strategy map 16

M A N A G E M E N T

S T R A T E G Y

M E A S U R E M E N T

Using StrategyMaps to DrivePerformance

By

Howard M. Armitage, Ph.D, CMA, FCMA

andCameron Scholey, MBA, CMA

MANAGEMENT ACCOUNTING GUIDELINE

Published by The Society of Management Accountants of Canada, the AmericanInstitute of Certified Public Accountants and The Chartered Institute ofManagement Accountants.

Copyright © 2006 by The Society of Management Accountants of Canada (CMA-Canada), the American Institute of CertifiedPublic Accountants, Inc. (AICPA) and The Chartered Institute of Management Accountants (CIMA). All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means,withoutthe prior written consent of the publisher or a licence from The Canadian Copyright Licensing Agency (Access Copyright). Foran Access Copyright Licence, visit www.accesscopyright.ca or call toll free to 1-800-893-5777.

ISBN 1-55302-193-2

NOTICE TO READERS

The material contained in the Management Accounting Guideline Using Strategy Maps to Drive Performance is designed to provideillustrative information with respect to the subject matter covered. It does not establish standards or preferred practices.Thismaterial has not been considered or acted upon by any senior or technical committees or the board of directors of either theAICPA,CIMA or The Society of Management Accountants of Canada and does not represent an official opinion or position ofeither the AICPA,CIMA or The Society of Management Accountants of Canada.

INTRODUCTION

The business world today faces a crisis instrategy — but not because managerscan’t formulate a good strategy...mostactually can.The core of the crisis lieswithin execution or,more accurately, itslack. In 1999, Fortune magazine claimedthat “70% of strategic failures are due topoor execution — not a lack of vision orsmarts”1. In 2003, it repeated this claim,saying that less than 10% of effectivelyformulated strategies are effectivelyexecuted.

Websites that focus on execution ofstrategy routinely mention similarimplementation issues.One such website2

cited these statistics in 2006:

- 95% of a typical workforce doesnot understand its organization’sstrategy;

- 90% of organizations fail to executetheir strategies successfully;

- 86% of executive teams spend lessthan one hour per monthdiscussing strategy;

- 70% of organizations do not linkmiddle management incentives tostrategy;

- 60% of organizations do not linkstrategy to budgeting.

This Management Accounting Guideline(MAG) is dedicated to helpingorganizations achieve their vision,mission

USING STRATEGY MAPS TO DRIVEPERFORMANCE

CONTENTS EXECUTIVE SUMMARY

Strategy mapping has revolutionized the way thatstrategy has been formulated and executed. Anatural evolution that builds on the success of theBalanced Scorecard, Strategy Mapping has beenthe subject of recent books, articles anddiscussions.This discourse has greatly raisedpractitioner awareness and interest in the value ofintegrated strategic scorecard systems by focusingon what these tools are,why companies adoptthem and by providing high level implementationframeworks and examples from practice.

However, when it comes to actual implementationdetail, practitioners soon find there is currently nodetailed document, or set of guidelines, thatillustrate how to take advantage of the power ofStrategy Mapping in a straightforward, easy-to-understand format.

The Strategy Mapping MAG fills this gap byproviding a set of guidelines that describe how toimplement Strategy Mapping in a practical, step-by-step format.The Strategy Mapping MAG servesas a reference for four principle interest groups.First,many organizations are looking for guidanceand direction that will permit them to implementtheir own maps and scorecards.They will benefitfrom a resource that acts as a bridge betweentheory and implementation. Second, largerorganizations that engage specific consultants willbenefit from the framework provided by theguidelines. A third group that will benefit from theStrategy Mapping MAG will be consultantsthemselves. In addition, this MAG will be aresource for management accountants who oftenplay a key role in developing strategy maps.

INTRODUCTION 3SCOPE AND AUDIENCE 5THE COMPELLING NEED FOR BETTEREXECUTION OF STRATEGY 5CREATING STRATEGY MAPS - THE GUIDINGSIX STEPS 8CASCADING THE STRATEGY MAP 25STRATEGY MAPPING CASE VIGNETTES 26

RBC DOMINION SECURITIES’ LIFE WEALTH PLANNERS. 27ATS AUTOMATION TOOLING SYSTEMS INC. 30THE MASTER OF BUSINESS,ENTREPRENEURSHIP AND TECHNOLOGY (MBET) PROGRAM 32THE BENEFITS OF STRATEGY MAPPING 34

VALIDATING THE MAP 35INTEGRATING STRATEGY MAPPING,ACTION PLANS AND THE BUDGETINGPROCESS 36CONCLUSION 39BIBLIOGRAPHY 43

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and strategies, and to achieve breakthroughresults. Its focus is based on the followingpremise:

Although formulating robust and meaningfulstrategies is a fundamental part of a successfulbusiness process, it is at the implementationand execution phase of strategy — not at theplanning or formulation phase,where majorimpediments to desired outcomes are found.

A recent approach to improving strategyimplementation and execution is called strategymapping. Pioneered by Robert Kaplan and DavidNorton (also the founders of the BalancedScorecard movement), strategy mapping is acutting-edge approach to the art of strategy

execution. In that approach, an organizationdepicts its key objectives in a graphical andillustrative (i.e.“picture”) format.

As the saying goes,“a picture is worth a thousandwords.” Well-conceived strategy maps assistorganizations to tell their “strategy story”concisely and succinctly. Figure 1 illustrates thevisual roadmap this MAG will follow. Its“overriding objective” is to assist organizations toimprove the probability of successfullyimplementing their strategy(ies). Its “valueproposition” is to provide a systematic processthat will permit readers of this MAG to buildeffective strategy maps that lead to improved

strategy execution.The MAG describes theimportance of (a) setting appropriate overridingobjectives in a corporate setting, (b) establishing adominant value proposition that will set thedirection for achieving those objectives, and (c) using that proposition to guide the selection ofcritical financial, customer, internal process, andlearning and growth strategies.

Those familiar with Balanced Scorecards (BSC forshort) will note that strategy mapping is closelyrelated to the BSC — in fact, it evolved from theexperiences of early BSC adoptersi. In many ways,however, strategy maps are more innovative thanthe BSC.While the BSC is best known forenhancing an organization’s performance

measurement system, strategy maps are theinstruments that tie BSC measures directly tostrategic objectives and outcomes and, in theprocess, improve strategy implementation andcorporate operating and financial results.Although the BSC was introduced several yearsbefore strategy mapping, strategy mapping actuallyprecedes the BSC and in fact can provide much ofits content.

Strategy maps allow organizations to describeand communicate their strategies.This guidelinedescribes a model for strategy mapping thatmanagers can use to effectively create andimplement strategy maps step-by-step.While no

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A Strategy Map for this Guideline

MAG Overriding Objective:Maximize Company Value through Improved Strategy Execution

Learn how to select key financial strategies that will lead to achievingthe overriding objective

Learn how to select key customer strategies that will lead to superiorfinancial results and achieve the overriding objective

Learn how to select key internal processes that support the customerstrategies that will lead to superior financial results and achieve the

overriding objective

Learn how to select key learning and growth processes that support theinternal strategies that will lead to superior customer and financial

results and achieve the overriding objective

MAG Value Proposition:Provide readers with an innovative set of guidelines to create effective strategy maps

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Figure 1:A Strategy Map for this Guideline

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one suggests that strategy maps are the completeanswer to strategy execution, they are a promisingsolution to the compelling need for betterexecution of strategy. Strong anecdotal evidencesuggests that such maps assist organizations toachieve better results. In addition, well-craftedstrategy maps improve the alignment of othercorporate functions, such as strategy planning,budgeting,monitoring, operations, andcompensation. By so doing, they can improve theprobability of successful execution of strategy andsuperior operating and financial performance.

In the following sections, this MAG will describe(a) the scope of, and reasons for the MAG, (b) asix-step methodology for developing andimplementing a corporate-level strategy map,(c) how to cascade the map to lower level businessunits and support groups, and (d) the importanceof validating the map and its associated measureswith ongoing strategic objectives.

SCOPE AND AUDIENCE

The MAG discusses the compelling need forbetter strategy execution, and provides aframework for implementing a strategy mapsystematically. Much excellent literature clearlyarticulates what strategy mapping is, and why acompany should adopt it.This guideline focuses onhow to implement a strategy mapping initiative.

Strategy maps have proven useful in public, not-for-profit and private sector organizations. Indeed,many principles underlying the construction, roll-out and communication of strategy maps aresimilar for a wide variety of entities. Sectors differin several important ways. This MAG providesuseful insight for a broad cross-section of readers.However, its primary audience is the privatesector, and the construction of the map thatfollows assumes a private sector settingii.

Well-conceived strategy maps will pervade theorganization.Consequently, the MAG will be ofinterest to several levels of organizationalpersonnel, including the professional accountant inbusiness. First, there are many mid- to senior levelindividuals who have read about strategy maps (orhave been to conferences describing them), andhave become strategy mapping advocates. Suchadvocates come from various corporatefunctions, including finance, accounting,marketing,manufacturing, and head office support.The MAGprovides advocates with the reasons and aprocess for implementing a strategy map that canconvince corporate sponsors to provide financialand moral support for the initiative. In turn,

sponsorship support at the senior level(CEO/president and board) leads to the creationof strategy mapping champions and teams thatcan use this process to begin developing andcommunicating their corporate and divisionalmaps.

The guideline should also be useful to consultantsintending to implement strategy maps for clients.

In short, the guideline will assist strategy mappingadvocates, sponsors, champions andimplementation teams to:

● Understand the benefits of strategy mapping;● Understand the steps in the strategy mapping

process;● Effectively participate in developing, validating,

integrating and rolling out processes necessaryfor a successful strategy mapping initiative.

THE COMPELLING NEED FORBETTER EXECUTION OFSTRATEGY

The vast majority of organizations have well-defined procedures for developing strategic plans.Strategic planning concepts including (but notlimited to) Porter’s 5-Forces, STEEP (Social,Technological, Economic, Environmental andPolitical) analysis and SWOT (Strength,Weakness,Opportunity,Threat) analysis, PMI (Plus,Minus,Interesting), Red and Blue Ocean strategies3,together with liberal use of focus groups,marketassessments and company retreats to revisit andrefine strategy are common practices on thebusiness landscape.While strategic planningexercises will always have room for improvementand new insight, it is clear that considerableresources, in the form of company personnel,consultants and research firms, are spent annuallyto develop and roll out strategies designed to giveorganizations a competitive edge. And for themost part, the result of these corporate retreats,research and planning exercises are good, solid,strategies designed to move the entity forwardand provide sustainable, even superior, returns.

But there is also a major disconnect between theformulation and execution phases of strategy.The ability to cascade an organization’s vision,mission and core strategies into actionablebehaviors that achieve critical objectives is moredifficult than much of our current strategyliterature would suggest. Failure to executestrategy not only leads to shareholder and boardfrustration, but also accounts for high executiveturnover.

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M E A S U R E M E N TRecently, this disconnect between plan andexecution has become more evident. LarryBossidy,Chairman and CEO of HoneywellInternational, and co-author of Execution, theDiscipline of Getting Things Done,wrote:

Most often today, the difference between acompany and its competitor is the ability toexecute. .....Execution is the great unaddressedissue in the business world today. Its absence isthe single biggest obstacle to success and thecause of most of the disappointments that aremistakenly attributed to other causes4.

This same sentiment was expressed by MichaelRoach,CEO,CGI Group

The true value of leadership is actually in theexecution. Can you actually implement thatvision, that dream? Can you execute to the plan,can you deliver a positive outcome?5”

While these sentiments reflect the frustrations ofpractitioners, academics have also observed thesame phenomenon. In a well-known publication,The Knowing-Doing Gap, Pfeffer and Sutton6

document the extraordinary gap betweenknowledge obtained through books, articles,meetings, retreats,workshops, educationalprograms, and the deliverables organizationalleaders hope for.

Analysts are equally concerned about thisknowing-doing gap. A series of Ernst & Youngstudies7 in the USA and the UK asked analysts torank the most important non-financial variablesthey look for in analyzing a firm’s future prospects.They cited factors such as “ability to attract andretain talent”,“management credibility”,“innovativeness” and “quality of corporatestrategy”, but the single most importantconsideration for both USA and UK analysts inrecommending an investment was the ability ofthe firm to execute its corporate strategy.The inference to be drawn is that,while analystsunderstand the importance of creating a valuepromise, the ability to deliver on the promise iswhat justifies premium ratings.

This, of course, leads to the question of why well-formulated strategies so often fail to besuccessfully implemented. Some conclusions areobvious to those close to the action. For example,senior managers often falsely conclude that othersin the organization share their view of thecorporate strategy.Organizational leaders alsooften misjudge the resistance to change and theimpact of culture on strategic implementation.Change agents often underestimate the time ittakes to create a successful change process.

However, experienced management teams usuallyknow these things and attempt to take them intoaccount. So why, in the face of all we know and allthe money and time poured into planning retreats,executive education and consultants, do we haveso little to show for in converting knowledge intosuccessful outcomes?

David Norton, author and co-author of manyarticles and books in the area of strategy andscorecarding systems, pinpoints the key issues thatimpede strategy execution. In a popular website,he recently highlighted these issues8:

First, it is impossible to execute somethingthat cannot be described.The point he ismaking here is that, while we have generallyaccepted tools, such as financial statements,to describe the economic health of a firm,we do not have similar taxonomies toeffectively describe, agree on andcommunicate strategy. Executive opinionsoften differ substantially on whether thestrategy should focus on product/servicedifferentiation, customer intimacy, costeffectiveness, technical superiority, or somecombination of several approaches.Thistype of confusion is widespreadiii and wheresuch confusion exists, execution fails at theoperating levels. Indeed, this explains whymost managers and employees cannotarticulate their company’s strategy.

Second, this confusion exists becauseorganizations do not effectively managetheir implementation of strategy or makestrategy a priority in the firm. For example,while vice presidential titles are common infinance,HR,marketing, logistics andmanufacturing, it is much less common toencounter vice presidents of corporatestrategy or Offices of Strategy Managementthat provide the central focus andresourcing for executing strategy.

Third, even when strategy implementation isgiven more focus, organizations have yet todevote adequate resources tocommunicating,monitoring, measuring andvalidating their strategic progress. It is onething to track high-level, lagging, financialindicators of performance. It is quiteanother to develop,measure and monitorleading measures of performance that oftenforetell future success or failure, and relatethem directly to strategy achievement.

First-generation balanced scorecards introducedin the mid- and late 90s attempted to address

these issues, but with only limited success.Whilestrategy was portrayed as being at the heart ofthese early scorecards, in reality organizationsprimarily used their scorecards as improvedperformance measurement systems to overcomean overriding emphasis on financial numbers.However, building scorecards without firstunderstanding core strategies turned out to befrustrating, unproductive, and largely disappointing.Many firms that adopted first-generation balancedscorecard systems abandoned their initiatives.Other organizations, however, persisted, soonrecognizing the necessity of making strategy thestarting point of a more complete managementsystem,one that begins with describing andcommunicating strategy before attempting todevelop specific performance measures.

The breakthrough in these second-generationscorecards was the use of a strategy mapiv — a visualization process designed to communicateand validate the “story” of a company’s strategy ina manner that company stakeholders can follow,understand and help realize.

The underlying concept of strategy maps is based

on a well-known premise — a picture is worth athousand words.While psychologists tell us thatmost humans are better able to respond to visualrather than oral or textual forms ofcommunication, until the past decade this axiom

has not been widely followed in business circles.

Strategy maps bring this visualization to life in abusiness context in a generalized but highlyintegrated manner. Every organization, no matterits size or sector,must meet customerrequirements and financial obligations. In turn,customer and financial expectations can only bemet with the right people/technologies and theright business processes.The strategy map, asdepicted in generic form in Figure 2, incorporatesthese two outcome perspectives (customer andfinancial expectations) with the two inputperspectives (people/technologies and processes)into a single representation that organizations canuse to communicate their strategies and translatethem into concrete actions.

