Summary: Strategy Maps

Review and Analysis of Kaplan and Norton's Book

BusinessNews Publishing

• Publisher: Must Read Summaries
• Year: 2016
• ISBN:
  9782511018286
• Topic: Negocios y empresa
• Subtopic: Estrategia empresarial

The must-read summary of Robert S. Kaplan and David P. Norton's book: `Strategy Maps: Converting Intangible Assets into Tangible Outcomes`.

This complete summary of the ideas from Robert S. Kaplan and David P. Norton's book `Strategy Maps` shows that many businesses share the same problem: they have intangible assets that cannot be measured and counted as market value. In their book, the authors give specific guidelines on how to build an accurate strategy map in order to measure these invisible assets. By following their advice, you will be able to align all of your assets and create a coherent strategy.

Added-value of this summary:
• Save time
• Understand key concepts
• Expand your business knowledge

To learn more, read `Strategy Maps` and find out how you can create a comprehensive strategy map and become an industry leader.

Summary of Strategy Maps (Robert S. Kaplan and David P. Norton)

1. The Basic Template of a Strategy Map

A strategy map provides a visual framework for an organization’s strategy – how it intends to create value. Specifically, a good strategy map will link together:

1. The desired productivity and growth outcomes.
2. The customer value proposition which will be needed.
3. Outstanding performance in internal processes.
4. The capabilities required from intangible assets.

In effect, a strategy map captures the organization’s strategy in visual form so that managers can better execute their desired strategy.

Every organization has a strategy for how it plans on creating value for its customers, shareholders and stakeholders. Numerous approaches have been developed on how best to describe and fine-tune strategy to enhance the creation of value. The Balanced Scorecard approach suggests that an organization’s ability to create value in the future will be driven by four key factors or perspectives:

1. The financial perspective – what financial results will be required to appear to be successful to its shareholders. This will be a balance between investing for long-term growth or cutting costs for superior short-term results.
2. The customer perspective – what specific and differentiated value proposition the organization is providing its customers. In practice, there are four major value propositions:
   • Lowest total cost of ownership
   • Superior products or services
   • Offering complete customer solutions
   • System lock-in making switching difficult
3. The internal perspective – the various internal processes by which products and services are prepared and delivered to customers. These can be clustered into four groups:
   • Operations management – producing and delivering
   • Customer management – relationship building
   • Innovation – next generation products or services
   • Regulatory and social – complying with the law
4. The learning and growth perspective – how intangible assets (people, technology, culture) are being improved so as to enable more added value to be created in the future. Intangible assets can be divided into three categories:
   • Human capital – your people
   • Information capital – what you know
   • Organizational capital – how you operate

The Balanced Scorecard approach is that instead of simply setting financial targets, objectives must be established and progress measured in each of these four perspectives. That way, your organization will be leveraging its intangible assets in such a way that sustainable value creation will be occurring.

Strategy maps are built around the structure of these four perspectives. They ensure that the organization’s objectives in each of these perspectives are consistent and internally aligned. That alignment, in turn, means the organization is focused and performing at an optimum level rather than having the actions of one part of the organization impact on the results achieved by another part. Strategy maps clarify all cause-and-effect relationships so that an effective strategy can be developed and then optimized over time. They are the interface between strategy and the Balanced Scorecard.

Conceptually, a strategy map links the high-level goals of the organization – its mission, values and vision – with meaningful and actionable steps each employee can take. Strategy maps also provide balance between the various competing dynamics every organization faces:

• Whether to invest in intangible assets that will generate stro...