strategy mapping example

Strategy is how an organization intends to create value for its stakeholders.

"If we succeed, how will we look to our shareholders?”

The Strategy

Private Sector Organizations

Financial Perspective

"To achieve our vision, how must we look to our customers?”

Customer Perspective

"To satisfy our customers, at which processes must we excel?”

Internal Perspective

"To achieve our vision, how must our organization learn and

improve

Learning & Growth

Introducing Strategy Maps

A simple model of the value creation process

Sample Strategy Map: Consumer BankIn

tern

al P

roce

ss

…which is all about great products and personal service…

Cust

omer

…enduring value-added relationships…

Fina

ncia

l

“Our success comes from…

C3 - “Appreciate me, and get things done easily, quickly,

and right.”

C1 - “Understand me and give me the right

information and advice.”

C4 - “Be involvedin my communities.”

C2 - “Give me convenient access to the right

products.”

F1 - Achieve sustainable double-digit net income growth

F2 - Maximize traditional revenue

sources

F4 - Manage financial resources for maximum risk-

adjusted return

F3 - Grow non-traditional revenue

sources

Lear

ning

and

Gr

owth

…delivered by a motivated & prepared work force.”

L4 - “We have the information and tools we

need to do our jobs.”

L1 - “We develop, recognize, retain, and hire

great people.”

L3 - “We understand the strategy and know what

we need to do.”

L2 - “I’m developing the skills I need to succeed.”

Innovation Customer Partnerships Operational Excellence

Provide premium service to delight and retain valuable

customers

Maximize efficiency and quality of business processes

Focus on the critical few activities

Consistently deliver the full value proposition

Migrate customers to the right channel

Identify and recognize high-potential relationships

Segment markets and target prospects

Communicate the full value proposition

Broaden offering through internal & external partnerships

Develop attractive new products & services

The Balanced Scorecard for Consumer Bank

Perspective

Financial PerspectiveF1 Increase earnings per shareF2 Add and retain high value customersF3 Increase revenue per customerF4 Reduce cost per customer

Strategic Objectives Strategic Measures


Customer Management

Inte

rnal

Pers

pect

ive

Human Capital

Lear

ning

& G

row

thPe

rspe

ctiv

e

Product Innovation

Operations Management

Information Capital

Organization Capital

• Net income (vs. plan)• Revenue mix (by target segment)• Revenue per customer• Cost per customer

C1 Become a trusted financial advisorC2 Provide superior service

• Customer satisfaction (survey)• Share of wallet• Target customer retention

I1 Understand customer segmentsI2 Shift to appropriate channelI3 Cross-sell the product line

• Share of segment• Channel mix change• Cross-sell ratio

I4 Develop new products • Revenue from new products (%)

I5 Minimize problemsI6 Provide rapid response

• Service error rate• Request fulfillment time

L1 Insure readiness of strategic jobs • Strategic job readiness

L2 Insure availability of strategic info • Information portfolio readiness

L3 Create a customer-focused cultureL4 Build cadre of leadersL5 Align the organizationL6 Best practice sharing

• Customer survey• 360° Survey (leadership model)• Strategic awareness survey• Personal goals aligned to BSC (%)• KMS utilization/currency

Responsible Citizen I7 Build diversity reflecting community • Diversity mix versus community

Targets

+$100M30%(A) 70%(B)

$300$75

90%50%90%

30%40%2.5

50%

0.%< 24hrs

1.0

100%

100%

100%70%90%

100%100%

Sample Strategy Map: Healthcare

INTERNALTo satisfy our customers, at which operational processes must we excel?

Clearly communicate expectations and accountabilities aligned with strategic

priorities

FINANCIALTo financially sustain our Mission, on what must we focus? Implement Managed Growth

Vision:XYZ is a values-driven, integrated organization which will be recognized for excellence in customer service,

quality patient care, financial strength, and support of community health

CUSTOMERTo achieve our Vision, how should we appear to our customers?

Specialty Care Patients / Referring Physicians

Primary Care Patients Payers/Employers

Maximize High Margin, Market Opportunities 1

Easy Access

Deliver Cost Efficient Care

Optimize Staff Efficiency

Excellent service Personalrelationships

Leadingedge technology

Leadingedge expertise

Innovativeprograms

Price competitiveservice

Continually Develop Sub specialized Clinical Excellence

Provide Outstanding Customer Service

Build a Strong Financial Base to Sustain our Mission and Achieve our Vision

LEARNING & GROWTHHow will we sustain our ability to change and improve?

