Strategy map allows validated learning

Thursday, the Netherlands — In my previous blog, I referred to a strategy map and to the Balanced Scorecard as designed by Kaplan & Norton. In my next blog I will spend more time talking about the Balanced Scorecard, but for the moment I want to focus on the strategy map.

The strategy map was also introduced by Kaplan & Norton. In the ’90s they designed the Balanced Scorecard and in an effort in the early ’00s to transform it into a strategic management system they developed the strategy map. What is it?

“The strategy map is a diagram that displays value creation through cause-and-effect relationships between strategic objectives.”

Drafting a strategy map makes good sense for any organization. It forces one to strategically think about goals and how to communicate them throughout the organization. What is expected from everyone in order to achieve our goals? The strong point of the strategy map — and the Balanced Scorecard — is the cause-and-effect relationships. The most basic form is the hypothesis: “happy customers will cause more revenue, either because they will return in the future or because they will spread positive words to others”.

The cause-and-relationships are hypotheses that organisations thought will occur. However, a hypothesis will remain just that and requires continuous validation. Monitoring behaviour of stakeholders — from customers to employees — gives insight in the validation. Eric Ries mentions in his book Lean Startup the notion of validation learning. Making mistakes and experiencing learning is part of the game, but there is a strong distinction in the added value of that experience. Testing your hypotheses in your strategy map forces organization learning.

In the next blogs I’ll discuss topics like the Balanced Scorecard as Corporate Management System, but also how digitalization supports the rise of similar tools.