Sustainability strategy map for corporate development

The Strategy Map for sustainable corporate development organises a company’s strategy into six perspectives and places them within the framework of socio-technical influencing factors. It is based on the further development of the Balanced Scorecard by Kaplan and McMillan (2020). Its core consists of four terms: Purpose, Planet, People and Profit.

At the top is the financial perspective with the company’s objectives. It distinguishes between profitability and growth. Profitability comes from cost savings and productivity increases, growth from new customers and from existing customers. Together they stand for profit in the sense of long-term economic success.

The values perspective describes the value proposition and self-image. At its centre is the purpose, with the questions of why the company does what it does, how it does it, what exactly it does and what self-image it has. Planet refers to the ecological positioning on the environment and climate. People refers to the socio-economic positioning on society, human rights, diversity and ethics.

The stakeholder perspective contains the customer value proposition. It names the markets, the target customers and the external stakeholders, such as politics and the state, partners and institutions. In addition, there is the product and service portfolio. The value proposition is described across six dimensions: time, quality, price, service, relationship, and brand and image.

The environmental perspective deals with the framework conditions at the interface between organisation and environment. On the ecological side, it is about taking responsibility for climate protection and climate change, eco-efficiency and environmental protection. On the socio-economic side, it is about responsibility for fair working conditions, human rights, diversity and ethical conduct. In between is the environmentally determined framework: internal framework conditions, sets of rules, codes of conduct and compliance, which shape and guide business activity.

The process perspective covers internal processes and cooperation. Service provision and value creation include procurement, service delivery and distribution, including supply chain management as well as linear and circular economy. Customer management covers customer selection, customer acquisition and customer retention as well as the expansion of customer relationships. Innovation processes identify innovation potential and extend to product development and product launch.

In addition, there are legally required and social processes. They serve compliance with legal requirements and interaction with the social environment. Digitalisation, automation and IT-supported processes affect all of these process areas.

The bottom perspective consists of the preconditions, the “enablers”. People concerns the recruitment, qualification or release of employees. Organisation includes organisational structures, hierarchy and decision-making routines. Technologies and assets concern the building, further development or reduction of IT systems and infrastructure. Culture and diversity cover the leadership system, alignment and teamwork.

The entire map is embedded in socio-technical influencing factors: worldview, economy, ecology, technology, politics and power, society, culture and health.

Each perspective of the Strategy Map is worked on using guiding questions. In the financial perspective, it must be clarified which financial goals the company wants or needs to achieve, what growth goals it has and which productivity goals it pursues.

The values perspective asks about the purpose: why the company does what it does, how it does it and what exactly it does. This includes the question of its self-image and the values the company stands for. It must also be answered what it stands for with regard to ecological and social requirements.

The stakeholder perspective is about the markets in which the company wants to operate and the target customer groups it wants to serve in these markets. It must be clarified what benefit and what added value it wants to offer the different customer groups. Added to this is the question of which other direct and indirect stakeholders the company wants or needs to satisfy and what benefit it offers them.

The environmental perspective asks where and how the company influences its ecological and socio-economic environment. It also asks which internal frameworks, rules and guidelines arise from its understanding of ecological and social responsibility.

The process perspective clarifies how the company must organise its processes in order to realise its positioning, i.e. values and benefits, effectively and efficiently.

For the enablers, the question is which prerequisites regarding people, organisation, technology and assets as well as culture need to be created so that the target picture is implemented successfully.

For the socio-technical influencing factors, the question is which developments are emerging with regard to world view, economy, ecology, technology, politics and power, society, culture and health. It must also be asked where there is potential for significant, hard-to-predict changes.

If the strategy process becomes routine, there is a risk of constant self-confirmation. In dynamic markets, this leads to a serious corporate crisis in the long term. This is where the benefit of an external perspective in the strategy process lies.

Systemic strategy work leads to six results. The first is the assessment of market developments and core competencies: current trends in the socio-technical landscape and market developments are assessed, and the company’s own core competencies are evaluated. The second is clarity about customer and stakeholder expectations. The expectations of different stakeholder groups, including customers, are compared with the degree to which current offerings fulfil them.

The third result is promising strategic options. They are developed for strategic positioning and use the system intelligence in the organisation and in the relevant environments. The fourth is an attractive and viable picture of the future with clear market positioning and defined offerings.

