Strategy maps

Kaplan and Norton introduced the balanced scorecard in 1992. After examining many scorecards, they observed recurring cause-and-effect patterns linking intended strategy with the capabilities and processes expected to produce its outcomes. A strategy map makes those hypotheses visible on one page.

When to use it

Use a strategy map to describe strategic objectives across the four balanced-scorecard perspectives and to show how contributions are expected to connect. Combined with indicators, targets and initiatives, it gives management an architecture for steering execution.

The map makes value-creating processes and intangible assets visible. In a knowledge-intensive organisation, skills, information, culture and leadership in the learning and growth perspective enable internal processes. Those processes create the customer value represented in the customer perspective, which should contribute to financial outcomes. The arrows are strategic hypotheses to test, not proof of causality.

A map also supports translation from broad intent to performance expectations. The linked balanced scorecard can be cascaded into teams and roles, helping people see how their work contributes. Cascade contribution and decision relevance rather than copying corporate measures mechanically to every employee.

Origins

Robert Kaplan and David Norton introduced the balanced scorecard in 1992 as a broader performance-measurement system. As organisations used the scorecard for strategy, the authors observed recurring cause-and-effect connections among objectives in its financial, customer, internal-process, and learning-and-growth perspectives. They articulated the strategy-map approach in a Harvard Business Review article at the start of the new millennium and developed it fully in Strategy Maps. The map made the strategic hypotheses behind a scorecard visible instead of leaving the measures as an unconnected collection.

What it is

A strategy map, described by Kaplan and Norton (2004), represents how intangible assets are expected to enable internal activities that produce customer and financial outcomes. It gives the organisation a cohesive and systematic picture of its strategic logic.

The map normally places learning and growth at the foundation, internal processes above it, customer outcomes next and financial objectives at the top. Strategic themes may cross all perspectives. Arrows state an assumed relationship: if the organisation builds a capability and improves a process, a specified customer and financial result should follow.