Strategy maps describe how organizations createvalue by building on strategic themes such as“growth” or “productivity”.These themesdetermine what specific strategies organizationswill adopt at their customer, process, and learningand growth levels.Well-constructed maps describehow the organization plans to meet its specificcustomer promises, through a combination of

employee, technology and business processes thatsatisfy customer expectations and meetshareholder demands. In short, they provide theconceptual framework that organizational leadersand their followers can use to better understand


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Completed Generic Strategy Map

Maximize Organizational Value

Revenue Growth Strategy Productivity Strategy Asset Utilization

Add/RetainHigh-ValueCustomers

IncreaseRevenue perCustomer

Current Migrated New New OfferingsSolutions

Focus

Reduce Costper Customer

Scalability Strategies(e.g.Web)

CustomerManagementLeadership

Innovation &Commercia-

lizationSupremacy

InternalOperations Excellence

EffectiveGovernance& Control

Perception;Public

Relations

1) Human Capital (Staff competencies)

2) Information Capital (Technologyinfrastructure)

3) Organization Capital(Climate for action)

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Figure 2: A Generic Strategy Map

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M E A S U R E M E N Tand execute strategy.

Organizations adopting strategy maps can reducethe impediments to successful strategyimplementation. First, the map provides a way todescribe and communicate strategy systematically— companies use their maps to “tell the story” oftheir strategy to various corporate stakeholders,thereby achieving a much greater understandingand engagement in the strategic process. Second,maps force organizations to place the onus first onthe strategy, and only secondarily on measuringimplementation, thus removing the problem ofnumerous unfocused measures.Third, leading edgeadopters use their maps to not only define andcommunicate strategic imperatives, but also tovalidate their actions.They use them to test thelinks described on the map. For example,“if weundertake this set of strategies/initiatives inperspective X, then are we seeing the results weexpect to see in perspective Y”?

The timing for this MAG is appropriate.While theconcept of the balanced scorecard has beenwidely accepted worldwide (estimates are that 40 - 50% of Fortune 500 companies have adoptedsome form of the BSCv), many implementationsare still at early stages.The strategy map, anintegral part of advanced balanced scorecardsystems, is much less recognized by practitionersvi,and the process of building robust strategy maps isstill in its infancy.We observe that many maps arepoorly conceived and poorly constructed.Theproper “story” of the company’s strategy is notbeing told. Linkages between perspectives are not

well thought through.Value propositions are notexplicitly expressed, and when they are,inappropriate business processes are often chosento support them.Certainly, there are books, a few(fairly expensive) websites and consultingorganizations that provide guidance.However, forthe vast majority of firms that may want todevelop their own strategy map, there is littleguidance as to how to go about it. In short, toreach strategy maps’ full potential calls for adisciplined, systematic approach to theirdevelopment and ongoing use within theorganization.

The next section provides a step-by-step approachto strategy mapping that will assist advocates,sponsors, strategy-mapping champions and teamsin their endeavor to create and implement aproper strategy map.

CREATING STRATEGY MAPS — THEGUIDING SIX STEPS

Organizations increasingly recognize the strategymap as an integral component of successfulstrategy execution. In this and the next section,wespend considerable time discussing how todevelop high level corporate, and secondary andtertiary level maps.

Strategy maps can be, and often are, used as stand-alone tools that organizations employ to develop,understand, and convey their strategic story.Tomaximize their value, however, they need to beseen, and used, as core building blocks in an aligned

MissionWhy We Exist

ValuesWhat’s Important to Us

VisionWhat We Want to Be

StrategyOur Game Plan

Strategy MapTranslate the Strategy

Balanced ScorecardMeasure and Focus

Targets and InitiativesWhat We Need to DoPersonal ObjectivesWhat I Need to Do

Satisfied Shareholders Delighted Customers Efficient and EffectiveProcesses

Motivated and PreparedWorkforce

Strategic Outcomes

Figure 3:The Strategy Pyramid


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change management process.This means that theexistence of a strategy map and balancedscorecard are necessary, but not sufficient,conditions to effectively execute strategy.To getthe most from them, they need to be seen as partof a change management initiative. Figure 39

highlights where the strategy map fits in theoverall strategic management process.

The diagram indicates that strategic deploymentbegins with shaping or reaffirming the firm’smission, core values, and vision.These statementsform the basis for the considerable (and oftenlengthy) discussion that leads to the developmentof a strategic plan.This part of the process,consisting of the use of well-known strategicplanning tools, consultant input and executiveknowledge, is generally robust.

The logic and visual quality of the strategy maphas improved the ability to cascade the strategicobjectives down to specific measures, targets, andpersonal initiatives.However, organizations are stilluncertain about the actual steps they can take tocreate their own strategy maps.

We now discuss six steps that have proven veryuseful in developing a strategy map.To provide anintegrated view of the map’s development, eachstep will consist of both an explanation andexposition.The steps are:

1. Specify an overriding objective

2. Choose the value proposition

3. Choose the financial strategies

4. Choose the customer strategies

5. Execute through the internal perspectivestrategies

6. Plan the learning and growth strategies

To better communicate the transition fromgeneric principles to their specific application,wewill use The Glacier Innvii as an example.

The Glacier Inn

The Glacier Inn was established a few years agoin Northern Minnesota after a visit to Quebec’sIce Hotel convinced the owner and her partnersthat a similarly styled hotel would be popularwith both adventurous Americans andCanadians.

As a result, the owner and partners investedtheir life savings and were able to secure asubstantial 3-year loan from the stategovernment.With these proceeds, theypurchased a plot of land bordering a main river,

which provided the hotel’s main constructionmaterial — ice.The stated vision of the GlacierHotel was:

To be an ice hotel of global renown,where innovative and unique offerings

provide an unmatched value,anunrivaled experience and total

satisfaction for our guests.

The hotel opened January 1.Made entirely ofice, the opening and closing dates of the hotelwere dictated mostly by Mother Nature.Thehotel consisted of 28 rooms in its first year, andincluded an art gallery that visitors not stayingat the hotel could visit for a fee.All rooms hadone queen-size bed,which slept two. Everythingin the hotel, including beds, had a frame madeentirely of ice. Guests slept in a sleeping bag ona bed of deer pelts placed overtop a bed-shaped block of ice.The room temperatureranged from -3° C to -6° C (26° F to 21°F), butguests remained warm as long as theyremained in the bed.

Expected occupancy was 98%. Actualoccupancy was 91%. Financial and operatingresults barely met expectations, and the ownerknew that changes had to be made.The owneralso knew that the board and governmentwould be looking for a strategy that would putthe hotel in a position to be compared to thelikes of the ones in Quebec and Sweden. Shehad learned of Strategy Mapping and theBalanced Scorecard and felt they would behelpful tools to develop, communicate andmeasure progress toward achieving strategicobjectives.

Step 1: Specify an OverridingObjective

In the next few years,what will it take to succeed?This first step is critical, because it links thestrategy map to the earlier steps ofcreating/reaffirming an organization’s mission/corevalues/vision.This step must differentiate betweenwhat the organization truly understands as itsoverriding objective, and the strategies it plans toimplement.There is considerable confusion on thispoint.Many mission and vision statements areoften mistakenly portrayed as the ultimateobjective to be achieved — satisfied customers,service excellence, best-in-field,market leader,low-cost provider, etc. Indeed, these are criticaloutcomes and are highly desired by allorganizations.However, for profit-makingorganizations, the overriding objective must be

economic.Michael Porter, the well-knownstrategist,makes this point forcefully:

“Start with the right goal: superior long termreturn on investment.Only by grounding strategyin sustained profitability will real economic valuebe generated. Economic value is created whencustomers are willing to pay a price for aproduct or service that exceeds the cost ofproducing it.When goals are defined in terms ofvolume or market share leadership, with profitsassumed to follow, poor strategies often result”.10

This is a fine point, but its importance should notbe underestimated.There is no question thatserving customers effectively,developing new andunique products and achieving market dominanceare worthy objectives. And, as Tom Peters pointsout,business isn’t some dry,dreary,boring,by-the-numbers enterprise.Business can be cool11.But in aprofit-making environment, these are all theingredients for success. Success is achieved bysignificant revenues and/or cost containment thatlead to superior economic returns — the overridingobjective.

Those who have missed this lesson have paid aserious price.Take quality, for example.Fewfollowers of organizational practice would disputethe importance of total quality management.Betterprocesses, fewer defects and reduced variance haveimproved the fortune of companies and consumersalike. Indeed,many organizations believe thatachieving higher and higher levels of quality is theprimary goal that, if religiously pursued,will lead to

superior returns.However, shortly after winning theprestigious Malcolm Baldrige National QualityAward for their high quality performance,WallaceCorporation was forced to file for bankruptcy.Florida Power & Light,winner of the even moreprestigious Deming Award, almost suffered thesame fate. As management began to realize that thecosts of quality exceeded the benefits, they wereforced to cut back and downsize quality initiatives.Similarly, Federal Express backtracked on its qualityoperations once it learned the economicconsequencesviii.

Similar anecdotes could be described fororganizations pursuing other non-economicobjectives as primary goals.The point is not todiscourage these worthy and important initiatives.They are the differentiators that give rise tocompetitive advantage.The point simply is that theyshould not be seen as ends to themselves — thediscipline provided by the correct overridingobjective: superior, sustainable financial returns — isthe indicator that permits management todetermine if these underlying strategies andinitiatives are working as intended.

The overriding objective should be the first elementof the strategy map. It should contain a financialtarget and a time dimension.

Examples of an overriding objective could be:

● Increase return on capital employed by sixpercent within three years.

● Increase profit margin from 8 to 12% and net

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Step 1:The Overriding Objective Increase CF by $XXXin 3 yearsIncrease profits by Y%in 3 years

The Glacier Inn’s

Overriding Objective

Increase Cash Flow &profitability

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Figure 4: Step 1 - The Overriding Objective on a Strategy Map


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cash flow from $500,000 to $750,000 within fiveyears.

● Increase target share price by 20% by nextreporting date.

● Increase total shareholder return relative tobenchmark by 10% within two years.

Overriding objectives are the first item to appearon a strategy map.Figure 4 excerpts the genericoverriding objective “Maximize OrganizationalValue” from the generic map shown earlier inFigure 2.

Application of principle to the Glacier Inn:The genericmap is a guide — it needs to be adjusted by eachorganization to reflect its particular circumstance.The owner of the Glacier Inn and her partnershave a vision for the ice hotel.However, they acceptthat the vision can only be reached if there is aneconomic return sufficient to satisfy the initialinvestors, and an adequate cash flow sufficient tosupport operations and loan covenants.Based oninvestor and market expectations and theirestimated revenue and cost model from operationsas a privately held hotel,Glacier selectedprofitability and cash flow (rather than shareholderreturn,normally the case for larger or publiclylisted firms) as their overriding objective.This wasStep 1 on Glacier’s strategy map (shown later inFigure 10b).

Step 2: Choose the Value Proposition

The company that tries to do everything ultimatelyachieves nothing,or at best very little, and isdestined to find mediocrity.That said, companiesthat deliver extraordinary levels of distinctive valueto carefully selected customer groups can reap therewards offered by market leadership. Sounds good,but how does an organization pull that off? Howmany market leaders can there really be? Generally

speaking,more than most people realize.

To lead the market, companies first need tosegment the market in new and unconventionalways,based on current and expected customerperceptions of value.What do (or will) customersreally (not traditionally) value? Armed with thisinformation, companies can re-focus to provide thenew value drivers better than competitors, and leadthe field.The second step in strategy mapping is tochoose the value proposition that will help theorganization win the market.

The threeix value propositions put forth by Treacyand Wiersema provide an excellent framework forcompeting in today’s markets12:

1. Operational excellence (also referred to as besttotal cost)

2. Product leadership

3. Customer intimacy (also referred to ascustomer solutions)

The idea behind the value proposition approach isto choose one dominant value proposition, andprovide breakthrough customer value in it. For thetwo propositions not chosen, it is imperative not tolead but to compete, at least, to some thresholdlevel.Doing so can create an image that will keepcustomers coming back, as well as provide thecompany the luxury of being the name that newmarket entrants will know.

Image:How Does the Customer See TheOrganization?

For an organization to dominate, the market mustdeem it worthy of that honor.The organizationmust be seen as a standout in at least one majorarea that the market values. In addition, theorganization must be able to compete in otherareas to at least some threshold standard.Threeimages that can make an organization stand out

Image Driver

Price

Unique attributes

Relationship level

OperationalExcellence

Primary focus: verylow prices Image:“Best deal”

Low end of thresholdstandards

Low end of thresholdstandards

Product Leadership

High end of pricing

Primary focus: veryunique attributesImage:“Bestproduct/service”

Meets thresholdstandards

Customer Intimacy

High end of pricing

Meets thresholdstandards

Primary focus: veryhigh customerintimacy Image:“Best friend”

Table 1 - The Value Propositions

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M E A S U R E M E N Tare presented in Table 1.

The “best deal” image is one driven by price,where price refers not only to the sticker price,but also the “intangible price” of an item, such asminimal wait time and a hassle-free return policy.As Table 1 indicates, companies focused onoperational excellence will use price as the keydriver of the “best deal” image. Be the best here,and that market segment will accept the low-endthresholds both in terms of unique attributes andrelationship.Wal-Mart,Dell, IKEA, and ING havefor many years been viewed as excellentexamples of companies pursuing this valueproposition.

The next image is the “best product or service”.Companies that decide to compete here are usingthe product leadership value proposition, and willuse unique attributes and features in theirproducts and services as their main image driver.The best companies here will find a market willingto accept a price at the higher end of thethreshold standards.Gap provides an excellentexample of a product leader — they brandthemselves as introducing many of the latestfashions, and spend liberally to get celebrities toendorse their apparel.As a result, people arewilling to pay large premiums to wear the Gapbrand.Other well-known organizations thatcompete on product/service leadership includeCNN, Apple and Cirque de Soleil.

The third and final image is that of the “bestfriend”. Companies that compete in this areafollow the customer intimacy value proposition,providing solutions to their customers.Thecompanies start with a product or service, andinstead of leaving it to the customer to make themost of product or service, collaborate with theclients to make it work.The process may take abit longer, and cost more, but to those in thismarket segment, the process is worth the timeand cost.Moores Clothing For Men, a Canadianchain of men’s clothing, embodies the spirit ofcustomer intimacy.Rather than just sellingclothes, staff at Moores (who are called “imageconsultants”) ask the right questions and workwith customers on the right look. Imageconsultants have even been known to phoneclients to ask how a particular engagement went.Customer-intimate competing firms also includeWilliams Sonoma, Starbucks and UPS.

The Hotel Industry: It’s Not Just About Sleep

The hotel industry provides an excellent exampleof how three different hotels — Formule 1,

Venetian Hotel — Las Vegas, and Ritz-Carlton —can all provide the same basic service of overnightaccommodation, and can all be market leaders.How? By leading in the specific market segmentwhere they have chosen to compete. Each hotelhas chosen a value proposition, and in doing sohas been able to hone customer value to a levelof excellence that makes guests (andcompetitors) take notice.

Formule 1:Operational Excellence

“A clever concept at an unbeatable price”: thiscatch-phrase from their website describes theplatform upon which Formule 1 has gained amassive market share in Europe’s hotel industry.With prices as low as $30 per night, one mightwonder how a hotel can even make money.Howdo they do it? By relying on two crucial factors:volume, and absolute cost leadership.

With small, cheaply made prefabricated roomsand a self-check-in and check-out system, Formule1 is the cost (and thus price) leader in Europe.Despite such low prices, the hotel chain’s hugemarket share, coupled with an occupancy ratewell above the norm, allows them to realize areturn on assets that puts other more swankyhotel chains to shame.And talk aboutconvenience: their website allows prospectivecustomers to see what is available at any giventime at any of their hotels, and book rooms onlinewith just a few mouse clicks. From the low pricesto the hassle-free experience, Formule 1 typifiesoperational excellence in every way.

The Venetian Hotel — Las Vegas: Product Leadership

Hotels do not have to be just about sleep - theycan be about an experience. At the VenetianHotel, guests experience the romance of Italy inthe heart of the Las Vegas Strip.Whether it is theentrance into the lobby, a stroll along acobblestone walkway, or a relaxing ride in anauthentic Italian gondola under a glorious paintedsky, visitors are treated to a veritable Italianexperience.Talented Italian opera singersserenade shoppers as they stroll along the GrandCanal, and costumed entertainers perform daily,taking guests and visitors back in time toRenaissance Venice.

