Your Strategy Needs A Guide. A Strategy Map Can Be That.
Strategy is a roadmap to future goals and objectives. More specifically, it’s a detailed roadmap and is concerned with the activities needed to achieve those goals and objectives. So anyone limiting their strategy to some ‘highfalutin’ concepts and ‘areas of focus’ is going to come unstuck. Note that I say “limiting….. to some ‘highfalutin’ concepts…”. I’m not suggesting that strategy doesn’t encompass an inspiring vision and mission (this has been explored more in my previous article here). In fact, something that compels people to go on the journey and provides ‘easy to follow’ signposts is essential. But it’s not enough. Strategy also has to specifically identify what needs to be done, how it will be done, who will do it and and how they will be held accountable. That’s the detail that many organisation shy away from working through and capturing. Without it, stakeholders have nothing more than a general direction of travel, which isn’t enough to make sure they have a successful journey.
Helpfully, there are numerous well established frameworks and models available to help people creating strategy build plans with the necessary detail to be effective. Their value comes from the help they afford to covering the bases and focusing, aligning and optimising effort in line with the strategic direction. They provide direction to defined goals and objectives; they prompt the identification of required activities and resources; and they help surface how progress to the goals and objectives will be measured.
In the next series of articles, I will provide an overview of four different frameworks: Strategy Maps; Activity Systems Maps; Soft Systems Methodology and Strategy As Practice. Any of these are likely to prove valuable in developing considered and meaningful strategies that can not just guide critical activities but also identify specific activities and resources needed to run them. It’s also worth noting that I find value in specific elements of each framework. It’s not unusual for people developing strategy to use one framework as a central anchor, and supplement this with specific elements from others. This can help with the strategy development process and increase engagement and buy in from stakeholders. For example, I find ‘Analysis Three’ in Soft Systems Methodology really helpful in thinking about culture, power and politics in the organisation and how these will impact strategy.
Building out Strategy, Pt.1: Strategy Maps
The creation process for any Strategy Map follows the same set of actions which makes it a very practical tool. Here a few key guidlines:
The map should be a one page document; This facilitates relatively easy strategic communication, and drives the articulation of a concise and focused value proposition.
The map shows four different but connected strategy perspectives:
- Financial perspective — which looks at creating long-term stakeholder value (recognising the commercial origins of Strategy Maps, Shareholder Value is traditionally designated. However, in other organisational contexts other ‘value subjects’ can be identified). This long-term value is created from: Productivity strategy (improving cost structure and asset utilisation) and growth strategy (expanding opportunity and enhancing customer value).
- Customer perspective — which focuses on price, quality, availability, selection, functionality (the product and service attributes); service and partnerships (the customer relationship attributes); and branding (the image attribute). It is these elements that directly feed the productivity and growth strategies seen in the financial perspective.
- The internal perspective — which has ‘processes’ as its focus. Operations and customer management processes link to the product and service attributes in the customer perspective. Innovation, regulatory and social processes link to the relationships and image attributes.
- The learning and growth perspective — which is concerned with the allocation of capital, specifically human, information and organisational capital (which comprises company culture, leadership, alignment and teamwork). This allocation of capital enables the processes identified in the internal perspective to be operated successfully. For me, it’s this perspective that is the bedrock of successful strategy development. This perspective demands that fundamental issues of organisational efficiency and effectiveness are addressed. For example: How should the enterprise be organised? What skills are needed to undertake the activities needed to deliver the strategy? How will employees, managers and other stakeholders collaborate effectively? What data and insight needs to be available for market and organisational performance to be analysed (including KPIs and objectives) and for informed decisions to be made? What is the role of leadership and what leadership capacity is needed? What is our culture now and what culture is needed to support the strategy?
Cause and effect relationships are identified:
The map is joined together by a series of connecting arrows that highlight the linkages and dependencies between different perspectives and elements of the plan. These all ultimately lead to the end-goal of long-term shareholder (stakeholder) value.
Below, is a generic example of a Strategy Map showing the perspectives and elements and how they work together.
When it comes to building a strategy map for your organisation you’ll almost certainly find yourself wanting to produce something bespoke to your context. A quick search on Google for ‘example real strategy maps’ will give you a sense of how organisations produce different expressions of a strategy map. Here are three examples that I think have some aspects to them:
This map has a lot going for it. It usefully includes vision, mission and strategic priorities and provides the ‘balanced scorecard’ metrics and goals in the side bar. There are some, but I’d like to see more measures around leading indicators of performance to help ensure the strategy is on track.
This map lacks detail but I’m attracted to the way it identifies specific customer groups and specific internal departments in it’s structure.
Again, light on detail, this example uses the causal linkage arrows well to show how elements of the strategy connect
To my mind, generating value from strategy maps depends on:
- Keeping true to the three guidelines to creating strategy maps (provided above)
- Giving equal attention to the different perspectives
- Using descriptions specific to your context rather than generic concepts. For example, not just saying “maximising margins” but more specifically (for example) “growing margin by 2%”. Or not just saying “focus on customer satisfaction” but rather (for example) “Introduce call centre processes and SLAs to increase customer Net Promoter Score (NPS)”; and having the required NPS as a metric.
- Backing up the strategy map with ‘playbooks’, process documents, job specifications and other artefacts that will provide clarity in relation to activities, roles, responsibilities and accountabilities for all stakeholders. An effective strategy map will be a springboard to more detailed work by leaders and managers across the enterprise to align their teams to the strategy, giving them clarity of purpose and focussing their efforts.
