One of the reasons why many business strategies fail is lack of shared vision throughout the company’s employees. In most instances, it is the senior management who are involved in the strategy formulation process and they have to communicate the strategy to middle managers and others at the lower ranks for implementation. For the process to be successful, senior managers must have the ability to communicate the strategy to the lower ranks in simple and easy to understand terms. They have to be able to translate the strategy into operational terms. Unfortunately, this is not always the case. Most employees at the lower level have no clue of the mission and goals of the organisation and how their actions contribute to organisational success.
One way to overcome this problem of communicating strategy to employees is through the use of a strategy map. A strategy map is a powerful communication tool that enables all employees to understand the strategy, and translate it into actions they can take to help the organisation succeed. It is a diagramatic represenatation of the organisation’s strategy on a single piece of paper and helps show how an organisation can create value.
The advantages of mapping your business strategy are:
» A strategy map helps identify what drives business performance. Unlike the 1st generation balanced scorecard which only showed a collection of measures in perspective, strategy maps show a cause and effect relationship between the objectives and outcomes.
» Mapping the strategy on a single piece of paper simplifies the process of understanding the strategy and communicating it to everyone in the organisation because they are able to read and visualise from a piece of paper and contribute towards its execution. It is better than having, say, a 1000 word document to read.
» The cause and effect relationship helps with the planning process as this helps identify what drives performance. They show your desired destination and how you intend to get there.
» When the balanced scorecard was first introduced as a performance measurement tool, the focus was on measuring outcome based on four perspectives; Financial, Internal, Customer and Learning and Growth, resulting in organisations collecting and listing numerous measures for each perspective and hence having to monitor big list of measures, some important and others not.
Using the strategy map, the focus is on objectives first and then the measures are derived from the objectives. By defining the objectives first, this helps describe what you want to achieve and also how to measure it. It therefore means that you don’t waste your time and other resources measuring what is not important, you only focus on what drives performance.
» Using a strategy map helps cascade the strategy throughout the organisation resulting in everyone contributing towards organisational success. Since strategy maps focus on the objectives first, the next question to ask is, “How to achieve those objectives?” Everyone will then be able to realise that they have to co-ordinate with each other to achieve the overall goals.
» Using a strategy map also helps monitor progress and review whether the strategy is working or not. In a dynamic business environment, businesses have to reshape their strategies to succeed and the strategy map allows that. They allow new information to be continuously fed in the map and balanced scorecard and this ongoing review is necessary for performance improvements.