The hotel, of course, offers other features thatguests require. Restaurants, rooms, a casino andservice are all acceptable but not remarkable (i.e.they meet threshold levels).However, the definingfeature of the hotel is its Italian-style uniqueness.The Venetian is selling an Italian adventure,whichmakes it a “product leader” in the truest sense.

Ritz-Carlton: Customer Intimacy

“Welcome.How may we be of assistance?”When you are asked this question the momentyou log onto a website, the inquiring company isreally answering your question about what youcan expect from them.The award-winning Ritz-Carlton is just that — a hotel that caters to theirguests’ needs...and charges for it. Indeed, theyboast to investors that they are able to charge a30% price premium.

How do they do it? 120 hours of training peremployee per year is a good start. Of course,much of the focus of this training is on thecustomer.To ensure that employees don’t forget,every employee is required to carry the hotel’sbusiness plan in his or her pocket, whichconstantly reinforces that guest satisfaction istheir highest mission. And talk about knowing the

customer! Example:when a room attendant seesan empty soft drink container in a guestroom, thetype of beverage is noted.The next time a gueststays at ANY Ritz-Carlton that soft drink will bewaiting on ice in his or her room.They do notjust offer a hotel room — they offer a solution toguest comfort and gratification.This symbolizesthe true meaning of customer intimacy.

Value Propositions:Mapping the Future

Sound strategy execution begins with a strongplan and an overriding objective.Choosing a valueproposition can make execution much smoother,since it points and guides the organization down achosen path.Value propositions offer direction onhow the strategy should unfold. Formule 1,TheVenetian and The Ritz-Carlton all know this.Thateach of these leaders has demonstrated thecharacteristics of a specific value proposition, and


13

Step 2:The Value Proposition (Generic)

Product LeadershipFirst to market;Unique attributes; Brand image

Customer IntimacyCustomer service;Relationship management;Brand image

Operational ExcellencePrice;Quality;Selection;Brand image

Organizations Choose their DominantValue Proposition from:

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Increase Cash Flow &profitability

Increase CF by $XXX in 3 yearsIncrease profits by Y% in 3 years

Glacier’s DominantValue Proposition

Product Leadership

The Glacier Inn provides an unmatched value,an unrivaled experience and total satisfaction

for our guests through the provision of a unique hotel adventure

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Figure 5: Step 2 - The Value Proposition

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M E A S U R E M E N Thas achieved remarkable results in doing so,seems far less likely to stem from simple goodfortune than from market leadership resultingfrom sound choices of value propositionx.

The Strategy Map

Understanding one’s value proposition isfundamental to the construction of the financial,customer, internal business processes and learningand growth perspectives on the map.Manyorganizations do not explicitly show the valueproposition on their maps, believing that thechoice of strategies in the four perspectives willbe evident to readers.While this may be true, it isbetter practice to include the value propositiondirectly on the map.

Figure 5 illustrates this process. First is a genericlook at the value propositions — a firm mustchoose a dominant proposition from the threealternatives. Second, it shows a map that highlightsGlacier Inn’s choice.Glacier’s owner believes thatthe hotel is clearly designed to attract visitorswhose primary reason for coming is neither cost,nor comfort. Rather, it is adventure — a uniqueexperience in a unique hotel.This is clearly aproduct leadership value proposition.

Choosing a value proposition guides theorganization toward the most appropriatefinancial strategies,which is the next step.

Step 3: Choose the FinancialStrategies

Having established the value proposition,organizations next formalize their plans and

strategies around revenues and costs. Financialstrategies can be categorized into three key areas:

1. Revenue growth;

2. Productivity; and,

3. Asset utilization.

All organizations must pay some level of attentionto each of these strategies.However, the choiceof value proposition in Step 2 helps dictate whichof the three will dominate, and where to spendmost of the effort and activity.Table 2 belowindicates the types of financial strategiescompanies pursue based on the choice of valueproposition.

Knowledge of the value proposition assistsorganizations to pinpoint which of the threefinancial strategies will dominate. Figure 6illustrates that organizations pursuing operationalefficiency propositions will focus on reaching theiroverriding objectives primarily throughproductivity and asset utilization strategies.Organizations following customer-intimate orproduct leadership propositions will put less focuson these efficiency strategies, instead attemptingto grow revenue through unique product orcustomer features.

Revenue growth strategies

All organizations want to grow revenue.Growthis the oxygen of business — growingorganizations thrive; shrinking companies fade.The value proposition chosen will dictate justhow an organization goes about growing itsrevenues.Companies following operationalexcellence will try to grow revenue through

FinancialStrategy


Product Leadership Customer Intimacy

Revenue growth Competitive prices Volume

Premium pricingNew features

BundlingCross-selling

Productivity Tight variable anddiscretionary costcontrol

Control but also spendon R&D and marketing

Control but also spendon solution selling

Asset utilization Maximize inventoryturnoverUtilize fixed assets tofullest

Utilize fixed assets asnecessary in pursuit ofproduct leadership

Utilize fixed assets asnecessary in pursuit ofcustomer intimacy

Table 2: Financial Strategy Chart

ValueProposition

reducing prices and increasing volume andturnover.Companies that improve productivityand asset utilization can do this profitably.Wal-mart is an example of a company that promiseslower and lower prices, yet does so profitablythrough focusing on cost reductions.

For those organizations pursuing productleadership, revenue growth tends to comethrough price premiums for their cutting-edgeofferings.Take Apple for example: by being “first-in” with products like the iPod, Apple was and isable to capture that segment of the market willingto pay large premiums for the “latest andgreatest” products. It is important to note that

companies focusing on revenue growth throughprice premiums do not ignore productivity andasset utilization.There is no “license to spend” forproduct leaders. Instead, these companies willspend more on areas such as research anddevelopment, expecting returns on theseinvestments through higher revenues.

The customer-intimate organization tends topursue revenue growth through bundling ofproducts and services that provide solutions forclients. By offering a solution portfolio,organizations are able to sell more and at thesame time please their customer base. Anexample of this is Erb Transport, a Canadiantransport company,which offers ancillary services

such as pallet trading so that customers do nothave to immediately remove shipments from theirpallets.This provides Erb additional revenuethrough saving customers time, effort and cost.FedEx and UPS are also excellent examples ofcustomer-intimate organizations.Their slogans,respectively,“Absolutely, Positively Overnight” and“Your World Synchronized” immediately tellclients that it is not just about delivering packages.It is about fast, reliable delivery and synchronizingglobal supply chains for any size of company — inshort, solutions to customer problemsxi.

Productivity

In management accounting terms, a productivity

strategy equates to optimizing the variable coststructure of the organization. It is important toemphasize ‘optimize’, not ‘minimize’, sinceminimizing costs often erodes quality. For thoseorganizations pursuing operational excellence,concentrating on ‘optimizing’ is paramount inreducing cost and offering very competitiveprices. A good example is Dell,which utilizes theInternet and extremely tight supply chainmanagement to maximize the productivity ofeach employee.

Product leaders need to strike a balance withproductivity, so as to be profitable (i.e. no “licenseto spend”),while not focusing on it to the pointof violating the product leadership value


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Step 3:Understanding the Link between Financial Strategies and the Value Proposition



Operational Excellence

Product Leadership

Customer Leadership

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Figure 6:The Relationship between Financial Strategies and Value Proposition

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proposition. A good example of this is CNN:emphasizing cost control too much would conflictwith CNN’s widely renowned reputation forbeing where the breaking story is. By spendingmore,CNN is able to maintain its image as havingthe best coverage of any network.

Customer-intimate companies, like the OntarioTeachers Insurance Plan (OTIP),must also strike asimilar balance.They wish to get as much returnas possible from their assets, but not to the pointof violating the customer-intimacy valueproposition. Although they could cut costs incustomer service staffing by outsourcing, OTIPhad no intention of doing so, as outsourcing wouldgo against their customer intimacy valueproposition.

Asset Utilization

In management accounting terms, an assetutilization strategy equates to optimizing the fixedcost structure of the organization. It is imperativethat companies who must invest heavily (ormoderately) in large-ticket items such as buildings

(e.g. hotels), or machinery (e.g. automotive) getthe most return from these investments.This isparticularly true for operationally excellentorganizations that can only achieve successthrough impressive inventory and other assetturnovers.

In the same vein as the discussion on productivity,product leaders and customer-intimateorganizations also need to improve their assetutilization without violating their primary valuepropositions. In conclusion, the choice of financialstrategies is an important step in the strategymapping process. By aligning financial strategieswith the value proposition, companies canposition themselves to properly decide whatcustomers are willing to pay for.

The Glacier Strategy Map

The top portion of Figure 7 highlights the threegeneric financial strategies.The lower portionillustrates the specific financial strategies Glacierchose. Since Glacier is pursuing a productleadership proposition, the company must focus

M A N A G E M E N T

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The Glacier Inn provides an unmatched value,an unrivaled experience and totalsatisfaction for our guests through the provision of a unique hotel adventure

Step 3:Understanding the Link between Financial Strategies and the Value Proposition



Step 3:Choosing the Financial Strategies (Glacier)

Increase Cash Flow & Profitability

Revenue Growth Strategy Productivity Strategy

Introduce newsources of non-hotel revenue

through unique,new services

Addmorehotel

capacity

Add moreunique, in hotel

features toincreasecustomer

profitability

Maximizeproficiency in icemanagement andmobilization and

conservation

Increase staffand hoteloperatingefficiencies

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Figure 7: Step 3 — Choosing the Financial Strategies

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primarily on generating revenues from theirunique offerings.This will involve a combination offinancial strategies, including generating revenuefrom non-hotel room sources. Examples couldinclude ice museums designed to attract dayvisitors, and outdoor activities and services thatcater to an adventurous clientele. Buildingadditional capacity in terms of hotel rooms andinfrastructure will add to revenue, as will astrategy that calls for providing in-hotel guestswith additional unique ice features, for example,drinks poured into all-ice glasses, for which guestswill be willing to pay premium prices.Glacier mustalso search for and implement cost savingstrategies that relate both to its physical andhuman assets, but which strategy to emphasize:revenue growth or productivity,xii is clear. Both areneeded, but without the “unique” revenue growthfocus, all the productivity strategies in the worldwill not permit Glacier to succeed.

At this stage,Glacier’s strategy map consists of itsoverriding objectives, its product leadership valueproposition, and its choice of high-level financialstrategies it will pursue to achieve the overridingobjective and the Glacier vision.

The next step is to select the customer-relatedstrategies.

Step 4: Choosing the CustomerStrategies

Having established financial strategies,organizations must formalize their plans andstrategies to win the marketplace. In other words,

they must clearly establish and articulate theircustomer strategies.Customer strategies can becategorized into three key areas:

● Retaining and adding customers;● Increasing revenue per customer; and,● Reducing cost per customer.

Organizations must pay attention to each of thesestrategies.However, the choice of valueproposition once again dictates where the firmshould focus its effort and activity.Table 3 indicatesthe types of customer-focused strategiescompanies tend to pursue based on the valueproposition chosen.

Those pursuing operational excellence will usecompetitive prices to retain and add customers, inaddition to increasing revenue per customer.Tightprocess and supply chain management will assist inits ongoing efforts to reduce costs per customer.

Product leaders will offer the latest oftechnologies and features, including “add-on”products and services, to increase customervolume and revenue per customer. In pursuingpremium pricing, product leaders cannot be givena “license to spend”. To be profitable, strategicplanning must try to balance spending and profits.

To retain and add customers, customer-intimatecompanies will tend to use strategies such aspromoting word-of-mouth marketing and loyaltyprograms. By offering complete solutions andbundling packages, these companies attempt toincrease revenue per customer. Like productleaders, strategic planning must try to balance


CustomerStrategy



Retain and addcustomers

Competitive prices Latest technologiesNew features

Loyalty programsWord-of-mouth

Increase revenueper customer

Competitive prices New features“Add-on” products andservices

Solution sellingBundling

Reduce cost percustomer

Tight process and supplychain management

Spending and costcontrol policies asnecessary in pursuit ofproduct leadership

Spending and costcontrol policies asnecessary in pursuit ofcustomer intimacy

Table 3: Customer Strategy Chart

ValueProposition

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spending and profits.The elements of theCustomer Strategy Chart are portrayed in thegeneric strategy map shown in the top portion ofFigure 8.

The bottom portion of Figure 8 indicates howGlacier has translated these concepts intocustomer strategies it needs to implement toachieve its financial goals, overriding objective, andvision.Glacier’s product leadership valueproposition provides the necessary guidance here.Glacier must compete for hotel visitors throughits uniqueness theme.Consequently, it mustpursue customer strategies that include“adventure”,“uniqueness”,“different”,“rare”,“exclusive” — the hallmarks of a product/serviceleader.These core strategies are shown as shadedboxes in Figure 8. At the same time,Glacier mustensure threshold levels of other amenities. Forexample, the “adventure” theme is a greatdifferentiator. But there must be a threshold level

of safety, cleanliness, and service.These arehighlighted on the map as “non-differentiable”factors. In other words, they must be present, butthey are not the key differentiating strategies thatwill persuade people to visit the Glacier Inn.

Note how closely tied these customer strategiesare to Glacier’s value proposition. It is a consistentstory of developing critical strategies around thecentral value proposition — leading to revenuegrowth and achievement of the overridingobjective.

Step 5: Execute through the InternalPerspective Strategies

Having established financial and customerstrategies, organizations next establish thoseimportant actions that will realize the plans andstrategies to win the marketplace.On the righthand side of the strategy map, the focus changes

Step 4:Choosing the Customer Strategies (Generic)







Focus Scalability Strategies(e.g.Web)

Step 4:Choosing the Customer Strategies for Glacier

UniqueDesign

UncommonExperiences

DifferentMeals

Back toNature

Glacier must pick attributes based on its valueproposition that will differentiate it from its competitors

The Glacier Inn provides an unmatched value,an unrivaled experience and total satisfaction for ourguests through the provision of a unique hotel adventure

Clean Safe

GoodService

Adventure

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Product/Service Attributes

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Figure 8: Step 4 — Choosing the Customer Strategies

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from “What do we want to accomplish” to “Howwe plan to accomplish it”. In other words, the firmmust execute the story that has been developedand revealed in Steps 1- 4.

The internal perspective is all about choosing andexecuting the right business processes to achievethe desired customer and financial strategies theorganization believes will lead to theaccomplishment of the overriding objective.Consequently, organizations must consciouslychoose internal business processes that linkdirectly to the earlier steps.

As an example of this linkage, one of the earlystrategy map adopters, Mobil, chose to competeon a customer-intimate value proposition.This ledto a customer strategy of delivering “fast service”.To execute on this requirement,Mobil developedan innovative time-saving device for drivers calledSpeedpass, that allowed Mobil customers to payfor gas purchases directly at the pump.Today, suchfeatures are common, but Mobil was the first todevelop this kind of customer aid — a directresult of linking a desired higher level customerstrategy to an internal business development.After its inception, Speedpass users grew at therate of 1 million per year, directly affecting theirfinancial results and assisting them to achieve theirstated overriding objective.

The example serves to illustrate that the choice ofvalue proposition dictates where to spend thebulk of effort and activity in developing internalbusiness processes.Table 4 below indicates how acompany could focus its processes, given its valueproposition.The figure will provide the basis of thediscussion for Step 5.

Internal operations excellence

To endure, all organizations must have solidinternal operations.However, companies followingan operational excellence value proposition mustmake internal operations a very high priority, and“run a tight ship”. By doing so, they work ateliminating non-value-adding activities, reducingcost, and delivering low prices.Organizationscompeting here pay special attention tooutstanding supplier relationships, riskmanagement, and efficient and timely productionand distribution.Common examples ofoutstanding operational excellence are, of course,Wal-Mart and Dell. For example, in a recentquarterly report,Wal-mart attributed its revenuegrowth and improved income to “reducing costsand improving inventory management”13.However,many other less well-known examples make itclear that it’s not just large organizations that cancompete here.Gildan Activewear, Inc, a Montreal-based company, competes in the textile industrydominated by Chinese manufacturers14. By usingadvanced technologies to gain efficiencies andscale, it has taken much of the labor cost out ofproduction and the firm is doing well in the face ofthe China threat.

