Emerald Group Publishing Limited
Copyright © 2004, Emerald Group Publishing Limited
Strategy implementation gets another building block
Donald MitchellChairman and Chief Executive Officer of Mitchell and Company, and co-author of The Ultimate Competitive Advantage, The Irresistible Growth Enterprise and The 2,000 Percent Solution (www.mitchellandco.com).
Strategy Maps: Converting Intangible Assets into Tangible Outcomes
Robert S. Kaplan and David P. NortonPublished by Harvard Business School Press
Robert S. Kaplan and David P. Norton are the innovators behind the Balanced Scorecard, which has proven to be a potent way of turning strategy into reality. Before the Balanced Scorecard, most strategies failed in execution because people didn't know what they were supposed to do. With the Balanced Scorecard, a very high percentage of strategies are implemented and do succeed. In The Strategy-Focused Organization, Professor Kaplan and Dr Norton explained the management processes that make implementing the Balanced Scorecard most successful.
Strategy Maps now becomes another essential building block in strategy implementation. Importantly, this building block should be the starting point in your search for success. In the preface, the authors describe the three essential elements behind breakthrough results: describe the strategy + measure the strategy + manage the strategy. They add, ''You can't manage (third component) what you can't measure (second component) [and] [y]ou can't measure what you can't describe (first component).''
In Strategy Maps, the authors show the way to communicate how each element of a company's activities contributes to the overall success of the strategy. Using the Balanced Scorecard, everyone in the organization knows what must be done, and now, with this book, each person will understand the context of what they must do and improve implementation.
Here's what a template of a typical strategy map includes for a for-profit company: First, all of the information is contained on one page. Second, that page has four perspectives: financial; customer; internal; learning and growth. Third, the financial perspective looks at creating long-term shareholder value, and builds from a productivity strategy of improving cost structure and asset utilization and a growth strategy of expanding opportunities and enhancing customer value. Fourth, these last four elements of strategic improvement are aided by changes in price, quality, availability, selection, functionality, service, partnerships and branding. Fifth, from an internal perspective, operations and customer management processes help create product and service attributes while innovation, regulatory and social processes help with relationships and image. Sixth, all of these processes are enriched by the proper allocation of human, information and organizational capital. Organizational capital consists of company culture, leadership, alignment and teamwork capabilities. Seventh, the cause and effect relationships are described by connecting arrows.
The book is a marvel of clarity. The authors describe what a strategy map is and proceed to share dozens of examples that have been successfully used in both for-profit and non-profit organizations around the world. The examples are carefully chosen to illuminate each element of the strategy map template that they suggest you begin with. In part four, they make the task of strategy map building even easier by taking typical strategies that are most often employed and showing how to build a strategy map that characterizes such a strategy. Finally, every chapter also refers to the best-published work on what strategies and actions are most likely to succeed. Even if you are not familiar with the literature of creating and implementing successful strategies, you can use this book to learn what you need to know.
Strategy Maps will be as valuable for small organizations as for large ones. All organizations need to have a better understanding of how the pieces of a strategy need to fit together. In fact, if you only read one book written about strategy in 2004, you would be wise to choose this one. As a student of continuing business model innovation, I was particularly pleased to see the authors explain how processes can be put in place to improve business models as part of a strategy map.
The only missing element in the book from my perspective is how to make strategy maps more compelling for the viewers. In strategy presentations across the country, I've often seen strategy maps that use colorful illustrations and enticing numerical relationships to help those in the trenches grasp the full scope of how their work connects to everything else. When Strategy Maps is ready for its next edition, I hope the authors will consider adding a section in this regard.
If you have not yet read The Balanced Scorecard and The Strategy-Focused Organization, I strongly encourage you to read those outstanding books as well. With the combined perspective of the three books, you should easily outdistance the competition!
As I finished the book, I thought about what else keeps strategies from being successful. In my experience, the typical remaining problem other than miscommunication is setting a direction that cannot be implemented in the appropriate time frame. I strongly encourage those who are planning new strategies to develop a strategy map before committing to the new strategy. Then use that strategy map to ask those who have to implement the strategy what problems they foresee in implementation. In this way, you can adapt the strategy to what you can reasonably hope to execute.