The fifth result is the Strategy Map with a consistent master plan for strategy implementation. It specifies the strategy for sustainable corporate development, taking all perspectives of the map into account. The sixth is strategy routines and impact monitoring: the established routines of strategy work are reviewed, and the inward and backward-looking orientation is overcome.

The Strategy Map itself provides threefold benefit. It gives an overview of relevant markets, customers, stakeholders, services and environments. It clearly formulates the values the company represents towards stakeholders and the benefit generated for customers and other stakeholders.

Finally, it gives employees and stakeholders clear orientation on the picture of the future, identity, purpose and shared values for sustainable corporate development.

Fourteen core questions are worked on in strategy development and strategy review. The first concerns the topics that occupy the company in its markets and must be observed, including with regard to external ecological and socio-economic factors, as well as how to deal with observed trends. The second asks which market segments can be defined and which are particularly attractive in terms of growth, profitability and volume.

The third question concerns the core competencies on which strategic considerations can build and those that need to be developed for the future. The fourth asks about the key strategic questions the company has to answer. The fifth concerns opportunities and risks arising from the requirements of climate neutrality and from the growing sensitivity of customers and other stakeholders to sustainable business.

The sixth question examines the extent to which the company currently meets the benefit expectations of customers and other stakeholders from their point of view. The seventh asks which customer segments can be distinguished from a behavioural and needs-based perspective. The eighth clarifies what fundamental options for strategic positioning exist.

The ninth question focuses on positioning for a successful future and on the company’s attractive and viable picture of the future. The tenth names the target markets and target customer segments within this picture of the future. The eleventh asks how offerings should be designed to meet the expectations of relevant customer segments and to use value creation potential.

The twelfth question concerns the targeted further development of internal processes, structures and resources so that market potential is used and market requirements are met. The thirteenth asks how it can be assessed at an early stage whether implementing the strategic measures will lead to the picture of the future or whether adjustments will be necessary. The fourteenth clarifies which organisational structure and which forms of collaboration are required to achieve the strategic goals.

Strategy development for shaping the future follows twelve steps. In the first step, relevant trends, core competencies and strategic challenges are captured. In the second, the competition-critical performance criteria and performance parameters are specified. In the third, customer expectations and their fulfilment with regard to these performance parameters are surveyed.

The fourth step comprises customer segmentation and the identification of potential. In the fifth, different strategic development possibilities are developed, taking stakeholder requirements into account. In the sixth, the attractiveness of the market segments is assessed in terms of volume, growth and profitability as well as alignment with the company’s values.

In the seventh step, the strategic options are presented along with their respective focuses. In the eighth, an attractive and authentic picture of the future is developed. In the ninth, this picture of the future is made a shared one within the leadership team.

The tenth step specifies the offerings and links them with values for the ecological and socio-economic environments. In the eleventh, the Strategy Map for implementing the picture of the future is created at the levels of finance, values, stakeholders, environment, processes and enablers. The twelfth step delivers the master plan and the learning architecture for strategy implementation.

The sequence thus leads from observing the environments and the company’s own competencies, through developing and assessing options, to the picture of the future and from there to implementation planning.

The approach is based on a systemic understanding of organisations. Organisations are complex social systems that provide solutions to problems in their environment. By drawing boundaries, an internal space is created to ensure stable output despite external influences. This results in highly selective observation, and relevant changes are often not recognised early enough.

Appropriate leadership ensures the right level of impulses flowing into organisational decision-making processes. transformis understands consulting as a deliberate decision to counteract the self-referentiality of organisations.

The basic element of organisations is communication, and the most important communicative event is the decision. Organisations are operationally closed and self-referential. They do not see what they do not see. They cannot be changed from outside. And they have one goal: to survive.

This explains why organisations recognise changes in the relevant environments too late. They have to reduce complexity in their observation. Surrounded by customers, suppliers, competitors, banks, employees, the city and the internet, they select their relevant environments using observation and assessment grids in order to remain able to act.

The established routines are designed to confirm internal ideas about the environments and to filter out deviating impulses. An organisation sees what it sees, and as a rule it does not see that it does not see what it does not see.

The leadership wheel according to Rudolf Wimmer (Führung und Organisation, 2009) organises the tasks of leadership. At its centre is leading itself: the goal-oriented shaping of social situations within an organised whole. Around it are grouped six fields of tasks, each responding to a reference point.