Innovation and commercialization supremacy

Organizations pursuing product leadership mustmainly focus on processes that motivate, identify,develop and launch commercial innovations, sincethe leadership proposition is to bring cutting-edgetechnologies, designs or services first to market.The need here is for internal processes thatmotivate a continuing pipeline of new ideas,minimizing time to market, while effectively

Process to excel and leadat



Internal operations Primary focus – mustexcel

Meet/maintain thresholdstandards


Innovation Low end of thresholdstandards

Primary focus — mustexcel


Customermanagement



Primary focus – mustexcel

Table 4: Key Process Chart

ValueProposition

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M E A S U R E M E N Tmanaging capital projects and budgets.Organizations that succeed here recognize thatcustomers are willing to pay a premium forleading-edge products and services, and willtolerate less than stellar customer service andcost. A good example is Nike. By focusing most oftheir efforts on fashion innovations and branding,those wanting to wear the Nike ‘swoosh’ arewilling to pay steep price premiums.Microsoft,another organization that has never been creditedwith “outstanding” customer service, stilldominates the market through its productleadership.

Customer management leadership

Customer-intimate organizations tend to focus onthose processes most closely linked to customermanagement: selection, acquisition, preservationand growth.The focus here is on developingknowledge of customers and building strongrelationships. It also includes the processes forproviding convenient order handling, and offeringsolution portfolios to customers. Extra effort ismade to identify with customers and makecustomer results happen. A good example is theFour Seasons hotel,where the focus of allemployees is to provide a world-class experience,whatever it takes15.UPS is another example of afirm that goes to extraordinary efforts to developsolutions for customers.To do this, UPS musthone their internal processes to ensure supportfor their “best friend” image.

It is important to emphasize again that allorganizations will develop strategies in all threeareas. However, the value proposition assists infocusing and prioritizing what effort to emphasize.

In addition to the core strategies noted above,organizations may also wish to highlight theimportance of developing other core processesfor other stakeholders. For example,many(particularly publicly listed) organizations find itimportant to emphasize and communicateprocesses relating to governance and control.These processes may take several forms, includingfiduciary, regulatory, and environmental. Similarly,some organizations have adopted processesconsistent with corporate social responsibilityobjectives such as social justice and communityobligations.

The strategy map

The top portion of Figure 9 shows what thegeneric strategy map looks like at this point.Thebottom portion of Figure 9 indicates how Glacierhas translated these concepts into internalbusiness strategies it needs to implement to

achieve its financial and customer goals.Glacier’sproduct leadership value proposition provides thenecessary guidance here.Glacier must stronglymarket its uniqueness theme.At the same time,Glacier must also continuously develop (a) theunique features it prides itself upon, and (b) thehiring and training programs it needs to excel inthis market space.These are the dominantinternal processes. If they are not developed, theGlacier Inn will fail. Productivity processes are animportant supporting theme. If the proposition iseffective in attracting customers, every effortmust be made to keep the hotel open as long aspossible each year.This means achievingefficiencies through targeted project/staffmanagement and exploiting existing icetechnologies to preserve and extend its basicbuilding component.The combination of theseinternal process themes will lead to customer andfinancial objective success.

This sets the stage for Step 6: planning thelearning and growth perspective,where the planto accomplish the strategy is finalized.

Step 6: Plan the Learning and GrowthStrategies

Having established financial and customerstrategies, and developed an execution plan,organizations will inevitably notice some gaps inknowledge, skills and abilities necessary toexecute the chosen strategy. In this final strategymapping step, companies develop the appropriatelearning and growth strategies.

The learning and growth perspective is aboutidentifying and bridging gaps that could limit theorganization’s ability to execute the key processesidentified in the internal perspective. Learning andgrowth can be classified into three primary areas:

1. Human capital;

2. Information capital; and,

3. Organizational capital.

Human capital

Human capital is the economic value anorganization derives from (a) application ofknowledge, (b) collaboration, and (c) engagedindividuals.Managed well, human capital is anenormous source of value that comes fromcommitted individuals making informed decisionson service, quality, effectiveness, creativity, goalalignment, and productivity.Many argue that anorganization’s human capital is its single biggestcompetitive advantage. Organizations can go a

long way to achieve their overriding objectives byaligning human capital skills to their dominantvalue propositions.This includes attracting andretaining the right types of skills, and providingappropriate coaching,mentoring and opportunitiesfor developing the know-how necessary toexecute specific strategies.While this may seemobvious, the high rate of employee turnover insome organizations and industries indicates all toocommon mismatches between desired outcomesand employee skills.

Information capital

Information capital relates to how organizationsutilize their information systems, networks,

manuals, databases, files and infrastructure to gaincompetitive advantage and to execute strategy.Examples include the effective use of intranets andcentral document repositories, and the ability tolist projects containing information on thosewhose particular expertise can assist in solvingparticular classes of problems.The type ofinformation capital chosen depends on the firm’sprimary value proposition. For example, acustomer relationship management (CRM) database system will be far more critical to acustomer-intimate organization than to anoperationally efficient firm. Similarly, systems thatreport on statistical process control will be farmore important to an operational efficient firm


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Step 5:Choosing the internal Strategies (Generic)









Innovation &Commerciali-

zationSupremacy

InternalOperationsExcellence


Perception;Public

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Step 5:Choosing the Internal Strategies (Glacier)_Increase CF by $XXXin 3 years Increase profits by Y%in 3 yearsIncrease Cash Flow & Profitability


Introduce newsources of non-hotel

revenue

Add morehotel capacity

Add more in-hotel features

Maximize proficiencyin ice management

Increase staff andhotel operating

efficiencies

Clean

EfficientService

Safe

Adventure

Uniquedesign

Uncommonexperiences

Differentmeals

Back toNature

Developintegrated

“adventure”based marketing

plan

Create anddevelop highquality unique

offerings

Develop hiringand trainingprocess to

support theme

Introduce a projectmanagement system

for time lines andstaff involvement

Exploit existingice technology

management andprocessesIn

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Figure 9: Step 5 — Choosing the Internal Strategies

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The Glacier Inn provides an unmatched value,an unrivaled experience andtotal satisfaction for our guests through the provision of a unique hotel

How

we plan to

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M E A S U R E M E N Tthan to a product leader.

Organizational capital

Organizational capital is the firm’s ability toconnect employee goals to corporate goals.Companies with high levels of organizationalcapital are ones that exhibit complementary teammemberships, open communication channels,shared visions, trust in leaders, and common bonds— usually leading to greater employee retentionand superior performance. Leadership, teamworkand communication are important ingredients inorganizational capital.Together, they provide theability to adapt, and to make the changes requiredto execute on the strategyxiii.

Companies need to take different approaches tolearning and growth because of their specificcircumstances, customer expectations, and internalbusiness requirements. In short, the firm’s human,informational and organizational capital policies

must be aligned to the chosen value proposition.Table 5 summarizes the thrust of each form ofcapital for each value proposition.

The strategy map

Figure 10a illustrates a completed generic strategymap. As the map indicates, all three types of capitalmust work together to help the company executethe elements of the internal business perspective.Aligned learning and growth and internal businessprocesses (the “how we plan to accomplish it”part of the map) facilitate achievement ofcustomer and financial strategies (the “what wewant to accomplish” part of the map).

The Glacier map in Figure 10b clearly highlightsGlacier’s Learning & Growth strategies. As a firmin the guest “adventure” business, it needs to besure that the employees delivering its unique styleof programs and activities have the rightcompetencies.Glacier will be more likely tosuccessfully execute its strategies if it looks foryoung, energetic, nature-loving individuals with agenuine concern for clients.Where would thatstrategy lead them to find such individuals? Severallocations are possible, but since the Inn is seasonal,and Glacier must also be cognizant of its cash flowand profitability objectives, a likely source wouldbe university programs that (a) specialize in theenvironmental or kinesiology studies, and (b)include practicums or cooperative work terms intheir academic requirements. As seen in theinternal business process part of the map,Glacier’ssuccess also depends on keeping the hotel open aslong as possible, and through potential seasonaltemperature thaws. Partnering with universities

whose engineering departments specialize in icetechnologies will help achieve higher productivityrequirements. Finally, in terms of organizationalcapital, the importance Glacier places ondeveloping an appropriate innovative culture andalignment of goals is highlighted on its map.

Reviewing the Glacier Inn Strategy Map

An earlier section emphasized the ability of a well-constructed map to tell an organization’s “story”. Itis now useful to look at Glacier’s strategy map tosee if the Glacier “story” is apparent from thepicture that has been developed.

The map communicates Glacier’s need to achieve

Type ofCapital



HumanStatus quo: abide byRisk:minimizeTime horizon: shorterFlexibility: rigid

Status quo: challengeRisk: calculatedTime horizon: longerFlexibility: versatile

Status quo: depends oncustomerRisk: calculatedTime horizon: very longFlexibility: adaptable

InformationFocus:efficiencySharing:externalMain area:operationsCustomer response:N/A

Focus: innovationSharing: internalMain area:R&DCustomer response:N/A

Focus: customersSharing: internal, externalMain area: salesCustomer response: rapid

OrganizationalPay-off: efficiencyExpertise: functionalTeamwork: lowHigh concern: process

Pay-off: creativityExpertise: functionalTeamwork: highHigh concern: outcomes

Pay-off: solutionsExpertise: versatileTeamwork: highHigh concern: solutions

Table 5: Capital Focus Chart

ValueProposition

its specific financial results (overriding objectives)within three years, if it is to survive.Managementbelieves it can achieve these objectives through astrongly differentiated value proposition that

promises guests an unrivalled experience and totalcustomer satisfaction by providing them with aunique hotel experience.


23

Figure 10a: Completed Generic Strategy Map

Step 6:Learning and Growth (Glacier)

Increase Cash Flow & Profitability


Introduce newsources of non-hotel

revenue

Add morehotel capacity

Add more in-hotel features

Maximizeproficiency in ice

management

Increase staff andhotel operating

efficiencies

Clean

EfficientService

Safe

Adventure

Unique design Uncommonexperiences

Differentmeals

Back toNature

Developintegrated

“adventure”based marketing

Create anddevelop highquality unique

offerings

Develop hiringand trainingprocess to

support theme

Introduce a projectmanagement

system for timelines and staff

Exploit existingice technologymanagement and processes

Attract and train youthful,energetic, individuals who

desire to participate and learnin an experienced-based setting

Create and promote aculture of innovation by

aligning business goals withpersonal goals

Partner with localcolleges/communities to

adopt new advances in icemaking and preservation

Employee Competencies Corporate Culture Technology

Fina

ncia

lC

usto

mer

In

tern

alR

enew

al

Increase CF by $XXXin 3 years Increase profits by Y%in 3 years

The Glacier Inn provides an unmatched value,an unrivaled experience and total satisfactionfor our guests through the provision of a unique hotel adventure

Figure 10b: The Completed Glacier Inn Map

Completed Generic Strategy Map









Innovation &Commerciali-

zation

InternalOperationsExcellence


Perception;Public

Relations

Fina

ncia

lC

usto

mer

Inte

rnal

Lear

ning

& G

row

th

What w

e want to accom

plishH

ow w


1) Human Capital (Staff competencies)

2) Information Capital(Technology infrastructure)

3) Ogranization Capital(Climate for action)

✙ ✙

✙

What w

e want to accom

plishH

ow w


24

M A N A G E M E N T

S T R A T E G Y

M E A S U R E M E N TGlacier will achieve its overriding objective byheavily relying on revenue growth throughadditional hotel capacity, unique in-hotel icefeatures, and expansion of its non-hotel sources ofrevenue (ice museums and ice-related attractions).At the same time,Glacier must manage its twomajor cost components — employee/hotel costsand ice construction and maintenance.

The customer-related strategies that will assistGlacier to meet its revenue projections arestrongly based on the value proposition of productleadership.While meeting threshold levels on corecustomer expectations (safety, cleanliness, service),it will focus the bulk of its activities on itsdifferentiated adventure theme — different meals,different experiences, and making the most out ofthe northern adventure.

To deliver on these themes,Glacier must beorganized internally to identify, design andimplement the key processes that will meet itscustomers’ demands for uniqueness.On therevenue growth side, these internal processesconsist of developing a highly compellingmarketing story, and supporting it with excitingoutdoor activities and indoor experiencesdelivered by enthusiastic and knowledgeable staff— all of which make Glacier an unforgettableexperience.On the productivity side, processesthat lead to operating efficiencies and icepreservation will assist Glacier to reach itsfinancial targets.

Finally,Glacier recognizes the importance of theright human capital skills, the importance ofseeking the latest ice technologies, and the rolethat organizational culture plays in putting theparts of the company together.As Glacier is aproduct leader in an annually changingenvironment, these elements are critical toongoing success.

Communicating the strategy map:A sample walk-through

In addition to allowing the owner and her partnersto clearly tell a strategic story to the board andthe government, the map can be extremely usefulin communicating the strategy to employees,facilitating a new understanding of how they cancontribute to strategy execution. A specific (yetsimplified) example of how the Glacier strategymap can be used in this manner is found in thetwo next paragraphs. Employees will generallyunderstand the desire to increase cash flow andprofitability, and the part revenue growth plays in

this.The example then will focus on the box“Introduce new sources of non-hotel revenue.”

The map can be used to visually communicate toemployees exactly how introducing new sourcesof non-hotel revenue will support the revenuegrowth strategy.The more specifically theelements of the customer perspective can bedrawn into a discussion, the more likely it is thatemployees will be able to visualize and understandhow the pieces of the map fit together. Forexample, the creation of a grounds tour for dayguests (not unlike the wine tours offered bywineries) can create a sense of adventure anduncommon experience, in large part due to theunique design of the facility. It may include lunch ordinner,making these meals a differentiatingexperience.This serves to create a new source ofnon-hotel revenue. Another example might be icefishing or wilderness walks for day or overnightguests, promoting the back-to-nature theme, andagain creating new non-hotel revenue.Using thestrategy map to explain this can only add toemployee clarity and understanding.

With employee clarity and understanding of whatGlacier wants to accomplish, the stage is set tocommunicate how they can contribute.Theimportance of developing high quality uniqueofferings to support the customer perspective, andmore specifically the need to generate non-hotelrevenue,will be much clearer to employees. Inaddition, they will likely better understand thehiring and training processes that support thethemes being promoted, as well as the culture andcompetencies plan on the strategy map. All of this,coupled with the fact that employees are usually amajor source of idea generation if asked, cangreatly assist Glacier in generating the high qualityunique ideas necessary for strategy execution.

Strategy maps, like the Glacier map, areexceptionally helpful in communicating the intentof the organization to all its stakeholders. Strategymaps not only keep the organization focused atthe executive level, they are also used for manyother purposes, including overviews to bankers,board of directors, and prospective employees.They can also be extremely helpful in guiding themost appropriate content (especially measures)for a balanced scorecard. Strategy maps reallystand out when used (a) to communicate withemployees (who must, each day, perform theactivities that lead to successful strategyimplementation), and (b) as a guiding frameworkfor developing strategy-critical measures.

CASCADING THE STRATEGY MAP

Corporate-level strategy maps help organizationseffectively describe and communicate corestrategies to their stakeholders. Executives reportconsiderable satisfaction after completing thisstage because, often for the first time, the seniormanagement team finds itself agreeing on high-level objectives, value proposition, and keystrategies. Some firms have the simple objective ofclarifying strategic direction and communicating aclear picture to stakeholders.Many strategymapping exercises stop at this “corporate strategymap” point.

However, most strategy mapping exercises use thecorporate map as a starting point for developinglower level maps and scorecards. As Figure 11illustrates, there is a continuum of possible drill-down maps. For example,Mobil developed acorporate-level map for its North AmericanManufacturing and Refining Group, thenencouraged its 18 business units and 14 supportgroups to develop drill-down maps based on thecorporate one. Interestingly, they did not insist thatthe specifics in each divisional map roll up or aremade consistent with the corporate map. ATSAutomation Tooling Systems, on the other hand,has encouraged lower level group, regions anddivisions to develop maps and scorecards thatarticulate with the corporate map.

Organizations can employ different types of

cascading maps. First, there is the “within-organization” type shown in Figure 11.Here thecorporate map is cascaded into a series of lowerlevel maps, usually based on geographical, product,service or group distinctions.

