Strategy map: linking strategy and execution

The strategy map goes back to Robert Kaplan and David Norton. In the strategy process, it follows the decision on positioning and goals. It therefore presupposes a vision of the future and does not replace it. Its task is to name the key levers for achieving the positioning, to coordinate them with each other and to bundle them. For each lever, the most important measures are then made concrete and summarised in a master plan. In addition, the key measurement and steering variables for implementation are defined for each lever.

The strategy map links four perspectives: finance, customers, internal processes, and learning and growth. In this way, goals are linked with the prerequisites the organisation needs to implement them.

The financial perspective describes long-term economic success via two routes. The growth strategy distinguishes between growth with existing customers and with new customers. The profitability strategy distinguishes between productivity gains and cost savings. The customer perspective contains the value propositions for the target customer segments.

The internal process perspective arranges four groups. Service provision includes procurement, service delivery and distribution. Customer management covers the selection, acquisition and retention of customers. Innovation means identifying, developing and introducing new services. In addition, there are social processes and given framework conditions, such as regulations on occupational safety, health and the environment.

The learning and growth perspective covers people, assets and organisational capabilities. This means recruitment and qualification, the building up or reduction of facilities and the development of core competences that are independent of individuals. For sustainable corporate development, the map can be extended by a values perspective and an environmental perspective.

A connection in the diagram explains the assumed logic of impact. It is not yet proof that a measure actually causes the result. The joint discussion of these assumptions is an important part of the work.

Before a strategy map steers implementation, it is checked. First, the current strategic goals and measures are brought together in the structure of the map. This is followed by a check for plausibility, consistency and completeness. Do goals, levers and measures fit together, and is anything essential missing? In the third step, the key cause-and-effect relationships are named and made concrete. Finally, the leadership team agrees on the most important goals of the customer and financial perspectives. These are later used to observe whether the strategy is working.

Which processes need to be changed, which capabilities developed and which resources deployed? These questions lead to specific initiatives and responsibilities. A map thus becomes the basis for implementation.

Key figure systems usually shed very precise light on the financial and process perspectives and report deviations between target and actual. As a rule, these are consistently acted upon. However, such measurement points mainly observe the results of past decisions.

They provide hardly any early signals of changes in the environment. For the strategy map, this means that measurement and steering variables belong to every lever, not just to the financial goals. And the measurement points themselves are reviewed at regular intervals to see whether they still fit the current vision of the future.

If new customer observations or implementation experience contradict the assumptions, the strategy picture must be reviewed. Effectiveness monitoring complements the picture through joint observation of developments.

A chemical park operator condensed its strategy into such a map. In the customer perspective was the promise to increase customers' competitiveness: through reliable basic services for secure production, optimised interfaces and processes, competitive prices with transparent pricing models and a strengthened product network.

The process perspective derived levers from this. The customer management process was aligned with customer segments, according to the principle that service and sales structure follow the customer segment. Different units were to present coordinated messages to the customer. In addition, there was a newly established efficiency programme and site settlement management in project mode.

The learning and growth perspective included incentive systems that reward customer orientation and the appropriate staffing of key positions for implementation. A continuous strategy process involving the management team was also entered there as a lever to strengthen the capacity for renewal.

A strategy map does not simply sort goals into four boxes. It describes assumed relationships: which capabilities and processes are meant to enable which customer benefit, and what economic impact is expected? This makes hidden assumptions discussable. Leadership and departments can check whether a goal has a responsible unit and suitable observation. In addition to lagging result values, earlier indications of change should also be considered.

If an initiative has been completed but the expected customer reaction does not materialise, this is a reason to review the connection in the map. The map thus serves as a shared working basis for implementation and learning. It replaces neither the strategic decision nor an analysis of causes when deviations occur.

For sustainable corporate development, the strategy map is extended to six levels. The presentation is based on Kaplan and McMillan, who developed the balanced scorecard further. At the top is still the financial perspective with the entrepreneurial objective: long-term economic success through profitability and growth. It stands for profit.