Marketing responds to the environment, market and customers: aligning with the requirements of the market. Strategy development responds to the future: preparing for future developments. Resource management responds to the scarcity of resources by securing the resources needed to fulfil tasks.

Organisational development responds to the organisation: ensuring suitable organisational forms for needs-based service delivery. People management responds to individuals by securing performance capability and willingness to perform. Controlling responds to the steering variables: producing a realistic self-description.

Two focal points are particularly important for strategy work. The first is the future. The basic thesis is: in their problem-solving activities, organisations deal with problems of the past. Strategy development ensures that an organisation’s development impulses are derived from the difference between present and future. The organisation then orients itself towards a jointly developed, attractive picture of the future.

The second focal point is the environment, markets and customers. Here the basic thesis is: organisations are preoccupied with themselves if left to themselves. It is therefore important to ensure that organisations engage with the relevant environments and anticipate their requirements in order to remain able to respond to them. To do this, appropriate ideas about these requirements must be developed within the organisation.

The transformis understanding of strategy can be summed up in five statements. Strategy development is a leadership task that cannot be delegated, dealing with the difference between present and future. It is about shaping the future and coping with uncertainty rather than plan-determined corporate management. Strategy work is reflection on the existing hypotheses about the status and development of the relevant environments.

The fourth statement: an attractive picture of the future is developed, taking into account all stakeholder requirements, to give the organisation orientation. The fifth: the picture of the future provides clear answers as to how the company will position itself in the market in future.

Strategy is thus an essential dimension of leadership in the company. Like strategy development as a whole, it serves to deal with the difference between present and future. It is the method for giving the company a perspective on the future and coping with existing uncertainty.

Strategy work comprises a regular process of reflection and decision-making for shaping the future and coping with uncertainty. It is a joint leadership achievement within the management system and involves key players from the organisation.

Modern strategy work internalises the external effects of business activities. In this way, it positions the company credibly within the requirements for sustainable corporate values. The Strategy Map with Purpose, Planet, People and Profit is the instrument in which this positioning is recorded.

For orientation, an organisation needs a meaningful picture of the future that is understood by employees. The picture of the future comprises the future business identity and the associated future strategic positionings.

It answers in which markets the organisation will operate in future, which target customer segments it will focus on and how it will design offerings for these target customer segments. It also names which growth and profitability goals are associated with this positioning and which key indicators are to be used to steer the organisation strategically.

As part of this positioning, the external effects of business activities are consciously and deliberately included in the development of the corporate identity, the corporate values and the corporate brand.

Strategic positioning answers four questions. First, in which markets the company wants to operate. Second, which target customer segments it wants to focus on. Third, what benefit, i.e. what unique value promise, it wants to offer its customers and how it wants to differentiate itself from the competition in this way. Fourth, which stakeholder requirements regarding corporate responsibility for ecology and socio-economic contexts need to be included in strategic considerations.

Strategy work combines reflection and action. According to Nagel and Wimmer (Systemische Strategieentwicklung, 2009), three levels can be distinguished. At the level of operational business, the strategic positioning is implemented. At the level of reflection, it is reviewed in recurring strategy reviews and developed further into a new positioning, which in turn is implemented in operational business.

Above this lies meta-reflection. It looks at the routine of the strategy review itself and examines whether the way the organisation carries out strategy work is still appropriate.

Strategic positioning emerges in four fields of work. It starts with the socio-technical influences. It must be clarified which trends can be observed in the target markets and which competitors, substitute services or complementary services influence strategic positioning and should be taken into account.

Added to this is the question of which social transformation processes and trends are significant for target markets, target customers, potential customers and stakeholders, and which political or legal frameworks affect the business. Finally, it must be examined which socio-technical changes or innovations outside the company’s own target markets can change the needs structure of customers, potential customers and stakeholders.

The second field of work clarifies where targeted development should take place. Market segmentation defines the basic logic, main criteria and scope. The market segments are then assessed according to market attractiveness and competitiveness, with criteria such as volume, growth, trends, profitability, retention potential, and revenue and margin. The result is a portfolio of attractiveness and competitiveness.

The third field of work clarifies how targeted development should take place. Threshold benefit and potential analysis captures the minimum expectations and value creation potential of current and potential customers. Customer segmentation determines distinguishing criteria, forms customer segments and characterises them. Both fields of work take an outside-in view.