Second, there is the “within-perspective” type ofmap. Figure 12 provides an example of this kind ofdecomposition, illustrating Glacier Inn’s valueproposition broken down into specificperspective-level strategies. For example, a Glacierstakeholder might say that developing customerstrategies around themes like adventure anduncommon experiences sounds good, but whatdoes that really mean? “Within-perspective” drill-down maps convey this additional information.

This can point employees to specific actions andaccountabilities that will help in executing strategy.For example, an employee in charge of thewilderness walks can spend more time thannormal to create the most interesting andeducational walks. She might do so by locatinginteresting landmarks, such as attractive rocks andtrees. She might also research the various typesand ages of trees seen in the walk. Anotherexample is the employee taking guests ice fishing.He might do additional research on the types offish usually caught, including tasting each, andcommenting on this to guests.Certainly, theemployee will need to understand any dangersigns (thin ice for example). The list of examples is


25

Maps and Scorecards of lower level maps may or may not roll up to higher level maps

Cascading the Map

Strategy Map Continuum

CorporateMap &

Scorecard

Division Maps& Scorecard

DepartmentMaps &

Scorecard

PersonalScorecards

SupportDepartment

Maps &Scorecard

Figure 11:Drill-Down Map Continuum

infinite — these are just two simple examples togive the reader a sense for how employees can takeaction using the drill-down map.Management canconvey to employees that this is the type of actionthey are expected to take and will be heldaccountable for.

A third type of cascading is the “across-function”type. Figure 13 provides a simplified example of adrill down for this objective on the main strategymap:“Optimize capital employment” for threefunctions.The Inventory Control section illustrateshow a subsequent drill down was conducted for“Super manage big dollar items”, because it isimportant to keep drilling until an actionable set oftasks results.

The most appropriate drill-down approach will varyfrom company to company, and from business unitto business unit even within a company.Theimportant result is a set of actionable steps that

employees understand and are equipped to act on.Two of the vignettes in the next section (MBET andATS Automation Tooling Systems) show how theseorganizations cascaded their strategy maps.

STRATEGY MAPPING CASEVIGNETTES

In this section,we present three cases oforganizations that have successfully used the strategy

map as an important tool in helping the firm toimplement its strategies.

The cases differ, in the sense that one is in financialservices, one in global manufacturing, and one ineducation.Two of the cases are for-profit, and thethird is an example of a cost-recovery organization.One is publicly listed; the other two are privatelyheld.One is a large multinational, and two aresmaller units within large and mid-size organizations.Each has developed/refined its own uniquemission/vision/value statements.

Despite these differences, each has used a strategymap to communicate its strategic themes tostakeholders. Each has followed the six stepsdescribed earlier, and identified an overriding objectiveand value proposition, and strategic objectives for theirfinancial, stakeholder, internal business process andlearning and growth perspectives.

All have produced corporate-level maps. In two ofthe cases,we illustrate different types of secondaryor “drill-down” maps to represent howorganizations utilize strategy maps at (1) differentbusiness unit/geographical levels, and (2) within aparticular perspective to provide more detail.

Each has subsequently utilized its map to developstrategy-based balanced scorecard measures tomonitor the progress of, and eventually validate,their chosen strategies. Important management

26

Step 4:Choosing the Customer Strategies for Glacier

Clean Safe

Good Adventure

UniqueDesign

UncommonExperiences

DifferentMeals

Back toNature

Product/Service

The Glacier Inn provides an unmatched value,an unrivaled experience and total satisfactionfor our guests through the provision of a unique hotel adventure

Denotes hygiene factor

Cus

tom

er S

trat

egie

s

How

we plan to accom

plish itW

hat we w

ant to accomplish

An all icehotel room

Sleeping ondeer pelts

Unique roomIce features

WildernessWalks

Ice fishing

Experiencethe “North”

Figure 12:Value Proposition Drill Down for Glacier

✙ ✙

✙

✙


27

processes, such as the annual budget,monthlyreviews, recruitment policies and continuousimprovement initiative have been incorporatedinto the measurement system.

Spokespersons at these organizations believestrongly that the use of the strategy map hasprovided a number of positive results. Principalamong these is the ability to describe,communicate, implement and monitor what mustbe accomplished, and how specific individualsthroughout the organization can be engaged toachieve it. All are committed to continue workingwith strategy maps.

The three organizations are:

1. RBC Dominion Securities;

2. ATS Automation Tooling Systems; and,

3. Master of Business, Entrepreneurship andTechnology (MBET) Program.

RBC Dominion Securities’ Life WealthPlanners

RBC Dominion Securities is one the oldest andpre-eminent providers of wealth management inCanada. Based in Toronto,Ontario, the company,with its subsidiaries and affiliates, offers insurance,investment products, and advisory services to

address the needs of policy owners and clients forfinancial protection, capital accumulation, estatepreservation, and asset distribution. Life WealthPlanners (LWP) is a new group of advisorsinvestment branches of RBC Dominion Securities,with offices in Kitchener and Cambridge,Ontario.

Background

In the investment management field, theopportunity to branch out and become anindependent advisor under the corporateumbrella is usually available to those who havedemonstrated excellence within the firm.Confident that they could achieve greater successthis way, in 2005 Dilk Dhanapala and Teri Cook(both certified financial planners) decided toexploit this opportunity by co-founding LifeWealth Planners (LWP). The term LIFE is actuallyan acronym for the partners’ approach to clients:

1. Identifying a client’s Life goals and values;

2. Gathering Information on clients;

3. Finding solutions for clients; and,

4. Evaluating and modifying plans.

Many clients have joined this group of advisorsbecause they feel they are obtaining objective andcomprehensive advice on their specific goals andvalues. Both of the founding members believe it istheir sincerity and execution of completecomprehensive solutions focused at providingvalue to their clients that truly sets them apart.

FinanceProduction,Project

Management Inventory Control

OptimizeCapital

Employment

ReduceReceivables

Minimize WACC

Manage Cash

Invest ONLYWhen

ROI>WACC

Invest ALWAYSWhen

ROI>WACC

Work With Big$$ Suppliers

Shorten DaysInventory

Super-manageBig $$ Items

Determine Big$$ Items

Activity Analysis

RemoveConstraints

Inte

rnal

R

enew

al

Optimize RiskAssessment

Liquidate IdleCapital

Figure 13 — Drill-Down Functional Example

28

M A N A G E M E N T

S T R A T E G Y

M E A S U R E M E N TThe new company’s vision was to leverage itsstrengths and strong network “to become thepre-eminent wealth management team in theregion.” Its business model was to create wealth(its overriding objective) through a customer-intimacyvalue proposition that called for taking thenecessary time to learn and understand clientgoals and develop, for each client, an individualplan that maximized the likelihood of achievingboth financial and non-financial goals.The adoptedstrategy focused on enhancing LWP’s corestrengths in wealth management, and expandingits reach of expertise to cater to clients lookingfor complete solutions to their wealthmanagement needs. By building a network ofspecialists, including a Will and Estate Consultantand an Insurance Consultant, LWP was able toidentify solutions for clients with the mostcomplex financial security needs.

LWP developed its strategy map to communicateand monitor the success of its strategy andaggressive growth plans.The co-founders alsoused the strategy map to assist in the training andengagement of new employees. Because of itsstrong client focus and its desire to use thestrategy map to convey the importance of clientrequirements, LWP created a map that placed thefinancial and customer perspectives side-by-side(see Figure 14). The company’s stated overarchingobjective is to create wealth for the partners byincreasing their financial returns.However, placingan equally high value on service — the theme ofthe customer perspective being to exceed clients’wealth expectations — would help it to achievethe desired level of profit. Placing the customerperspective on an equal footing causes clients to(a) feel that the company fully understands theirbusiness and/or personal issues, and (b) trust thefirm to develop customized solutions.

The LWP internal process perspective centersaround two primary themes.The first theme,“Network”, focuses on three needs:

1. To establish a cutting-edge informationarchitecture that tracks key information onclients as the company continues to build theclient base and follow the customer-intimatevalue proposition;

2. To optimize the management of what isreferred to as the “Centres of Influence”. Thefocus here is on building partnerships with avariety of key individuals and organizations thatcan assist LWP in providing clients with thebest local professionals and the best relevantadvice; and,

3. To enhance the productivity of representativesto maximize wealth generated for clients.

The choice of these internal strategies is entirelyconsistent with LWP’s choice of a customer-intimate proposition. Successful implementationof this theme results in a robust, integratedplanning approach to maximizing client wealth andincreasing the capabilities and productivity of allemployees.

The second theme,“Process”, focuses on the“behind-the-scenes” activity that clients do notsee directly, yet tends to affect their wealth-related goals immensely.The company expectsemployees to find new and more efficient ways ofworking to maximize benefits to clients and thecompany.Three key needs were identified for thistheme:

1. Developing and maximizing efficiencies for allinternal processes;

2. Supervising employees to ensure completecompliance and best practices; and,

3. Measuring service excellence in all areas byusing the balanced scorecard.

The company fosters a culture of loyalty andcommitment through strong hiring andorientation practices, and treating people as well-respected resources.To obtain the type ofemployees needed to satisfy a customer-intimatestrategy, LWP recruited people using a three-stepsystem referred to as PIE (getting the appropriatepipeline of candidates; undertaking a structuredapproach to interviewing for the right fit; and,enabling new employees to prosper quicklythrough effective orientation). Again, the choiceof employee and learning and growth strategies isconsistent with LWP’s value proposition.Thedominant theme is to build clientele.The PIEsystem is the learning and growth strategy that isa key driver in accomplishing it.

Results

The co-founders use the strategy map in several ways.First,the balanced scorecard measures that flow fromthe map to facilitate regular quarterly discussions aboutthe execution of the company strategy.

Second, the company uses the strategy map toorient new staff to what the company is all aboutand what is expected of them, as well as toremind existing staff about their roles in executingcompany strategy.Through the map and thebalanced scorecard, employees are educatedabout the tight connection to strategy and long-term results.


29

The company intends to cascade and link thebalanced scorecard to employee bonuses, toreward employees for progress made towardstrategy achievement.Traditionally, the industrylinks bonuses to short-term financial results and,since employees tend to act in a way thatmaximizes rewards, their behavior might notalways be in the best interests of clients.To fostera culture of long-term client wealth maximization,LWP feels that use of the entire balancedscorecard is appropriate to measure and rewardemployees for helping to advance the companystrategy.

Overall, the company feels that its return on theinvestment in the strategy mapping initiative hasbeen great and continues to grow, and the co-founders agree that their strategy mappinginitiative has played an integral role in its success.The company looks forward to many years ofprosperity.

ATS AUTOMATION TOOLINGSYSTEMS INC.

ATS Automation ToolingSystems Inc. (ATS — seewww.atsautomation.com) is one of the world’sleading designers and producers of turnkeyautomated manufacturing and test systems.Headquartered in Cambridge,Ontario and listedon the Toronto Stock Exchange (symbol ATA),ATS serves a variety of industries, includinghealthcare, computer/electronics, automotive, andconsumer products. ATS is also an emergingleader within the solar industry with its energycells and modules.

Background

ATS began in 1978 when Klaus Woerner beganoperations with a 2,800 sq. ft. special-purpose dieshop and four employees. By the year 2000, underKlaus’s drive and entrepreneurial leadership, the

Figure 14: RBC Dominions Securities’ Life Wealth Planners’ Strategy Map

The Life Wealth Planners’ Vision:To be the pre-eminent wealth management team in the region.

The Life Wealth Planners’Mission:To create a superior standard of excellence within the financialservices industry through effective use of the L.I.F.E.process that

empowers clients to set and achieve purposeful goals

Client Financial

To meet and exceed the wealth managementexpectations of our clients,we will:

To value service over profit and optimize financialreturns, we will:

Provide specific wealthmanagement solutions

aimed at customerloyalty

Provide exceptionalservice to each client

Employ the L.I.F.E.process in client goal

setting

Provide expert, up-to-date advice relevant to

specific client needs

Focus on sustained,unparalleled value to

clients

Develop cutting-edgebuying and selling

processes

Link fees to growth inclient wealth

Seek growth andexpansion in theappropriate new

markets

Optimize investmentresults

Emphasize long-termclient relationships

Manage cash flow

Grow investmentproduct revenue

To achieve our client objectives and meet our financial objectives,we mustNetwork Process

Inte

rnal

Bus

ines

sR

enew

al

Establish theinformationarchitecture

Build andoptimize

managementof the

“Centres ofInfluence”

Enhance fieldrep

productivity

Develop andmaximizeinternalprocess

efficiencies

Supervise forcomplianceand bestpractices

Measureservice

excellence inall areas

Attract andretain

professional,competent

staff

Be recognizedas a people-

focusedemployer

Commit tothe

developmentand quality of

ouremployees

Foster aculture ofloyalty and

commitment

Exploresuccess-

enhancinginformationtechnologysolutions

To maintain an environment comprised of motivated, knowledgeable people, we will:

Cultivate aculture ofcontinuous

improvement

M A N A G E M E N T

S T R A T E G Y


30

company had grown to nearly 4,000 employees at26 manufacturing facilities around the world,withannual revenues approaching Cdn$700 million. Asthe new millennium unfolded, however, ATS’smarkets weakened and problems related to ATS’entrepreneurial way of developing and managingits business began to appear.Klaus became ill, andwhen he passed away in early 2004, it was clearthat for many reasons, a new direction wasrequired.

The problem was that the entrepreneurial culturethat had so successfully helped ATS to grow waslimiting future growth. Even though ATS was twiceas big as its nearest competitor, customers beganexpressing frustrations at the lack of integrationacross the company, and the ATS managementteam started to realize that businessopportunities were being missed.Customerswould say “we do business with your facilities inCanada and Singapore and it’s like we’re dealing withtwo totally different companies.” Comments fromATS sales people included such complaints as,“ourstructure limits our ability to compete to a regionallevel when in reality ATS could be capturing andleveraging its much broader international presenceand critical mass”.

Strategy and the ATS Strategy Map

Following the death of the entrepreneurialfounder,Ron Jutras, the former long-time CFO ofATS took over as CEO. Under pressure forimproved shareholder results, he made strategicplanning and execution within ATS a priority forthe company.The time had come to evolve theentrepreneurial approach into a more disciplinedand systematic approach to running the business.A decision was made in 2004 to leverage the skillsalready in place, and to reshape ATS into astructured, results-driven machine that woulddeliver increased value to its stakeholders.

In many ways, ATS exhibited similarities toorganizations that benefit from a disciplinedapproach to strategy implementation. Forexample,

● The company had implemented a number oflocal initiatives, including a continuousimprovement process, that were notgenerating expected results.

● The Board of Directors and senior managersall had different ideas about what should bethe company’s key strategic themes.

● The executive team knew it needed a roadmapto effectively develop, communicate and

implement a differentiated strategy.● Results needed to be achieved quickly.

During 2005,Ron put into motion a number ofdirectives and meetings designed to build on thesignificant strengths and reputation of ATS, byencouraging the executive team to revisit andrefine the firm’s core mission, vision, and values.These discussions led to explicit recognition ofwhat the ATS overriding objective must be (this wasframed in terms of (1) a desired share pricewithin five years and (2) a financial benchmarkagainst other competitors), and the valueproposition that would permit ATS to reach itsoverriding objective. After considerablediscussion and analysis, ATS selected a customer-intimate value proposition that revolved aroundthe objective of becoming “a total solutionsprovider” to its customers.

Now the story of how ATS would implement itsnew strategy in terms of financial, customer, internalbusiness process and employee growth anddevelopment had to be articulated andcommunicated throughout the organization.Toaccomplish this, ATS first developed thecorporate strategy map shown as Figure 15.

Ron and his senior management team used thismap as the basis for obtaining approval for thenew strategy from the Board of Directors, andthen developed tentative “drill-down” strategymaps for each of their three business groups. Inthe months that followed, they visited each ATSregion and had the regional VP present thecorporate mission, vision, values, and map.Thesepresentations summarized the strategic planningprocess at ATS. Along with the presentation, acommunication workshop was conducted withthe managers, and an electronic “toolkit” wasgiven to each business unit that included a softcopy of a video made by Ron Jutras reinforcingthe importance of the company’s new direction.This drill-down map is shown in Figure 16.