Create an environment to support employee engagement & commitment

to the mission

Redesign operations for efficiency and effectiveness

Clinical Practice Management

Strive for Operational Excellence

Develop research opportunities aligned with targeted growth

areas

Develop leading edge techniques and programs

Friendly, attentive interactions

Recruit & retain qualified staff

Implement technology & develop facilities & infrastructure to support internal processes

Develop Leadership & Management Talent

On-Time Service

Strategy describes how an organization intends to create value for its shareholders.

Strategy maps are simple models of the value creation process.

"If we succeed, how will we look to our shareholders?”

The Shareholder

Private Sector Organizations

The Mission Stakeholder

Government & Non-Profit Organizations

Financial Perspective

"To achieve our vision, how must we look to our customers?”


"To satisfy our customers, at which processes must we excel?”


"To achieve our vision, how must our organization learn and

improve

Learning & Growth

“To satisfy our customers, financial donors and mission, what business

processes must we excel at?”


“To achieve our vision, how must our people learn, communicate, and work

together?”

Learning & Growth

"If we succeed, how will we look to our taxpayers

(or donors)?”

"To achieve our vision, how must we look to our

customers?”

Customer PerspectiveFiduciary Perspective

Architecture for an Association Strategy Map

The Mission Stakeholder

Associations: Member-Based Organizations

“To satisfy our members, financial donors and mission, what business processes

must we excel at?”


“To achieve our vision, how must our people learn, communicate, and work

together?”

Learning & Growth

"If we succeed, how will we look to our donors?”

"To achieve our vision, how must we look to our

members?”

Member PerspectiveFiduciary Perspective

ADA Strategy MapADA’s Mission, Vision, Goal and Values

Mission: To prevent and cure diabetes and to improve the lives of all people affected by diabetes

Vision: To make an every day difference in the lives of people affected by diabetes

Goal: By 2007 we will continue to be the leading diabetes organization and will support our programs of research by increasing our income to $300MM while improving net margin

Values: Integrity, Passion for making a difference, inclusion, leadership, ownership, trust

Strategy Map: American Diabetes AssociationBoard of Directors StakeholderInformation SeekersConstituent

High Impact Individuals

Community Volunteer Leadership

High Risk Individuals

People Affected by Diabetes

Professional Section

Donors

Corporate Community

The Strategy Map design begins with a clear definition of:

• The Stakeholders (like “shareholders”)

• The Constituents (like “customers”)

Board of Directors

Progress Toward Prevention/Cure

Stakeholder

Improve Quality of

Life

Information SeekersConstituent






Donors

Corporate Community

Improve Quality of

Care

• Analysis of constituent needs leads to clear, concise definitions of the constituent objectives that we will attempt to satisfy

(like a “customer value proposition”)

Strategy Map: American Diabetes Association

Board of Directors


Stakeholder

Improve Quality of

Life

Improve Quality of

Care

Information Seekers

Financial

Increase Net Margin

Constituent






Donors

Corporate Community

Grow Revenues

Operate Efficiently

• The Financial strategy for an association plays a “support role”, unlike the private sector where it is the ultimate measure of effectiveness

• Nonetheless, the financial strategy is structurally similar and no less intense


Financial

Board of Directors

Standardized ExecutionConstituent Relationship Management

Identify Resource

GapsAdopt ADA Best

Practices

Develop, Deliver & Evaluate Products &

Services


Understand & Prioritize Segments, Needs &

Strategies

Stakeholder

Establish Donor Focused Fund

Raising

Influence Policy Makers

Improve Quality of

Life

Improve Quality of

Care

Information Seekers

Increase Net Margin

Grow Revenues

Operate Efficiently

Constituent






Donors

Corporate Community

Work ProcessImprove End

to End Processes

• Identify the “critical few” internal processes that create the desired impact on constituent and financial outcomes



