Strategy Mapping
Strategy Mapping
Introduction
The importance of vision and mission statements in a company cannot be gainsaid as far as determining the course that the business takes is concerned. Indeed, vision and mission statements have often defined the strategies that the business uses and, consequently, the success that it has in meeting its goals and objectives. Balanced scorecards were built on the recognition of the fact that the success or profitability of an enterprise depends on the tangible and the intangible assets. It complemented the conventional metrics i.e. the financial measures that summarized the results pertaining to actions previously taken.
Building on the balanced scorecard, Kaplan and Norton came up with strategy maps aimed at assisting businesses in meeting their objectives. Strategy maps make up the instruments that directly connect the varied balanced scorecard measures to the strategic objectives and outcomes thereby enhancing the implementation of the strategy, as well as the corporate financial and operating results (Murby & Gould, 2005). They enable business entities to describe, as well as communicate their strategies. According to Smith (2012), strategy maps are management tools that express the strategy of the organization using a series of cross-functional cause-and-effect relationships. Coming up with a strategy map involves comprehension of the fundamental strategic themes in the four balanced scorecards’ perspectives. Once it has been created, the strategy map would make a powerful communication tool that allows all employees to gain an understanding of the strategy, as well as translate it into actions that they can undertake to assist in the success of the organization (Lagace, 2004). There exists voluminous anecdotal evidence suggesting that strategy mapping would allow organizations to attain its desired results. Indeed, strategy mapping is tied to performance management as The Glacier Inn case study shows.
Established a few years ago, The Glacier Inn had been having problems meeting its financial and operating objectives. This necessitated some key changes, as well as the incorporation of a strategy that would enhance the competitiveness of the company. The first step in this regard involved the specification of its overriding objective. It is noteworthy that there exist variations as to the overriding objectives of private and public institutions. A private sector company has its overriding objective as purely financial, where it enhances its profitability and competitiveness in the long-term (Smith, 2012). In this case, The Glaciers Inn spelt its overriding objectives as increasing cash flow and profitability.
The second step involves the selection of value propositions. These are the propositions that will enhance the competitiveness of the company and allow it to win the market. They may include customer intimacy, product leadership and operational excellence. While private companies may be best placed vouching for an image that is built on price, the management considered that its customers were there merely for adventure with cost not being much of a consideration (Armitage & Scholey, 2006). In essence, its value proposition would have to be built on product leadership.
The third step revolves around the selection of financial strategies based on the selected value proposition. The Glaciers Inn would be expected to seek revenue growth via creation of distinctive products rather than focusing primarily on efficiency strategies as it chose product leadership proposition (Armitage & Scholey, 2006). In this case, it would involve capitalizing on non-hotel room sources such as ice museums, all-ice glasses, as well as enhancing its human capital.
Next, the company would have to select customer strategies, which are grouped into reduction of cost per customer, increasing the revenue derived from every customer and retention and addition of customers (Armitage & Scholey, 2006). This is determined by the value proposition, in which case, The Glaciers Inn, as a product leader would seek to offer the latest features and technologies while creating a balance between spending and profits.
In addition, the company would select and execute the appropriate business processes that would achieve the desired financial and customer strategies that the organization believes would enhance the accomplishment of its overriding objective (Armitage & Scholey, 2006). In marketing its uniqueness theme, The Glaciers Inn would need to persistently develop the unique features, as well as the training and hiring programs necessary for excellence.
The last step involves planning the learning and growth strategies in recognition of the existing gaps in skills, capabilities and knowledge needed for the execution of the chosen strategy. This involves the identification and bridging of the gaps that may restrict the capacity of the organization to execute the fundamental processes that were identified in the internal perspective. The Glaciers Inn would, in essence, need reexamine the competencies of the employees charged with the responsibility of delivering the unique services and style. The individuals would have to be young, nature-loving and energetic individuals who are genuinely concerned about clients (Armitage & Scholey, 2006). Possible sources included, in this case, are universities that have programs dealing in kinesiology or environmental studies, as well as partnership with universities so as to maximize on the duration within which the seasonal hotel is open.