With strategy now in place and beingcommunicated to increasingly lower levels,balanced scorecard measurement is well underway and being used to monitor the extent towhich specific financial, customer, internal processand learning and growth objectives are beingrealized. Additionally, these measures havebecome part of the regular ATS quarterly, annualand long-range budget process, and newlyinstituted quarterly and annual operating planprocesses.

AAUUTTOOMMAATTEEDD

SSYYSSTTEEMMSS

GGRROOUUPP


31

BUILD SUPERIORSHAREHOLDER

VALUE

GROW REVENUES INCREASE RETURNON CAPITAL

GROW OPERATINGMARGIN

BUILD CONFIDENCETHROUGH PREDICTABLE

PERFORMANCE

PROVIDE THE BESTCUSTOMER EXPERIENCE DELIVER BEST TOTAL VALUE

CREATE LOYALTY THROUGHEXCELLENCE IN QUALITY,

SERVICE & DELIVERY

DEVELOP LONG-TERMSTRATEGIC RELATIONSHIPS

EXCEL IN TIME-TO-MARKET BUILD A GLOBAL BRAND

BECOME A MARKET DRIVENCOMPANY

ACHIEVE EXCELLENCE IN THECOMMERCIALIZATION OF

STRATEGIC NEW PRODUCTS

IMPROVE RESOURCEUTILIZATION, REDUCE COSTS,

AND PROVIDE A HIGH QUALITY

GROW REVENUE WITHPARTNER ACCOUNTS

LEVERAGE STRATEGICRELATIONSHIPS WITH

TECHNOLOGY AND SERVICES

PROACTIVELY IDENTIFY ANDMANAGE RISK

HAVE THE RIGHT PEOPLE INTHE RIGHT PLACES AT THE

RIGHT TIME

CELEBRATE SUCCESS

HAVE THE DATA AND TOOLS TOACHIEVE OUR OBJECTIVES

LIVE OUR CORE VALUES

BE A GREAT PLACE TO WORK

DEVELOP A WINNING TEAMCULTURE

OUR ROADMAP – FOCUSED ON THE FUTURE

Delivering excellence in innovative manufacturing solutions to the world’s most successful companiesFINANCIAL

PERSPECTIVEThe financial

objectives we mustachieve to satisfyour shareholders

F1

CUSTOMERPERSPECTIVEThe customerneeds we must

satisfy to achieveour financialobjectives

BUILD ENDURING STRATEGIC RELATIONSHIPS BY DELIVERING VALUE

F2 F3 F4 F5

C1 C2 C3

INTERNALPROCESS

PERSPECTIVEThe business

process we mustexcel at tosatisfy our

customers andshareholders

FULFILL OUR CUSTOMER & SHAREHOLDER NEEDS THROUGH TARGETED MARKETING BACKEDBY INNOVATION & OPERATIONAL EXCELLENCE

11

12

13

14

15

16

17

18

19

LEARNING &GROWTH

PERSPECTIVEAligning our

intangible assetsto improve

critical processes

EXECUTE OUR STRATEGY BY FOCUSED DEVELOPMENT IN OUR EMPLOYEE WORK ENVIRONMENT

Figure 15 — ATS Corporate Strategy Map

CorporateStrategy Map& Scorecard

I.T.Scorecard

H.R.Scorecard

QualityScorecard

FinanceScorecard

Sales &MarketingScorecard

STRATEGIC PLANNING PROCESS

1.Translate the Corporate Vision andMission into strategic objectives,

measures and targets for the totalcorporation, driving integration &

synergy.

2.Translate the Corporate strategicobjectives, measures and targets intocommon Group specific strategies,

driving integration & synergy within abusiness group.

3.Translate the Group strategicobjectives, measures and targets into

common Group regional specificinitiatives, driving integration &

synergy within a geographical region.

4.Translate the Group regionalstrategic initiatives, measures andtargets into divisional initiatives,

measures and targets.

5.Consolidate & translateCorporate,Group & Divisional

objectives, measures and targets intocommon support initiatives,measures and targets driving

integration & synergy throughoutthe corporation.

Corporate Support Service Functions

Figure 16 — ATS Drill-Down Strategy Map

PPRREECCIISSIIOONN

CCOOMMPPOONNEENNTTSS

GGRROOUUPP

SSOOLLAARR

GGRROOUUPP

ATS Customer Value proposition: Providing Complete CustomerSolutions by offering our customers: the ability to fulfill all the customers’solution needs by selling multiple, bundled products and services; exceptionalservice before and after the sale; and a long-term customer relationship builton trust.

L1

L4

L2

L5

L3

L6

DivisionalScore-cards









ASGN.A. EastScorecar

ASGN.A.West

ASGEurope

Scorecard

ASGAsia

Scorecard

ASG StrategyMap &

Scorecard

PCG StrategyMap &

Scorecard

PCGN.A.

Scorecard

PCGEurope

Scorecard

PCGAsia

Scorecard

Solar StrategyMap &

Scorecard

SSPScorecard

PhotowattScorecar

32

M A N A G E M E N T

S T R A T E G Y

M E A S U R E M E N TResults

In reflecting on ATS’s experience with its strategymap,Ron Jutras pointed out that that the challengefor ATS in meeting its customer needs will be metby its ability to convert an entrepreneurial, fire-fighting culture to a more planned and disciplinedmanagement style.The strategy map has assistedthis transition in several ways. In talking about theprocess of developing and communicating thestrategy throughout ATS via the strategy map,Ronexplained:

It has brought our organization together moreglobally.There is no question in my mind thatour regional people are now more closelyintegrated.The strategy map has encouraged theregions to be more closely joined at the hips, toconsider the organization as a whole and tofocus on strategy rather than just day-to-dayevents. As a result, we have more coordination,better alignment and better understanding. Forexample, we are beginning to see the earlybenefits of us doing a much better job atleveraging our global purchasing power.

We are also bubbling up issues such as howdoes this business unit/strategy/initiative fitwithin our overall organization — when wemeet you can see “strategy” coming across inour meetings.We are getting a much clearerpicture of where we will be going and why weare going there.When you talk to theoperational people, they are beginning to outlinewhere they see the future.

Without doubt, people still say that our desire tomake strategy everyone’s job increases whatthey have to do on top of their day-to-daybusiness.However, I believe they will soon view itas an empowering tool to allow them to makebetter and faster decisions and allow us to freeour time for more important matters like takingadvantage of growth opportunities to accelerateour business.

The strategy map has played a significant role inhelping us understand, communicate andexecute our strategy. We are committed to it.

THE MASTER OF BUSINESS,ENTREPRENEURSHIP AND

TECHNOLOGY (MBET) PROGRAM

MBET is a distinctively different graduate business

program that has been carefully designed to (1)respond to Canada’s pressing need for moreinnovation, (2) build on the University ofWaterloo’s distinctive energies in technology andentrepreneurship, and (3) attract entrepreneuriallyoriented individuals interested in changingCanada’s business landscape.

Background

Despite the existence of numerous excellentbusiness programs,Canada’s record has beenweak on managing and mobilizing entrepreneurialand technological opportunities into commerciallyviable products and businesses. Responding to thisneed, in early 2000 the University of Waterloo,well known for its distinct policies on intellectualcapital and success at technologicalcommercialization, created the Centre forBusiness, Entrepreneurship and Technology(CBET) (www.cbet.uwaterloo.ca).The objective ofthe Centre was to (a) improve the quality offuture business leaders through focused programsthat would attract more innovative students, (b)improve training, and (c) develop the managerialskills that would assist in converting opportunitiesinto viable commercial businesses.MBET was theCentre’s flagship program.

Strategy and the MBET Strategy Map

MBET represents a combination of private andpublic sector interests. It exists within a publiclyfunded university but, as is increasingly the casewith new professional programs in Ontariouniversities, its funding comes almost entirely fromstudent tuition and externally raised money. Inother words,MBET must be financially viable or,like any private sector organization, it will cease toexist.

MBET designers believed they knew how todevelop a first-class curriculum to attractentrepreneurs, and to provide the type of“knowing-doing” educational program that wouldhelp overcome Canada’s innovation gap.However,they needed to be able to quickly tell the MBETstory to prospective faculty, students, advisorycouncil members, potential donors and mentors,and other educational and administrative units oncampus.The strategy map proved to be an idealway to communicate the university’s chosenmission, vision, and strategies.

MBET’s overriding objective was social in nature —the number of new ventures it planned to spin outof the program in the next few years. Recognizingthat the graduate business education field was

U s i n g S t r a t e g y M a p s t o D r i v e P e r f o r m a n c e

already filled with literally thousands of MBAprograms, the university consciously chose adifferent name,MBET, and adopted a valueproposition clearly focused on product or educationalleadership. Its corporate-level strategy map is shownin Figure 17.

Because of its joint public/private sector objectives,MBET’s strategy map puts its financial andstakeholder perspectives on an equal footing, todenote that, not only must it satisfy its stakeholders,it had to do so in an economically sustainable way.

The educational leadership value proposition is inevidence in the stakeholder perspective.Here, theMBET strategy is to create an “educational

adventure” and a “choice” working environment forfaculty and other stakeholders.The internal andlearning and growth perspectives indicate how this,and meeting its financial obligations, are to beaccomplished.

The corporate map provides a snapshot of the high-level strategies MBET selected to achieve itsoverriding objective and mission.However, similarto other strategy maps, each strategic objective onthe map can be “drilled down” to provide additionalinformation.This is illustrated by the stakeholder

objective to create “a differentiated educationaladventure designed to produce tomorrow’sinnovators”. Figure 18 portrays, in more detail, howthe program would attract entrepreneurial studentsby promising and delivering on a number of keyeducational components.Note that only certaincomponents are true differentiators.Things such assimple admission procedures were taken asnecessary but not sufficient conditions for mountingthe program.The real differentiators are thosecomponents not easily found in other programs.

Results

According to the program designers, the MBET

strategy map has been extremely helpful inexecuting the strategy the university believed wouldresult in a high quality, differentiated, program — aprogram that could leverage Waterloo’sentrepreneurial and technological advantages andprovide an alternative to Canada’s existinglandscape of graduate business programs.

First, the choice of the name on the map sends asignal that MBET is clearly a niche program. Forthose who are (E)ntrepreneurial and have a(T)echnological background, it promises to providea set “knowing-doing” (B)usiness skills that will

33

Master of Business,Entrepreneurship and Technology - MBET – Strategic Map

To be an entrepreneurship program of local and international renown,where the exceptional talents of graduates, and aninternational community of committed stakeholders, leverage technology to create breakthrough opportunities that result in new,

market-leading businesses

To meet and exceed the expectations of entrepreneurial students, faculty,capital providers and program supporters,we provide:

To achieve our stakeholder objectives and meet our financial obligations,we must:

To create and maintain a culture of innovation with our faculty, staff and external stakeholders, we:

EducationAdventure

E(I)ntrepreneurFocus

Inspired Faculty CommunitySupport

New BusinessCreation

NurturingEnvironment

To achieve financial self-sufficiency,we:

Financial Obligation

A differentiated educationaladventure designed to produce

tomorrow’s innovators

A learning/doing environment thatpositions CBET as a choice UW

initiative in which to work,contribute and support

Set realistictuition fees

Seek out revenuegenerating mission-

consistentopportunities

Maximize financialand moral support

from university,donor groups and

governmentagencies

Support development ofrequired competencies

Use new technology asenabler for teaching &program management

Link research interests tooverall mission

Mis

sion

& T

hem

es

Stak

ehol

der

Sati

sfac

tion

In

tern

al P

roce

sses

R

enew

al

Figure 17 — The MBET Strategy Map

Build the right program Build the right faculty Build the necessarysupport system

Achieve operatingefficiencies

MBET Product Leadership Value proposition: Providing adifferentiated educational adventure designed to help technicalentrepreneurs create leading edge new businesses.

assist individuals to commercialize their ideas andcreate new ventures.

More importantly, the map was used tocommunicate the differentiators to stakeholders.As used in presentations to potential students,future donors, interested faculty and advisorycouncil members, the map indicates how eachstakeholder group fits into the MBET vision. Forexample, Figure 18 illustrates the MBET valueproposition for the prospective student. Faculty alsoused this map to create a curriculum entirelyconsistent with these propositions. Similarly, thecorporate MBET map shows strategy at the internalprocess perspective level, called “Build SupportSystem”. A drill down of this objective shows asecondary map for the roles and responsibilities ofthe Advisory Council they are expected toimplement to achieve the CBET vision.

After the map was created, balanced scorecardmeasures were developed and collected for each ofthe four perspectives.The map has been highlyuseful in determining what measures will determineif the strategy is working. For example, one strategicmeasure at the stakeholder level is the ratio ofacceptances to offers.The designers pointed outthat since many MBA programs are general innature and not highly differentiated, many studentsapply to several programs to increase theirprobability of acceptance at one.Consequently, theactual ratio of acceptances to offers is often quitelow in many university MBA programs.On the

other hand, if MBET is sufficiently differentiatedfrom other graduate business programs, theacceptance to offers ratio should be much higher.ToMBET staff, a ratio below 75% indicates that either(1) the differentiated message is not getting throughand/or (2) other universities are beginning tocompete in the same market by replicating theMBET program. Either situation is cause forreviewing its strategies.

To date, however, the niche strategy appears to beworking.MBET has attracted an increasing numberof entrepreneurially oriented students. Studentsactively participate in business competitions.Newcompanies are being formed. Faculty withentrepreneurial interests are part of the program.Advisory council members actively assist youngstudents to move forward on their business ideas.Donors are being attracted to the CBET vision.

These results have been made easier by the use ofthe strategy map,which has provided guidance forall those involved in implementing MBET’sdifferentiated educational strategy, and helping toachieve its goal of improving Canada’s innovativecapacity.

THE BENEFITS OF STRATEGYMAPPING

From these three case vignettes, it is apparent thatthose responsible for developing, communicatingand executing their strategy maps believe strongly

A differentiated educationaladventure focused designed toproduce tomorrow’s innovators

The Value Proposition

Simple Admission _

Clear roles,expectations

Professional

EducationAdventure

Unique design Uncommonexperiences

Inspiration IndustryParticipation

NurturingEnvironment

Build your ownbusiness

Combine both “knowingand doing” opportunitiesacross multiple disciplines

ProgramModules forInnovators

Designed forinnovators

Simulates theentrepreneurial

process

CommercializationPracticum

Build on UW brandfor innovation (e.g. IP,

CP, spin-offs)

Mentorship (faculty, industry)

InspiredFaculty, staffand mentors

LocalCommunity

Support StudentNetworking

Reputable andengagedadvisorycouncil

AlumniNetworking

Student-Focused Attributes

Figure 18 — An MBET Drill Down

34

✙ ✙

✙

denotes a required and non-differentiable attribute✙


35

in their benefits. Beyond these case examples,however, how strong is the evidence that theuse of strategy maps has had a positiveoperating and financial impact on organizationsadopting them? Here are some observationsfrom practice and from the performancemeasurement literature.

Little in the academic literature proves ordisproves the hypothesis that adoption ofbalanced scorecard and strategy mappingsystems is positively associated with superiorfinancial returns.Hoque and James (2000)16

documented a positive association betweenBSC use and organizational performance.Onthe other hand, Ittner and Larcker (2003)17

showed that BSC use had no impact onperformance unless organizations establishedcausal linkages between their non-financialmeasures and financial outcomes.Those thatdid produced significantly higher returns onassets and equity than those that did not.

Perhaps these mixed results are not surprising.With all that is going on inside modernorganizations, it is extremely difficult foracademic studies to tease out the effects of asingle initiative on the financial performance ofan entity.

Despite this lack of general empirical evidence,it is noteworthy that a large number oforganizations themselves claim significantfinancial or market share gains as a result ofadopting strategy mapping/balanced scorecardinitiatives.The best evidence of this comesfrom the approximately 70 “Hall of Fame”companies from around the world that claimto have achieved breakthrough results afterimplementing strategy maps and balancedscorecards. Readers can view theseorganizations and their testimonials by goingto http://www.bscol.com/bscol/hof/ andlooking at current members. In addition,readers can peruse some additional samplestrategy maps developed by these companies.