Financial

Board of Directors

Standardized ExecutionConstituent Relationship Management

Identify Resource

GapsAdopt ADA Best

Practices

Develop, Deliver & Evaluate Products &

Services


Understand & Prioritize Segments, Needs &

Strategies

Stakeholder

Establish Donor Focused Fund

Raising

Influence Policy Makers

Improve Quality of

Life

Improve Quality of

Care

Information Seekers

Increase Net Margin

Grow Revenues

Operate Efficiently

Constituent






Donors

Corporate Community

Work Process

Improve End to End

Processes

EnablersTrain the

WorkforceIdentify & Recruit Qualified Talent

Integrate X-Functionally

Integrate Data

Align with Priorities

Keep the Best People

Achieve Appropriate

Fund Balance

Topic #2 – How did they create Strategy Focused Organizations

#1. They translated their strategies to operational terms

#2. They put strategy at the center of their management process

STRATEGY

Management

Process

TranslateExec Leadership

Motivate

Align

Gove

rn

STRATEGY

Balanced Scorecard

Strategy Maps

There is a consistent set of “best practices” applied by successful BSC users.

1.1 Top leadership committed

1.2 Case for change clearly articulated 1.3

Leadership team engaged 1.4 Vision and strategy

clarified 1.5 New way of managing understood

1.6 Program manager identified

5. GOVERN TO MAKE STRATEGY A CONTINUAL PROCESS

3. ALIGN THE ORGANIZATIONTO THE STRATEGY

3.1 Corporate role defined3.2

Corporate – SBUs aligned3.3 SBU – Support

units aligned 3.4 SBU – External Partners aligned

3.5 Board of directors aligned

5.1 BSC reporting system established 5.2 Strategy review meetings conducted

5.3 Planning, budgeting, and strategy integrated

5.4 HR and IT planning linked to strategy

5.5 Process management linked to strategy

5.6 Knowledge sharing linked to strategy

5.7 Strategy Management Office

established

2.1 Strategy map developed2.2 Balanced Scorecard

created2.3

Targets established

2.4 Initiatives rationalized

2.5 Accountability assigned

4.1 Strategy awareness created4.2 Personal goals aligned4.3 Personal incentives aligned4.4 Competency development aligned

4. MOTIVATE TO MAKE STRATEGY EVERYONE’S JOB

STRATEGY-FOCUSED

ORGANIZATION

BEST PRACTICES

2. TRANSLATE STRATEGY TO OPERATIONAL TERMS

1. MOBILIZE CHANGE THROUGH EXECUTIVE LEADERSHIP

Principles of the Strategy-Focused Organization

Mobilize Change through Executive Leadership1

A successful Balanced Scorecard program starts with a recognition that it is not a metrics project…

IT’S A CHANGE PROCESSBest Practices

1.1 Top leadership committed1.2 Case for change clearly articulated1.3 Leadership team engaged1.4 Vision and strategy clarified1.5 New way of managing understood1.6 Program manager identified

Principle 1: Mobilize Change through Executive Leadership

The executive team is responsible for overseeing the formation and execution of strategy.

Formulate & Communicate The Strategy

Oversee Execution of The

Strategy

Executive Team

CIO

SMO

CFO

CEO

MKTG

OPS

R&D

HRO

Held together bya shared view of

the strategy

Organization: ATT Canada Practice: 1.3 – Leadership Team Engaged

Strategic Management System at ATT Canada

BSCol Best Practice Case Study

StrategyImplementation

StrategicObjective

Components

Membership

Foundation

Business Development

Council

BusinessProcess Council

ProfessionalDevelopmentRoundtable

BalancedScorecard

Sustainable CompetitiveAdvantage

EVPGlobal Operations

Growth Productivity People

InformationSharing Communications

Focus&

DisciplineShared

ObjectivesSpecific

AccountabilitiesConsensual

DecisionMaking

Metrics MutualIncentives

NorthAmerica

SouthAmerica Canada Technology Finance H.R.

LegalGov’t.

Relations

Executive Asst.

DirectMarketing

Services

Linkage/Metrics


Translate the Strategy to Operational Terms

Best Practices2.1 Strategy map developed2.2 Balanced Scorecard created2.3 Targets established2.4 Initiatives rationalized2.5 Accountability assigned

Principle 2: Translate the Strategy to Operational Terms

2

You can’t manage something that you can’t describe!

The Objective: Link management process to strategy

The Problem: How do you describe a strategy?.

The Balanced Scorecard provides a framework to link long term strategic objectives to short term targets, initiatives and accountability.