Below this is the values perspective with value proposition and self-image. At its centre is purpose: why do we do what we do, how do we do it and what exactly do we do? Two positionings flank it. Planet refers to the ecological positioning on environment and climate, people to the socio-economic positioning on society, human rights, diversity and ethics.

The stakeholder perspective contains the benefit promise. In addition to markets, target customers and the value proposition for the product and service portfolio, described in terms of time, quality, price, service, relationship and brand, it includes external stakeholders such as politics and the state, partners and institutions. The environmental perspective forms the interface between organisation and environment. It records where the company exerts influence on its ecological and socio-economic environment and which internal framework conditions, rules, codes of conduct and compliance requirements guide its actions.

The process perspective arranges internal processes and cooperation: service provision and value creation including linear and circular economy, customer management, innovation, and legally required and social processes. Digitalisation, automation and IT-supported processes run through all groups.

The lowest level names the prerequisites, the so-called enablers: people, organisation with structures, hierarchy and decision routines, technologies and assets, and culture and diversity with leadership system, alignment and teamwork. The framework is formed by socio-technical influencing factors from worldview, economy, ecology, technology, politics and power, society, culture and health.

Each level of the extended map is opened up through guiding questions. In the financial perspective they are: which financial goals do we want or need to achieve, which growth goals and which productivity goals do we have? The values perspective is about self-image, the values represented and what the company stands for in the face of ecological and social requirements.

The stakeholder perspective asks in which markets the company wants to operate, which target customer groups it serves there and what benefit and added value it offers them. In addition, there is the question of which other direct and indirect stakeholders it wants or needs to satisfy and what benefit it offers them.

The environmental perspective clarifies where and how the company exerts influence on its ecological and socio-economic environment. It also records which internal framework conditions, rules and guidelines result from its self-image and its responsibility. The process perspective asks a single question: how must the company organise its processes in order to realise its positioning based on values and benefit effectively and efficiently? The enabler level asks about the prerequisites in people, organisation, technology and assets, and culture that need to be created to implement the target picture.

A separate guiding question applies to the environment. Which developments are emerging in worldview, economy, ecology, technology, politics and power, society, culture and health, and where is there potential for significant, hard-to-predict changes?

The benefit of a map filled in this way lies in three points: an overview of relevant markets, customers, stakeholders, services and environments, a clear formulation of the values represented and the benefit generated, and orientation for employees and stakeholders on the vision of the future, identity, purpose and shared values.

The extended map is worked on in a fixed order. It starts with the environmental perspective: identifying relevant socio-technical trends and taking them into account for positioning. This is followed by the values perspective with purpose, planet, people and profit and the benefit perspective, in which target market segments, the associated customer segments and stakeholder interests are identified and addressed.

Only in fourth place come the cost and growth goals of the financial perspective. After that, the processes are designed, including customer and stakeholder management and capacity for innovation, and finally the enablers are determined.

Four questions belong to the environmental perspective. Which trends, competitors, substitute or complementary services influence positioning in the target markets? Which social transformation processes are significant for target markets, customers and stakeholders? Which political or legal framework conditions affect the business? And which changes or innovations outside one's own target markets can change the structure of needs of customers and stakeholders?

The multi-level perspective on societal transitions according to Geels and Schot offers a framework for this. It distinguishes between the socio-technical landscape with overarching developments, the socio-technical regime of markets, industry, science, politics, technology and culture, and niche innovations supported by small networks. Overarching dynamics put the regime under pressure. If a window of opportunity opens, a new configuration prevails and leads to adjustments in the regime.

In the strategy process, the map accordingly comes late. After the vision of the future, the service offerings are made concrete and interlinked with the values for ecological and socio-economic environments. This is followed by the strategy map at the levels of finance, values, stakeholders, environment, processes and enablers, and the master plan with learning architecture for implementation.