These steps underline the capacity of strategy mapping to assist in taking varied missions and developing a common sense of direction and purpose. It would also provide the framework for determining the initiatives that are critical in the facilitation of the strategic plan execution, as well as the measures that would be most appropriate in evaluating the strategic performance. Strategy maps provide organizations with techniques through which they can describe and communicate their strategies. They allow companies and business entities to outline their strategy in a manner that involves clarity of the message and eliminates the unnecessary stuff in the same (Witt, 2013). Its visual nature allows individual employees alongside other stakeholders to recognize their roles in the big picture, as well as take up their responsibilities in the continuing story pertaining to the organization.
On the same note, strategy maps outline the manner in which organizations create value through building on strategic themes like productivity and growth. These themes play an immense role in determining the specific strategies that organizations would adopt in their learning and growth, process, as well as customer levels (Witt, 2013). As in the case of The Glaciers Inn, strategy maps allow for the determination of the value proposition that would enhance the competitiveness of the company thereby pegging all its efforts to the value proposition. In addition, Strategy Maps allow for the determination of the magnitude of influence that a variation in a single lead indicator would have on the variation in the corresponding lag indicator (O’Connor, 2004). In this case, the management would decide on the number of resources that can be devoted to certain lead indicators, for example, the time when it should choose between higher skill straining levels and hiring more customer representatives. The management, through enhanced comprehension of the factor that influences customer retention in a greater magnitude, would then prioritize the commitments of its resources (O’Connor, 2004).
In conclusion, strategy mapping was developed from the balanced Score card and undertakes the articulation of the strategy of an enterprise via varied cross-functional cause-and-effect relationships. The Glaciers Inn has effectively incorporated strategy mapping in an effort to turn its fortunes. This involves specifying its overriding objective (enhancing its profits) and selecting its value propositions, which then determine the financial strategies, customer perspectives, internal processes and learning and growth strategies that would allow for the achievement of its mission. These are primarily based on the value proposition (product leadership), which was clarified through strategy mapping. These activities underline the fact that strategy mapping would provide the framework for determining the initiatives that are critical in the facilitation of the strategic plan execution, as well as the measures that would be most appropriate in evaluating the strategic performance.
References
Smith, R. (2012). Mapping Strategy in Public Sector Organizations. Orion Development Group, retrieved 26th August 2013 from HYPERLINK “http://www.odgroup.com/articles/public-sector/” http://www.odgroup.com/articles/public-sector/
Lagace, M (2004). Mapping Your Corporate Strategy. Harvard Business School, retrieved 26th August 2013 from HYPERLINK “http://hbswk.hbs.edu/item/3888.html” http://hbswk.hbs.edu/item/3888.html
Armitage, H., & Scholey, C., (2006). Using strategy maps to drive performance. Society of Mgt. Accountants of Canada. Retrieved 26th August 2013 from: HYPERLINK “http://www.cimaglobal.com/Documents/ImportedDocuments/Tech_MAG_Strategy_Mapping_March07.pdf” http://www.cimaglobal.com/Documents/ImportedDocuments/Tech_MAG_Strategy_Mapping_March07.pdf
Murby, L. & Gould, S., (2005). Effective Performance Management with the Balanced Scorecard: Technical Report. Chartered Institute of Management Accountants. Retrieved 26th August 2013 from: HYPERLINK “http://www.cimaglobal.com/Documents/ImportedDocuments/Tech_rept_Effective_Performance_Mgt_with_Balanced_Scd_July_2005.pdf” http://www.cimaglobal.com/Documents/ImportedDocuments/Tech_rept_Effective_Performance_Mgt_with_Balanced_Scd_July_2005.pdf
Witt, K.W (2013). Using Strategy Maps to Drive Performance. American Institute of CPAs, retrieved 29th August 2013 from HYPERLINK “http://www.aicpa.org/interestareas/businessindustryandgovernment/resources/operationalfinanceaccounting/strategicperformancemanagement/pages/executive%20summary%E2%80%94using%20strategy%20maps%20to%20drive%20performance.aspx” http://www.aicpa.org/interestareas/businessindustryandgovernment/resources/operationalfinanceaccounting/strategicperformancemanagement/pages/executive%20summary%E2%80%94using%20strategy%20maps%20to%20drive%20performance.aspx
O’Connor, N.G (2004). Map business strategy and develop performance measures that matter: Developing a strategy map. Business Management, retrieved 29th August 2013 from HYPERLINK “http://nealeoconnor.com/brainlid/Home%20page/NetworkOctDec04_StrategyMap_p22to24.pdf” http://nealeoconnor.com/brainlid/Home%20page/NetworkOctDec04_StrategyMap_p22to24.pdf
