Today we are going to discuss the Strategy Map, which is a tool that allows you to understand the multi-tier nature of strategy and its impacts on other parts of the business
Strategy Maps where developed by Kaplan and Norton and set perspective’s for business including:
- Process and
- Development (Learning & Growth)
The beauty of this approach is that it allows you to understand the impacts and trade-offs required to implement an optimum strategy.
Using the example in the Strategy Map tool in our store we start with restating our vision. This allows us to continually check alignment between our goals and our aims.
In this example we start with the main goal being profit. Profit doesn’t always have to be the main goal. There are times when your main goal maybe to increase value, improve quality or increase market share.
So, for this organisation, the overall goal is to generate £100,000 profit in the current forecast year. The business model here isn’t straight forward because this organisation subsidises members benefits by holding events for the public and from leasing out its flats.
So, an overall strategic goal has been broken down into a set of revenue goals and cost management goals. The revenue goals have been agreed across each of its lines of business.
Once these primary goals have been discussed, the next step is to look at the other perspectives. You can start with any other perspective; For this example, we have opted to choose the Customer Perspective next. So, to generate £15k of revenue we have agreed to lease out the flat, to generate £30k we have agreed to improve the attendance of existing members who haven’t visited in a long time and to generate circa £60k we will put on 36 new events.
The next question we ask for each business line is “what customer goals we need to support the financial strategy”. For instance, to generate 10% increased revenue from members we have decided to focus on the 300 members that haven’t attended in the last year and will need a strategy to put on new events to attract them in.
Once we have agreed a customer strategy, we can look at the process perspective. So, to put on new activities for non-attending members, we will first need to complete a survey to see which activities they want and then source the events. The survey is a process which fits under marketing and promotion processes and the sourcing of the activities is a process that fits under the sourcing of products and entertainment processes.
Finally, we look at people and tools / technology. The identification of processes allows us to understand which people are impacted by change and what tools they need to support the strategy. In our example here we need to recruit more staff to support new events and we will need a marketing tool to promote through the channels that will attract the public to the new events.
Feel free to complete our free business model assessment if you want an insight into how you’re managing your business strategy