To become a “Hall of Fame” company,organizations must meet certain conditions,including (1) the adoption of the “principles ofa Strategy-Focused Organizations” (whichincludes a strategy map), and (2) theachievement of significant financial or marketshare gains.18 Examples of well-knownorganizations that meet these criteria andhave been selected for membership in the“Hall of Fame” include CIGNA P&C,UPS,Royal Canadian Mounted Police,Wells Fargo

Bank,Mobil USM&R, AT & T Canada,HiltonHotels, Ricoh, BMW,Tata Motors and GTE.Many of these organizations claim impressiveoperating and financial improvements from theadoption of strategy maps and resultantscorecards.

VALIDATING THE MAP

The previous section highlights the criticalimportance of “validating” the strategy map.Once the map is developed, goals andmeasures that are consistent with and advancethe chosen strategy must be specified.Validation refers to verifying the cause-and-effect linkages between the variousperspectives on the strategy map.Validationonly occurs when management can track howimproving the measures at one level of themap create improvements in otherperspectives and contribute to achieving theoverriding objective.

For example, some years ago Sears19, claimedto be able to track the impact of a change inits Learning and Growth actions on thefinancial returns of the organization as awhole. Specifically, they claimed that a 5 pointimprovement in “employee attitudes” led to a1.3 point improvement in “customersatisfaction”,which led to a 0.5% improvementin “revenue”.

Unfortunately, current experience stronglysuggests that most organizations have not yetused their measures in a robust way thatwould verify that if they do action “X” inPerspective “A”, they will see result “Y” inPerspective “B”. Ittner and Larcker20 claim thatthis is partially due to corporate laziness orthoughtlessness.To some extent, this may bethe case, but in the dynamic world of business,it is very difficult to precisely determine the “ifwe do this here, then we should see thatthere” link. Ittner and Larcker’s study claimedthat only 23% of the studied organizationsseriously attempted to validate the linkagessuggested by the strategy map. Interestingly,however, those 23% achieved 3% higher ROA’sand 5% higher ROE’s than organizations thatdid not attempt to validate their models. Asdifficult as validation may be, it appears there isa benefit to those who spend time evaluatingthe quality of their hypothesized map linkages.In general, then, organizations wishing tovalidate their maps tend to follow these steps:

1. Develop the model to be tested (this is the

36

M A N A G E M E N T

S T R A T E G Y

M E A S U R E M E N Tcreation of an agreed-upon strategy map);

2. Add data to the model (this is the developmentof the balanced scorecard targets and measuresfor each perspective);

3. Assess the results periodically (this involvescomparing BSC actual results to targets anddetermining whether results in one perspectiveare statistically linked to results in others);

4. Refine the model (this may mean revisiting themeasure or the strategic objective todetermine if the proposed linkage is correct, orto improve its predictability); and,

5. Plan action based on verified results (this wouldresult in resources being directed to actionsleading to improved operating and financialperformance).

The effort of validating the map brings hugebenefits. In addition to the Ittner and Larckerfindings, other researchers have found similarcause-and-effect outcomes. For example, in thearea of customer-related strategies,Castellano(2006) found that a five percent increase incustomer loyalty results in a staggering lifetimeprofit increase of 95 percent, and that a twopercent increase in customer loyalty is theequivalent to a ten percent cost reduction 21.

INTEGRATING STRATEGYMAPPING, ACTION PLANS ANDTHE BUDGETING PROCESS

This section discusses how different types ofmanagement initiatives can be integrated with thestrategy map. It first focuses on how the strategymap can assist in selecting the appropriatemanagement tool from the wide spectrum ofavailable tools.We then discuss the symbiosisbetween the strategy map, balanced scorecard, andone management tool used almost universally —the budget and annual review procedure.

Using the Strategy Map to SelectAppropriate Management Initiatives

Over the past two decades, executives havewitnessed an explosion of management initiatives,tools, and techniques.The term “managementtool” now encompasses a broad spectrum ofapproaches to management — from simplistic tocomplex — that promise to improveorganizational results.Many of these tools areextremely helpful, but many also offer conflictingadvice.

All management tools have one thing in common:

they promise to make their users more successful.And beleaguered managers — struggling todemonstrate that they can adapt to rapid changein an increasingly competitive world — haveturned to management tools in unprecedentednumbers.Keeping up with these techniques anddeciding which ones to use are important parts ofa manager’s responsibilities. But there has beenlittle guidance on assessing whether a tool isappropriate for a particular situation ororganization, or if it will help truly differentiate acompany from competitors.The reality is thatmost of these tools have failed to live up to theirbilling — not necessarily because they were poortools but because they have been appliedinappropriately. Estimates are that the averagefailure rate of these management initiativesexceeds 80%.Years ago, a seminal article22 arguedthat most organizations adopt new managementinitiatives, not on the basis of need, nor on thebasis of a well thought through strategy, but forthe following reasons.

● Mimetic — organizations adopt initiativesbecause they see others doing it and do notwish to be left behind. Such examples wouldinclude just-in-time manufacturing (JIT), activity-based costing (ABC), customer relationshipmanagement (CRM), etc. As has beendemonstrated over time, many firms adoptedsuch techniques only to find that they were notthe magic bullet they were seeking, and endedup dropping them.

● Regulatory — organizations are forced toadopt new initiatives because of political orcorporate pressure, regardless of the chosenstrategy. An example of the former would bethe recommendations of the Sarbanes-OxleyAct in the USA and Bill 198 in Canada. Anexample of the latter would be the pressurethat organizations will often place on theirsuppliers to be ISO 9000 compliant. In thesecases, initiatives are implemented not becausethe firm believes it is right for them, butbecause they have little choice in the matter.

There is little doubt that these same situationsprevail today and, as new programs/tools/initiativescome to light,may even be getting worse.Thereare no “Consumer Reports” on managementtools to help managers sort fact from fiction, norto decide where to use a tool most effectively. Inthe absence of a selection framework, groundlesshype surrounding the promotion of certain ofthese tools can make choosing and usingmanagement tools a dangerous game of chance.

Strategy map adopters gain a tremendous

1 Mission,VisionStatements

Strategy Map

Cascade todivisions,

employees

Initiatives andactions

selection

Goals andmeasuresselection

BalancedScorecard

Validate strategy

Communicate strategy map (SM) andspecify the scorecard that will monitor

strategies

Communicate balanced scorecard (BSC)and specify the action plans required to

meet targets and objectives

Integrate SM and BSCwith budget and othermanagement processes

2

3

5

4

advantage by gaining insight into the mostappropriate initiative for them.The reason simply isthat construction of the strategy map forcesorganizations to carefully consider their valueproposition. In turn, the value proposition limits thetype of strategies that will be implemented andpursued at the financial, customer, internal businessprocess and learning and growth levels.Knowledgeof the primary value proposition and of thetargeted strategies leads naturally to the type ofstrategic management initiatives and tactics thatshould be selected to support the chosenstrategies. For example, a firm that developsstrategies to support a product leadership valueproposition should be much less likely to adopt aCRM initiative than a customer-intimate firm,whosestrategies are built on understanding and quicklyresponding to customer needs. An operationallyexcellent firm should be far more likely to considerJIT than a customer-intimate firm, because thestrategy of the OE firm is far more dependent oncreating the maximum possible efficiencies and costsavings in its internal business processes. A productleadership firm will be more disposed to initiativesthat promote creativity and speed to market thanensuring 100% quality.

In short, to achieve the objectives on the strategymap and its related balanced scorecard targets, anorganization must choose the right initiatives.The

strategy map provides an important framework that(a) permits this choice to be systematically madeand (b) in so doing, avoids many of the costly errorsfirms have traditionally made in selectingmanagement initiatives/tools.

To illustrate this, Figure 19 first shows theprogression of events that would take place in awell thought-through strategy process.Event 1 —The management team arrives at a statement of itscore mission/vision/values.Event 2 — The strategymap builds on this using the steps outlined earlier inthe MAG. Specifically, the executive team agrees onan overriding objective and selects a dominant valueproposition.

This sets the stage for selecting strategies at eachperspective that are designed to achieve the visionand mission.Event 3 — Through the balancedscorecard, strategic goals, measures, targets andweights are then developed around the keystrategies.Event 4 — The new strategy andstrategic goals are communicated throughout theorganization, and local managers/employees areasked to consider what they must do to implementthe core strategies.

At this point, a series of action plans and tactics areproposed and selected — and it is at this pointwhere things can go badly wrong.Many of theseaction plans will call for the selection of specific


37

Figure 19 — Strategy and the Choice of Management Initiatives

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S T R A T E G Y

M E A S U R E M E N Tmanagement tools to assist in the requiredtransformation. And while many managementinitiatives appear to claim that “one size fits all”,most do not — the success of the action plan willdepend, largely, on the quality of choice andimplementation of the right management initiative.

Since strategy maps and the balanced scorecardare integrating frameworks, they facilitate thechoice and incorporation of management toolsquite well.Table below indicates the mostappropriate types of initiatives for each of thechosen value propositions.

The point of Table 6 is to show that the choice ofthe value proposition leads to choosingmanagement initiatives that more naturally fit thetype of business activities that should occur oncethe proposition is chosen. It also indicates thestrategic perspective most consistent with thechosen initiatives. Simply stated, organizations thathave chosen their value proposition well will notget distracted by management tools whosefunction is primarily to support otherpropositions.

This does not mean that a customer-intimate firmcannot benefit from benchmarking, or a productleadership firm from data mining.Nor does it meanthat an operationally excellent firm is the only typeof organization that will use BPR to improve itsinternal business processes. In all cases theyprobably can, but they are secondary to initiatives

that support the dominant proposition.

Chemical Bank provides an interesting example ofhow this kind of logic was applied to the bank’schoice of initiatives23. Just before creating thebank’s strategy map and scorecard, the project

team estimated it had over 70 initiatives underway.Not surprisingly, it turned out that many ofthese had no connection to the company’s newlydeveloped core strategies or scorecard measures.Without the insight provided by the strategy mapand related measures, the Bank had no frameworkfor deciding on and prioritizing the mostappropriate initiatives. Introducing the strategymap allowed Chemical Bank to dramaticallyreduce the number of existing initiatives, and tointroduce new initiatives more aligned with thefirm’s strategic objectives.

Strategy Mapping and the BudgetaryProcess

It may be noted that initiatives belonging to thefinancial perspective in Table 6 were listed under“all propositions”. The reason is that someinitiatives are so pervasive that they exist invirtually all firms, irrespective of the chosen valueproposition. Examples include financial measuresand tools such as profit, return on investment, cashflow statements, and EVATM.These are found, inone form or another, in all for-profit organizations.In essence, these are the lagging, aggregate, financialmeasures that evidence how well individualinitiatives within learning and growth, internalprocesses and customers have been executed.

To benefit most from the strategy map,organizations have learned that, in addition to

tracking relevant financial measures, strategy mustbe linked to and made part of their everydayoperations.This is Event 5 in Figure 19. Sincestrategy is defined in terms of desired actionsimplemented at each of the four perspectives, this

All Propositions

Budgeting, Returnon Investment

(ROI), EmployeeLoyalty

Financial

Table 6: Value Propositions and Management Initiatives

Dominant ValueProposition

Chosen

ManagementInitiatives

StrategicPerspective Most

Affected byChoice of Initiative


Just-in-timemanufacturing (JIT),Activity-Based Cost

Management(ABC/M), Business

ProcessReengineering (BPR)

Internal

Customer-Intimacy

CustomerRelationshipManagement(CRM),Data

Mining, PermissionMarketing,

Customer

ProductLeadership

Computer-aidedDesign (CAD)Visioning, IdeaGeneration,

Scenario Planning

Learning & Growth

means that organizations need to (a) tie theirbalanced scorecard reporting system to theirplanning, budgeting, and review process — and (b) include in this process both the expectedoperating costs and strategic investments requiredfor the activities that will take place in theircustomer, process management, human relations,information technology, and knowledge creationactivitiesxiv.

The key here is to recognize how the newstrategy mapping and balanced scorecard system islinked to the existing budgeting system.Theanswer is that the budget, in addition toforecasting revenues and costs from ongoingactivities, now explicitly recognizes new initiativesprompted from the strategic objectives andtargets of the firm.While this may seem selfevident, strategy-based budgets, informed by thestrategy map and its measures, are seldomintegrated into ongoing budgeting activities.

This integration offers several benefits. Forexample,Chemical Retail Bank screenedinvestments for their potential impact on theirbalanced scorecard.Over 50% of investmentrequests were discarded as “non-strategic” (i.e. theimpact on the balanced scorecard was simply notgreat enough)24.This helped free resources forthose initiatives deemed truly strategic.

The potential to use the strategy map for makingbudgeting decisions is immense. Each line item andinvestment can be considered in the context of itsimpact on achieving strategy map components. Forthis reason, we can expect to see more and morestrategy maps and balanced scorecards asprominent parts of the annual planning cycle. Forexample,Northwestern Mutual, one of the oldestand most respected companies in the UnitedStates, links all new project-funding proposals tothe company’s strategic objectives,with impressiveresults.Within one year of aligning projects to thebalanced scorecard, the company saw a 21 percentimprovement in the number of projects meetingscope, schedule, and budget goals25.

Some companies, like IKEA, have gone one stepfurther and eliminated the traditional budgetingprocess, replacing it with balanced scorecard-likeapproaches for target setting.While this step maybe extreme and inappropriate for mostcompanies, it does demonstrate the power ofthese tools to affect performance26.

In terms of communication, linking strategymapping to budgeting can very effectively indicateto employees where new initiatives can be mostvaluable. Since employees are an important sourceof new ideas and initiatives, the opportunity to linkthe strategy map to the budget to execute on thechosen strategy is immense. For example,companies like Saint Mary’s Duluth Clinic reviewsand refreshes its strategy map each year at budgettime.This helps reaffirm that it is measuring andcommunicating the right things27.

CONCLUSION

Strategy mapping is an effective and powerfulinitiative that can help keep a company at itscompetitive peak.The tools, techniques and stepsprovided in this guideline enable organizations toeffectively and efficiently conduct their ownstrategy mapping initiative and to successfullyimplement strategy where others have failed.

Companies struggling with strategy execution willfind maps a compelling way to think about, agreeupon, and communicate their strategic initiativesto various stakeholder communities.This can onlypromote better execution. In addition, strategymaps form the appropriate basis for (a) balancedscorecard performance measures, (b) linkages toappropriate management and validationtechniques, and (c) allocating resources toinitiatives and strategies that support its valuepropositions and overriding objectives.This hasproven to lead to better performance for manyorganizations, including those in the “Hall ofFame”.

Realizing the full power of a strategy mappinginitiative calls on top managers to commit todescribing and communicating strategy in a waythat will guide decision making away from a short-term focus on financial figures. As employees at alllevels learn to use the strategy map to guide theiractions, they will align themselves, and theircompany, to execute strategy in a manner neverbefore experienced. In doing so, the company willposition itself to generate the profitability and todemonstrate the accountability demanded bycustomers, shareholders, employees, and thecommunities around them.


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M E A S U R E M E N T 1 R.Charan and G.Colvin,“Why CEOs Fail”, Fortune, June 21,1999.

2 Balanced Scorecard Collaborative — bscol.com,May 23,2006.

3Michael Porter,Competitive Strategy:Techniques for Analysing Industries and Competitors,The Free Press,1980(5-Forces);P. Selznick, (1957) Leadership in Administration: A Sociological Interpretation.Row,Peterson,Evanston Il. 1957 (SWOT) (PEST); E.de Bono,de Bono’s Thinking Course, London,1982,British BroadcastingCorporation, (PMI);W.Chan Kim and Renee Mauborgne,“Blue Ocean Strategy”,Harvard Business Review,Oct.2004.

4 Larry Bossidy, Ram Charan and Charles Burck,Execution:The Discipline of Getting Things Done,CrownBusiness,New York,2002,p.5.

5 Michael Roach,quoted in Corner Office,Globe and Mail, Aug 21,2006,p.B10.

6 Jeffrey Pfeffer and Robert Sutton,The Knowing-Doing Gap:How Smart Companies Turn Knowledge into Action,Harvard Business School Press,2000,p.3.

7 J. Low and T.Siesfield,Measures That Matter, Boston:Ernst & Young,1998 and Measures That Matter: Anoutside-in perspective on shareholder value recognition,UK:Ernst & Young,2000.

8 David P.Norton,https://www.bscol.com/bsc_online/learning/sfo/

9 Adapted from R.S.Kaplan, and D.P.Norton.The Strategy-Focused Organization:How Balanced ScorecardCompanies Thrive in the New Business Environment.Harvard Business School Press,2000,p.73.