Objectives Milestones

• Provide technology & resources

• % new technology used by staff

• Learning assessment project

Inte

rnal

Lear

ning

Cust

omer

Accountable

• HR Committee

• $ xxxx

Resource Alloc.Targets InitiativesMeasuresVisionMission

• Provide personalized care

• Customer satisfaction survey rating

• ‘04 xx%• ‘05 xx%• ‘06 xx%

• Survey drafted by 6/04

• Deadline met

• Mkg. Team • $ xxxx

To p

rovi

de to

p-no

tch

heal

thca

re to

our

co

mm

unity

Be th

e co

mm

unity

hos

pita

l of c

hoic

e

Longer Term (3-5 year) View Shorter Term (Annual) View

Strategy

“Leadership”

Tactics

“Management”

• Service level spot check rating

• Electronic notes project

• Dept. Chairs• Complete by 2004

• All patients logged in

• $ xxxx• Keep patients informed

• ‘04 xx%• ‘05 xx%• ‘06 xx%Fi

nanc

ial • Grow high-

margin service

• % revenue from high-margin services

• ‘04 xx%• ‘05 xx%• ‘06 xx%

• Develop organization- wide survey

• ‘04 xx%• ‘05 xx%• ‘06 xx%

Strategy and Map

L4

P1 P2

F1

F2

C1


Align the Organization to the Strategy3

Best Practices3.1 Corporate role defined3.2 Corporate & SBUs aligned3.3 SBU & Support units aligned3.4 SBU & External partners aligned3.5 Board of Directors aligned

Principle 3: Align the Organization to the Strategy

BSC provides a framework for describing strategy and managing its execution (“Strategy Focused Organizations”)

BSC provides a framework for aligning the governance process and promoting greater transparency

MAN

AGEM

ENT

GOVERNANCE

Employees

ShareholdersBoardCEO

Corporate

Group

Division

SBU SBUSBUSBUSBU

The process of “cascading” creates synergy. It must be based on a clear understanding of the corporate role.

“Corporate Role”

Organization Derived Value (Synergy)

Scorecard Cascade

Customer Derived Value

The Balanced Scorecard aligns priorities throughout the enterprise.

Principles of the Strategy-Focused Organization:

Make Strategy Everyone’s Job

Top-Down “Bridging Process” To Share the Strategy & Align the Workforce

Bottom-Up Process to Internalize & Execute the Strategy

CORPSBU

The Strategy Focused Workforce

4

Best Practices4.1 Create strategic awareness4.2 Align personal goals4.3 Align personal incentives4.4 Align competency development

Principle 4: Making Strategy Everyone’s Job

HR processes are essential for moving strategy from the top to the bottom

The Hilton Hotels Balanced Scorecard

Objective OperationalEffectiveness Revenue Maximization

EBITDA RoomRevPAR

RevPARIndex

GuestComment

Cards

CustomerSatisfaction

Survey

MysteryShopper

Customer Loyalty TeamLoyalty

TeamMemberSurvey

BrandManagement

StandardCompliance

Measure

Hotel

8 Common Measures Used for Each Property

Hotel A

Hotel B

Hotel C

Hotel D

Hotel E

$20,730

$8,065

$11,622

$16,252

$3,055

$123.77

$73.15

$148.02

$93.59

$68.17

123.7

106.4

103.8

105.1

94.0

6.36

6.35

6.30

5.73

6.08

6.20

6.09

6.04

5.10

5.68

94.9%

91.3%

89.8%

85.3%

88.7%

60%

73%

70%

69%

67%

100%

97%

90%

100%

100%

Employee Orientation at Tapatio Cliffs

EBITDAMEANING: Earnings Before Interest, Taxes, Depreciation and Amortization. In other words, the money we make.

HOW CAN YOU HELP?Saving money where you can - turn off lights when you leave a room, utilize only the amount of product needed to complete a task, order only what you need, submit ideas to the D.A.D.S. program, upsell to guests, refer your family and friends to the resort, restaurants, golf, salon and retail outlets.

2001 Goal: $XXX,000

REV PARMYSTERY SHOPPER

COMMENT CARDSTEAM MEMBER SURVEY

CUSTOMER SATISFACTIONSTANDARDS

The Personal Scorecard at Tapatio Cliffs

Continuing Education and Communication

The Results – Keeping score is a continuous process.