Strategic positioning follows from this. It names the attractive market segments, the company’s competitiveness in these segments, the customer segments relevant there and the additionally relevant stakeholder interests. Added to this are value propositions for the various customer segments and stakeholders.

The Strategy Map is developed in a fixed order. It starts with the environmental perspective: relevant socio-technical trends are identified and taken into account for positioning. This is followed by the values perspective with Purpose, Planet, People and Profit. The benefit perspective identifies and addresses target market segments, the corresponding customer segments and stakeholder interests.

The financial perspective then sets cost targets and growth targets. The process perspective concerns customer and stakeholder management, process design and innovation capability. At the end come the enablers: people, organisation, culture, technology and assets.

To assess the significance of societal transitions for strategy, the multi-level perspective according to Geels and Schot (2010) helps. It distinguishes three levels.

The top level is the socio-technical landscape. It comprises overarching developments. The middle level is the socio-technical regime with its socio-economic, political and technical structures. It includes markets and the preferences of users and consumers, industry, science, politics and the state, technology and culture.

The bottom level consists of niche innovations. Here, small innovative networks of different actors support innovations on the basis of shared expectations. External influences act on the niches, and the innovations go through processes of selection, consolidation and channelling.

There is a dynamic between the levels over time. Overarching dynamics of the landscape put pressure on the regime. This opens up “windows of opportunity”: a new configuration prevails and leads to adjustments in the regime. The restabilised regime in turn influences the landscape.

For strategy work, it follows that observation should not be limited to the company’s own markets. Overarching developments and innovations from niches also need to be considered, because they can change the structures in which the company is successful today.

Wimmer (2000) describes the learning capability of organisations as skilfully balancing change and continuity. The self-renewal process is based on three basic mechanisms: variation, selection and re-stabilisation.

Variation means expanding the sources of irritation, i.e. increasing the chances of learning impulses. Selection means increasing the organisation’s internal capacity to process impulses for innovation. Re-stabilisation is the ability to turn the selected innovations back into usable routines.

Following Nagel and Wimmer (Systemische Strategieentwicklung, 2014), the three mechanisms can be transferred to the strategy process. Variation corresponds to work on the starting position. Here, impulses are fed in, for example from stakeholders, employees, experts or trends. Information is generated in the system through irritation from the outside in.

The starting position includes changes in the socio-technical influencing factors in the relevant environments, trends, innovations and market developments, market segments and their attractiveness, customer segments with threshold benefits and potential, the competition, core competencies, challenges and core questions, and strategic options.

Selection corresponds to the picture of the future with the strategic positioning in the market. This is where the decision on shaping the future and coping with uncertainty is made. What is defined are the business identity with Purpose, Planet, People and Profit, the target markets, the financial goals, the answers to the core questions, the target customer segments, the relevant stakeholder groups, the value propositions and the Strategy Map.

Re-stabilisation corresponds to implementation. The company develops out of the difference between present and future. This includes organisational design, strategic initiatives, communication, impact monitoring, learning architecture, structures and processes, empowerment, and reflection and process steering.

According to Nagel and Wimmer, the strategic management process runs in seven steps. In the first, the strategic starting position is determined. In the second, core competencies are specified. In the third, strategic options are developed, and in the fourth, they are assessed. In the fifth, positioning and goals are defined. In the sixth, the master plan is drawn up. In the seventh, implementation is monitored and steered.

The steps are divided into three phases: analysis, design and implementation. Analysis deals with opportunities and threats from the environment, current core competencies and industry dynamics. Design comprises the identity concept, strategic positioning and corporate goals. Implementation includes strategic controlling, strategic programmes, self-renewal and the learning organisation.

The process has a characteristic dynamic. In the first half, uncertainty about the central assumptions about the business increases. In the second half, these assumptions are increasingly stabilised again. At the same time, the variety of possibilities considered decreases over the course of the process, while concreteness increases.

Implementation requires a learning architecture. It links organisational development and people development. Organisational development works at the organisational level with a processing architecture. People development works at the individual level with a qualification architecture.

The two levels support each other. Work on the organisational challenges is supported by what has been learned individually. Conversely, individual learning is oriented towards the organisational challenges. A learning architecture thus links organisational development and people development effectively. It enables synchronous further development at both levels.