10 Michael Porter,“Strategy and the Internet”,Harvard Business Review,March 2001,p.71.

11 Tom Peters,“Tom Peter’s True Confessions”,Fast Company,December 2001.

12 M.Treacy and F.Wiersema,“The Discipline of Market Leaders:Choose Your Customers,Narrow YourFocus,Dominate Your Market”, (Cambridge:Perseus Books,1995).

13 Wal-mart,2006,Quarter 1 release.

14 “Beat China on Cost”,Canadian Business,Nov 7-20,2005.

15 M.Huselid,B.Becker and R.Beatty,The Workforce Scorecard:Managing Human Capital To Execute Strategy(Harvard Business School Press) 2005.

16 Z.Hoque and W. James.2000.Linking the balanced scorecard measures to size and market factors:Impact on organizational performance. Journal of Management Accounting Research (12):p.p.1-17

17 Christopher Ittner and D.Larcker,“Coming Up Short on Non-Financial Performance Measurement.Harvard Business Review,November 2003,88-95.

18 http://www.bscol.com/bscol/hof/nomination/

19 A.J.Rucci, S.P.Kirn and R.T.Quinn,“The Employee-Customer-Profit Chain at Sears”,Harvard BusinessReview, January-February 1998.

20 Christopher Ittner and David Larcker,“Coming Up Short on Non-financial Performance Measurement”,Harvard Business Review,November 2003.

21 Richard J.Castellano, “Time for a Fresh Look at Your Loyalty Management Strategy.” ICCM. Jul. 7,2006,www.iccm.com.

22 Paul J.DiMaggio and Walter Powell,“The Iron Cage Revisited: Institutional Isomorphism and CollectiveRationality in Organizational Fields,” American Sociological Review,Vol 48, April 1983.

ENDNOTES

41


23 R.S.Kaplan and D.P.Norton,“Linking Strategy to Planning and Budgeting”,Balanced Scorecard, ArticleReprint No.B0005A,Harvard Business School Publishing,2000.

24 R.S.Kaplan and D.P.Norton,The Strategy-Focused Organization:How Balanced Scorecard Companies Thrivein the New Business Environment (Harvard Business School Press) 2000.

25 R.S.Kaplan and D.P.Norton,Strategy Maps:Converting Intangible Assets Into Tangible Outcomes (HarvardBusiness School Press) 2004.

26 R.S.Kaplan and D.P.Norton,The Strategy-Focused Organization:How Balanced Scorecard Companies Thrivein the New Business Environment (Harvard Business School Press) 2000.

27 R.S.Kaplan and D.P.Norton,Strategy Maps:Converting Intangible Assets Into Tangible Outcomes (HarvardBusiness School Press) 2004.

i A good review of BSC principles is found in R.B.Kaplan and D.P.Norton.The Balanced Scorecard:Translating Strategy into Action.Harvard Business School Press,1996.

ii A future MAG may address the specific concerns of developing strategy maps for not-for-profit andpublic sector organizations.

iii It is not just a misunderstanding between top and lower levels of management.R.Charan and G.Colvin“Why CEOs Fail”, Fortune, June 21,1999,pointed out that in one organization, the five top executiveswere asked to list the company’s ten highest priorities.Only two appeared on more than one list.

iv The term “strategy map” is the most common term to describe cause and effect relationships amongvarious balanced scorecard perspectives.However,other terms that have been used to express the samekind of visual phenomenon include,“knowledge maps”,“transformation maps”,“strategy cause and effecttree”, and “concept maps”.

v While solid academic evidence has yet to fully justify the attention received by the balanced scorecardmovement, there is no question about its popularity in practice.There are now literally hundreds oftestimonials from organizations of all sizes and from all sectors that claim that the discipline and theunderstanding provided by the strategy map, the hypotheses that can be generated (and tested) and themeasures that are used to monitor it, have lead to breakthrough results in implementation.

vi Two recent webcasts shed some light on the extent to which Strategy Mapping is recognized andpracticed by practitioners. In 2003, Armitage and Turney conducted a webcast on Strategy Mapping toover 600 participants.Participants were asked how many of their organizations had adopted (1) the BSCand (2) strategy mapping as part of their BSC.Over 50% had adopted some form of scorecarding butonly 15% were aware of strategy maps. (H.Armitage and P.Turney,“Strategy Management”,BetterManagement.com, August 2003). In 2006, a similar webcast found that 51% of listeners had heardof strategy mapping but knew very little about it and 36% of the participants knew nothing about it.(G.Lawrie,“Balanced Scorecard Best Practices:How to Create and Use Strategy Maps”,BetterManagement.com,February 2006).

vii The Glacier Inn is a hypothetical example of an ice hotel that has been designed to illustrate howstrategy mapping can be applied.To keep the example simple and take emphasis off of financial figures,cash flow increase is referred to as “CF $XXX” and profit increase is referred to as “Y%”.

viii There are many organizations that have espoused quality and claim that it has lead to superior returns.This is true but successful firms in this category such as GE,Motorola, IBM,Kodak, and Westinghouseimplemented TQM as a means to the end — economic sustainability, rather than as the end itself.

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M E A S U R E M E N Tix A fourth value proposition, called the “system lock-in” strategy,has been put forward by Arnoldo Hax andDean Wilde (The Delta Project:Discovering New Sources of Profitability in the New BusinessEnvironment.New York:Palgrave,2001). With this strategy, firms deliver products and services thatenhance the organization’s own product and service offerings.Microsoft is the best example of a companythat is in the position to compel others to accept their standards.Kaplan and Norton refer to this as“system platform” in their new book,Alignment.

x We have chosen to describe value propositions in terms of product, customer or operational leadership.Another approach to thinking about value propositions comes from David Thomson in Blueprint to a Billion,John Wiley,2006.Thomson describes three types of propositions:Shapers of a New World (eBay,Yahoo),Niche Shapers (Starbucks,Veritas), and Category Killers (Wal-mart,Home Depot).While the classificationsdiffer, the sources of competition are very similar to the propositions described above.

xi UPS has taken customer service to new levels including reducing the time for computer repairs bydesigning,with Toshiba, an improved logistics system and acting as the dispatcher for companies that rangefrom Nike to Papa John’s Pizza. See,T.Friedman,The World is Flat, Farrar, Straus and Giroux,New York,NY,2005,p.p.141-143.

xii Readers will note that the Glacier map does not contain an “asset utilization” strategy. Since an ice hotelis forced by Mother Nature to rebuild every year, it does not have the same “long-term” asset investmentas would exist in typical organizations.

xiii Each year Fortune produces a list of the “100 Best Companies to Work For”.These are organizations thatexcel in creating an environment where human and organizational capital are highly developed. It is nosurprise that, in general, firms that make it to the top 100 are also firms that have demonstrated superiorfinancial returns.

xiv There are several references that describe the organizations that have earned the BSC Hall of FameAward (see bscol.com). Virtually all of these organizations have integrated strategy into their regularoperating procedures.

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Armitage,H.M. and C. Scholey. “Mapping mavens:how private and public companies gain fromstrategy mapping. (Business Strategies).” CMAManagement Volume: 77 Issue: 3 (2003): 15(4).

Armitage,H.M., and C. Scholey.“Hands-onscorecarding:How strategy mapping has helped oneorganization see better its successes and futurechallenges.” CMA Management,October 2004.

Armitage,H.M., and C. Scholey.“Strategy Mapping:Avoiding Costly (and Unnecessary) StrategicFailures.” Chapter 7 in Handbook of CostManagement.Warren,Gorham & Lamont, 2004.

Becker, B.,M.Huselid and D. Ulrich.The HRScorecard: Linking People, Strategy, and Performance.Harvard Business School Press: 1st edition, 2001.

Bossidy, Larry, Ram Charan and Charles Burck.Execution:The Discipline of Getting Things Done. NewYork:Crown Business, 2002.

Charan,Ram and G.Colvin.“Why CEOs Fail.”Fortune. June 21, 1999.

De Bono, E. de Bono’s Thinking Course. London:British Broadcasting Corporation, (PMI), 1982.

DiMaggio, Paul J. and Walter Powell.“The Iron CageRevisited: Institutional Isomorphism and CollectedRationality in Organizational Fields.” AmericanSociological Review,Vol 48, April, 1983.

Frigo,M.L. and Krumwiede, K. “Balanced Scorecard:A Rising Trend in Strategic PerformanceMeasurement.” Journal of Strategic PerformanceMeasurement, February-March, 42-48, 1999.

Frigo,M.L.“2001 CMG Survey on PerformanceMeasurement:Trends and Challenges inPerformance Measurement.” Cost ManagementUpdate. Issue 115,March, 2001.

Gordin,D. and Roy D. Pea.“Prospects for ScientificVisualization as an Educational Technology.” Journalof the Learning Sciences,Vol. 4,No. 3, 1995.

Hax, A. and D.Wilde.The Delta Project: DiscoveringNew Sources of Profitability in the New BusinessEnvironment. New York: Palgrave, 2001.

Huselid,M. and B. Becker,R. Beatty.The WorkforceScorecard:Managing Human Capital to ExecuteStrategy. Harvard Business School Press, 2005.

Ittner,C. and D. Larcker.“Coming Up Short on Non-financial Performance Measurement.”HarvardBusiness Review,November 2003.

Kaplan,R.S. and D. P.Norton.“The BalancedScorecard-Measures that Drive Performance.”Harvard Business Review. February, 1992.

Kaplan,R.S. and D. P.Norton.The Balanced Scorecard:Translating Strategy into Action.Harvard BusinessSchool Press, 1996.

Kaplan,R.S. and D. P.Norton.The Balanced Scorecard:Measures That Drive Performance.Harvard BusinessReview, 2000.

Kaplan,R.S. and D. P.Norton,“Having Trouble withYour Strategy? Then Map It.” Harvard BusinessReview, January, February, 2001.

Kaplan,R.S. and D. P.Norton. The Strategy-FocusedOrganization:How Balanced Scorecard CompaniesThrive in the New Business Environment.HarvardBusiness School Press, 2000.

Kaplan,R.S. and D. P.Norton. Putting the BalancedScorecard to Work.Harvard Business Review, 2000.

Kaplan,R.S. and D. P.Norton.Using the BalancedScorecard as a Strategic Management System. HarvardBusiness Review, 2000.

Kaplan,R.S. and D. P.Norton.Strategy Maps:Converting Intangible Assets into Tangible Outcomes.Harvard Business School Press, 2004.

Kaplan,R. and D.Norton.“Linking Strategy toBudgeting.” Balanced Scorecard, Article Reprint No.B0005A. Harvard Business School Publishing, 2005.

Kaplan,R.S. and D. P.Norton. Alignment:Using theBalanced Scorecard to Create Corporate Strategies.Harvard Business School Press, 2006.

Kim,W.Chan and Renee Mauborgne,“Blue OceanStrategy”,Harvard Business Review,October. 2004.

Lebas,M..“Managerial Accounting in France:Overview of Past Tradition and Current Practice.”European Accounting Review,Vol 3,No 3, 1994.

Lingle, J. and W.A. Shieman.“From BalancedScorecards to Strategic Gauges: Is MeasurementWorth It?” Management Review,March, 1996.

Low, J. and T. Siesfield.“Measures That Matter,Boston: Ernst & Young, 1998 and Measures ThatMatter: An outside-in perspective on shareholdervalue recognition.” UK: Ernst & Young, 2000.

Niven, P.“Balanced Scorecard Step-by-Step:Maximizing Performance and Maintaining Results.”Wiley; 1st edition, 2002.

BIBLIOGRAPHY


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M E A S U R E M E N TOlve,N., J. Roy and M.Wetter. “PerformanceDrivers: A Practical Guide to the BalancedScorecard” Wiley, 1999.

Peters,T.“Tom Peter’s True Confessions.” FastCompany,December 2000.

Pfeffer, Jeffrey and Robert Sutton.The Knowing-Doing Gap:How Smart Companies Turn Knowledgeinto Action.Harvard Business School Press, 2000.

Porter,M..Competitive Strategy:Techniques forAnalysing Industries and Competitors.The FreePress, 1980.

Porter,M. “Strategy and the Internet.” HarvardBusiness Review,March 2001.

Rucci,A.,Kirn and Quinn.“The Employee-Customer-Profit Chain at Sears.” Harvard BusinessReview, January-February 1998.

Scholey, C. A Practical Guide to the BalancedScorecard.CCH Canadian, 2002.

Scholey, C.“Capturing the Value of Strategy Maps,Step-By-Step.” Journal of Business Strategy.May/June, 2005.

Scholey,C. and H.M.Armitage.“Clear Trails:Strategy Mapping may be the key to improvingorganizational performance.” CMA Management,April 2003.

Scholey, C.“Targeted marketing with valuepropositions: Leadership is all in the image” CMAManagement, October 2002.

Selznick, P. Leadership in Administration: ASociological Interpretation. 1957.

Thomson,D.,Blueprint to a Billion, John Wiley,2006.

Treacy,M. and F.Wiersema,“The Discipline ofMarket Leaders: Choose Your Customers,Narrow Your Focus,Dominate Your Market.”Cambridge: Perseus Books, 1995.

Zaltman,G.How Customers Think: Essential Insightsinto the Mind of the Market.Harvard BusinessSchool Press, 2003.

ONLINE RECOMMENDATIONS

The Balanced Scorecard Collaborativewww.bscol.com is one of the world’s foremostauthorities on strategy mapping and the balancedscorecard. It provides a host of offerings,including free reports and online events.

BetterManagement.comwww.bettermanagement.com offers generalmanagement advice by offering online seminars.It has a diverse range of topics, including strategymapping and the balanced scorecard


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Richard Benn,CMA, FCMAVice President Knowledge and ProgramDevelopmentCMA Canada

Dennis C.Daly,CMAProfessor of Accounting Metropolitan State University

William Langdon,MBA,CMA, FCMAKnowledge Management Consultant

Mano Mahadeva, CPA,ABV,MBA,CFE,Regional Finance Director U.S.Oncology

Douglas Nesbit,MBA, CPASenior Finance and Accounting ConsultantSALO,LLC

Todd Scaletta,MBA, FCMAManager,Knowledge & Program DevelopmentCMA Canada

Richard Wagner,MBA,CMAEntrepreneur-In-Residence,Schlegel Centre for EntrepreneurshipSchool of Business & EconomicsWilfrid Laurier University

Kenneth W.Witt, CPATechnical Manager, Business, Industry &GovernmentAmerican Institute of Certified Public Accountants

The views expressed in this ManagementAccounting Guideline do not necessarily reflectthose of the individuals listed above or theorganizations with which they are affiliated.

This Management Accounting Guideline was prepared with the advice and counsel of:

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M E A S U R E M E N TTHE AUTHORS:

Howard M.Armitage, Ph.D, FCMA and Cam Scholey,MBA,CMA have worked together for severalyears advancing the theory and implementation of Strategy Mapping and Balanced Scorecards.

Individually and collectively, they have offered numerous seminars to both the Society ofManagement Accountants and the American Institute of Certified Public Accountants as well as tonumerous other groups in Canada,USA,Central America, Europe and Asia.They have extensiveexperience in implementing these systems in a variety of organizations.

They have published several articles in recent years including:

Scholey, C.,“Strategy maps: a step-by-step guide to measuring, managing and communicating theplan” Journal of Business Strategy,May/June 2005.

Armitage,H.M., and C. Scholey,“Strategy Mapping: Avoiding Costly (and Unnecessary) StrategicFailures”,Chapter 7 in Handbook of Cost Management,Warren,Gorham & Lamont, January 2004

Armitage,H.M. and C. Scholey,“Hands-on Scorecarding:How strategy mapping has helped oneorganization see better its successes and future challenges”, CMA Management,October 2004.

Scholey, C. and H.M.Armitage,“Clear Trails: Strategy Mapping may be the key to improvingorganizational performance”, CMA Management, April 2003.

Armitage,H.M., and C. Scholey,“Mapping Mavens:How private and public companies gain fromstrategy mapping”, CMA Management,May 2003.

Cam Scholey is also the author of “A Practical Guide to the Balanced Scorecard” (CCH Canadian,2002).

Curriculum vitae and biographical sketches of each author are available on request.

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