The Payoff at Tapatio Cliffs


Govern to Make Strategy a Continual Process5

Best Practices5.1 BSC reporting system established5.2 Strategy review meetings conducted5.3 Planning, budgeting and strategy integrated5.4 HR and IT planning linked to strategy5.5 Process management linked to strategy5.6 Knowledge sharing linked to strategy5.7 Strategy Management Office established

Principle 5: Govern to Make Strategy a Continual Process

Continuous Improvement

Integrated Planning

Review & Learning

Reporting & Analysis

Organizational Alignment

Human Capital Alignment

Strategy

Leadership

Strategy Management—An Integrated Closed Loop Process

Human Capital Planning

Q1 Q2 Q3 Q4

STRATEGY MANAGEMENT

PROCESS

Enterprise Strategy Planning

Business Unit Strategy Planning

Financial Planning

Management Control & Learning

Strategy Reviews

Initiative Management

Knowledge Sharing

Q1 Q2

Next Year

Strategy UpdateStrategy Update• Clarify Vision• Update Strategy

Financial Resource Alignment• Budgets • Initiatives

Strategy Map / Scorecard Design & Update

Organization Alignment• Corporate role updated• Corporate-SBU aligned• SBU support unit aligned• Board of Directors aligned

Human Resource Alignment• Personal goals• Incentives• Personal development

This Year

Strategy Communication

There is a consistent set of “best practices” applied by successful BSC users.

1.1 Top leadership committed

1.2 Case for change clearly articulated 1.3

Leadership team engaged 1.4 Vision and strategy

clarified 1.5 New way of managing understood

1.6 Program manager identified



3.1 Corporate role defined3.2

Corporate – SBUs aligned3.3 SBU – Support

units aligned 3.4 SBU – External Partners aligned

3.5 Board of directors aligned

5.1 BSC reporting system established 5.2 Strategy review meetings conducted

5.3 Planning, budgeting, and strategy integrated

5.4 HR and IT planning linked to strategy

5.5 Process management linked to strategy

5.6 Knowledge sharing linked to strategy

5.7 Strategy Management Office

established

2.1 Strategy map developed2.2 Balanced Scorecard

created2.3

Targets established

2.4 Initiatives rationalized

2.5 Accountability assigned

4.1 Strategy awareness created4.2 Personal goals aligned4.3 Personal incentives aligned4.4 Competency development aligned


STRATEGY-FOCUSED

ORGANIZATION

BEST PRACTICES



What is your organization’s strategic readiness?SFO Strategic Readiness Assessment






2.2 – Balanced Scorecard Created3

2.1- Strategy Map Developed2

2.3 – Targets Established

32.4 – Initiatives Rationalized2

2.5 – Accountability Assigned2

4.1 – Strategic Awareness Created2

4.2 – Personal Goals Aligned3

4.3 – Personal Incentives Aligned2

4.4 – Competency Development Aligned 3

3.1 – Corporate Role Defined2

3.2 – Corporate-SBUs Aligned2

3.3 – SBU-Support Units Aligned 2 3.4 – SBU-External Partner Aligned13.5 – Board of Directors Aligned

1

5.1 – BSC Reporting System 2

5.2 – Strategic Review Meetings 2

5.3 – Budgets and Strategy Integrated 2

5.4 – HR/IT Linked to Strategy 2

5.5 – Process Mgt. Linked to Strategy 2

5.6 – Knowledge Sharing Linked 2

5.7 – Strategy Management Office 2

1.2 – Case for Change Clear

3

1.1 – Top Leadership Committed2

1.3 – Leadership Team Engaged31.4 – Vision & Strategy Clarified

21.5 – New Way of Managing

21.6 – Program Manager Identified2

STRATEGY-FOCUSED

ORGANIZATION

2.4 2.3

1.6 2.0

2.5

Key: Level of Excellence

5 - We are “best practice’ at this4 – We are good at this3 – We are okay at this2 – We are not good at this1 – We are awful at this

Just as with other management disciplines, you must build the capability to execute strategy as a permanent, enduring

competency of your organization.

“A New Way of Managing”

Enterprise

Strategy Management

Financial Management

Human Resource Management

Marketing / Communications

Technology Management

Strategic Planning

Organizational Unit A

Organizational Unit B

Organizational Unit C

Organizational Unit D

strategy mapping example

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