective strategies.
Four Perspectives Of A Strategy Map
A strategy map groups objectives into four main categories, also known as perspectives. Robert S. Kaplan and David C. Norton developed these perspectives as a part of their Balanced Scorecard framework for strategic management and planning.
The four perspectives of a business strategy map are:
1. Financial Perspective
This outlines the outcomes of organizational strategy. It focuses on specifying strategies to lower costs and improve revenue. There are two measures of financial perspective—productivity and revenue growth. While productivity deals with short-term objectives, revenue growth deals with long-term objectives. The emphasis is on sustaining growth.
2. Customer Perspective
This is the ‘customer value proposition’ which is at the core of the strategy. The organization must identify the targeted customers to define the objectives for the value proposition. It shows what an organization will offer its customers that sets them apart from their competitors. For-profit companies aim to achieve product leadership, customer intimacy or operational skills.
3. Internal Process Perspective
This specifies the internal processes that are essential for greatest impact on a strategy. It focuses on methods of internal processes that help achieve customer and financial goals. This includes:
- Management of internal processes
- Development of human, organization and information capital
- Producing and delivering the value proposition for customers
- Market expansion and innovation for growth
- Achieving operational excellence
- Improving relationships with customers and stakeholders
4. Learning And Growth Perspective
This is the foundation of every strategy. It helps the organization deliver the intended value by outlining the required knowledge, skills and system. A strategy map example will focus on learning and growth objectives. This perspective ensures smooth operations that help provide more value to customers. More value to customers means improved financials.
With a strategy map in place, organizational growth isn’t left to chance. Every aspect is considered and reevaluated at regular intervals.
How To Create A Strategy Map
The value a strategy provides an organization comes from thinking and discussing during the process of design. The following are the steps to create a strategy map:
1. Mission And Vision
An organization must define its mission and vision. While the mission is the purpose of an organization’s existence and activities, the vision defines its long- and short-term goals. Defining the objectives helps create a clear picture at the beginning of a strategy map. It lays the foundation of a business strategy map.
2. Environment Of An Organization
The environment is the landscape an organization operates in. Identifying trends and stakeholder roles plays an important role in mapping a strategy. A strategy map example will always identify an organization’s environment first.
3. Defining Strategy
The next step is to define a strategy to achieve the goals set by an organization. Defining a strategy includes highlighting the activities an organization needs to create a sustainable difference.
4. Translating Strategy
A map highlighting these four perspectives makes the strategy meaningful and helps employees make them actionable.
5. Highlighting Cause-And-Effect Relationships
Drawing arrows between objectives establishes the cause-and-effect relationship. For example, more communication between customers and organization means improved customer service and product or service quality. This relationship is essential to define strategy map meaning.
Corporate strategy maps help communicate core strategies to stakeholders. This can be used as a strategy map example for developing several lower-level strategy maps.
A strategy map provides a common framework and language to communicate ideas. Whether it’s conveying a strategy internally in an organization or among different organizations that are working in tandem, a strategy map serves as the most effective tool. In a community of nonprofit and for-profit organizations, a common framework provides better communication for a common mission.
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