Does your business need a strategy map?
Ian Dyason. 20 Feb 2021
I am not a betting man, but I'll wager that you have not heard the term "strategy map" being bandied around these past few years, have you? This was all the rage in the late 1990s and early 2000s, when the balanced scorecard, or BSC, was creating waves. The BSC was developed by Drs. Robert Kaplan and David Norton and is a visual representation of how a business will operate in a cause-and-effect manner. There are usually four perspectives, each impacting the other until they reach a strategic focus for the business or organisation. The four perspectives are usually Learning & Growth, Processes, Customer and Financial (or Value). Within each perspective are three or four strategic objectives that when are increased or improved upon, will cause the increase or improvement of the next perspective. For example, increasing our organisational capability or capacity will cause us to improve processes. Improving processes will impact, and cause to improve, customer relationships. And improving customer relationships can cause us to improve the financial (or value) position of a business. This relationship is shown here
Ultimately, all businesses exist to improve their financial position or shareholder value. Hence, understanding the inputs or drivers of each perspective will help a company focus on the right things, and not just on doing things right, so as to build better financial or value positions. So, if you have not heard of the strategy map, or you have not built your own BSC, perhaps it is time for you to spend some time doing that? Perhaps you will realise that this is the ONLY thing you should be focussing on right now! Following are the steps you can take to build your own strategy map and balanced scorecard. (You can also check out BCI's Nine Step process here https://balancedscorecard.org/about/nine-steps/)
Begin with your vision
It may seem passé, but you need to start with your vision. I am sure you have not seen your vision statement ever since you went to some strategy offsite, so that it can be plastered onto your website. Actually, your vision statement is very important because it provides everyone who interacts with your company a sense of what you are working towards. For example, our vision statement is:
"To empower all businesses and individuals for growth"
This allows everyone to understand what you are doing, where you are doing it, and why you are doing what you are doing. The reason why we start with your vision is because if you don't really know your own raison d'être, then anything goes. And if that is the case, then, you really don't need a strategy map. So for now, revisit your vision statement, and see if it still works. If it is still valid, and still gives you the sense and direction of your business, then it is time to move to the next step. But if it does not give you that sense of motivation, drive and excitement, you should spend time to get that done before moving on.
Update your mission
While your vision is the reason for your business, and hence does not change much, your mission can change over time. The mission is your current plan to achieve your vision. It is useful to revisit your mission every 2 to 3 years. This week we celebrate our 5th birthday. And our mission is
"To be the Number One service provider for the growth mindset and its set of programs in all the countries we are in."
We are currently not there. But we are getting there.
What about you? What is your mission? How is that linked to your vision? Is it still valid? If you have also not looked at your mission over the past one year, I suggest to take a peek at it. You might be surprised by what it says, or does not say. After all, 2020 was a terrible year for all of us, and it certainly has impacted many businesses' mission. Maybe it has yours?
Identify your strategic themes
You can think of the strategic theme as your focus. You cannot do everything you want to achieve your mission and you don't have to. You should focus on the key areas of execution that will allow you to get a jump on its success. Remember the Pareto Principle? 80/20? Well, this is the 20% focus that will allow you to see 80% of what you want to achieve.
For us, Internationalisation is a key focus. While Singapore is where we were born, we don't need to remain there, and neither should we. Singapore is too small as a market to allow us to survive. Hence, we need to move out. Next, we need Digitalisation. Not only is this a key Singapore initiative, it is also an important driver for operational excellence for us. Hence, we will focus on Digitalisation both in terms of products and service delivery. Lastly, we want to focus on Thought Leadership. The growth mindset is not the intellectual property of GCA, but the 5Dimensions are; and we want to claim thought leadership in applying the growth mindset, and the 5 Dimensions, in particular, on businesses' and individuals' growth.
Your Strategic Results
Once you have identified your strategic themes, you want to qualify your expected results. These are the high-level thinking for the results that you hope to achieve along your strategic focuses. For example, for our Internationalisation theme, we want to have an office presence in Singapore, Vietnam and the Middle East. We are also toying with the idea of Indonesia, India and China. We want each country to be self-sufficient with its own board of advisors. For Digitalisation, we want not just the products to be digitalised (as we already have started), but also the service delivery. Training we know can be delivered online, but we want a concomitant high engagement score with it. That will be the holy grail of online training, I suppose. As for Thought Leadership, well, we are not interested in being a guru, but we want the 5Dimensions to be well researched, not just by us, but also by others. We want it to contribute to new knowledge and a stable organisational culture. A tall order? Perhaps... but like Jim Collins and Steven Porras mention in their book, Good to Great, we need a big, hairy audacious goal (BHAG)!
Build Your Strategy Map
The strategy map is the fun part because you will look at the different objectives you would undertake to achieve your strategic results. These are broken down into the 4 perspectives outlined above. Each object (increasing or improving) is laid out in a bubble in the related perspective. We normally have three to four objectives per perspective, giving us between 12 to 16 strategic objectives to work towards in delivering our mission. For example, the following diagram shows the possible strategy map for GCA:
Recall we mentioned that this is a cause-and-effect diagram? Well, the causes at the bottom lead to the effects at the top, and we map that out with the arrows.
Identify measures and targets
Now that you have your strategy map in place and you know your strategic objectives, you have to identify what you will measure that meets that objective, and what the target measure will be. You may at times have more than one measure per objective, but don't make it too many. If one is sufficient, use that one. So long as it is the key indicator for the objective. So, increased hiring of right people... what do you think is the right measure? It could be percentage of total establishment headcount; and the turnover rate of that headcount. With these two measures, we can see how well we are meeting to this strategic objective. The target rate for the headcount could be 50% in Year 1, 65% in Year 2, and 80% in Year 3 and more. And for the staff turnover rate, it could be 40% in Year 1, 30% in Year 2 and 20% in Year 3 and more.
These are done for all the bubbles in the strategy map.
Map out your initiatives
The penultimate step is to devise your initiatives. These are the actions you would take meet your strategic objectives. For example, for the first bubble of increased hiring of the right people, our initiatives could be a road show, or hiring push, or a virtual open house. We could work with government agencies who are helping displaced individuals to find new jobs. Whatever the case, these initiatives are the steps you would take to meet the targets for each objective. You will need to do this for all your strategic objectives.
Monitor and adjust
The final step is not a step per se. It is the continuous action of monitoring, reporting, adjusting and repeating. Since this is an on-going process to help you achieve your strategic objectives, you need to keep a sharp eye on the progress, taking appropriate actions to keep the business on-track. And finally, when you have met your strategic objective, then it is time to move it up again!
Do you have a strategy map?
I hope you realise the importance of creating a strategy map for your business; it provides you with the strategic direction for your business. No matter how big your organisation is, or how small, you still need one. Otherwise, you will find yourself floating aimlessly in a sea of change and a semi-inflated dingy that has just sprung a leak! I am sure you don't want to be that business, do you? So, if you have not created your own strategy map and BSC, then it is time to do so. And if you need help, just click on this link. We are always an email away!