Strategy Maps: Converting Intangible Assets into Tangible Outcomes [Hardcover]

Robert S. Kaplan (Author), David P. Norton (Author)

Book Description

Publication Date: February 2, 2004

More than a decade ago, Robert S. Kaplan and David P. Norton introduced the Balanced Scorecard, a revolutionary performance measurement system that allowed organizations to quantify intangible assets such as people, information, and customer relationships. Then, in The Strategy-Focused Organization, Kaplan and Norton showed how organizations achieved breakthrough performance with a management system that put the Balanced Scorecard into action.

Now, using their ongoing research with hundreds of Balanced Scorecard adopters across the globe, the authors have created a powerful new tool--the "strategy map"--that enables companies to describe the links between intangible assets and value creation with a clarity and precision never before possible. Kaplan and Norton argue that the most critical aspect of strategy--implementing it in a way that ensures sustained value creation--depends on managing four key internal processes: operations, customer relationships, innovation, and regulatory and social processes. The authors show how companies can use strategy maps to link those processes to desired outcomes; evaluate, measure, and improve the processes most critical to success; and target investments in human, informational, and organizational capital. Providing a visual "aha!" for executives everywhere who can't figure out why their strategy isn't working, Strategy Maps is a blueprint any organization can follow to align processes, people, and information technology for superior performance.

Editorial Reviews

Review

"...a useful resource for any manager who is or will be leading a balanced scorecard initiative." -- Strategic Finance, March 2004

About the Author

Robert S. Kaplan is the Marvin Bower Professor of Leadership Development at Harvard Business School. David P. Norton serves as a Director with the Balanced Scorecard Collaborative.

Product Details

• Hardcover: 454 pages
• Publisher: Harvard Business Review Press; 1 edition (February 2, 2004)
• Language: English
• ISBN-10: 1591391342
• ISBN-13: 978-1591391340
• Product Dimensions: 6.3 x 1.8 x 9.3 inches
• Shipping Weight: 2 pounds (View shipping rates and policies)
• Average Customer Review: 3.6 out of 5 stars  See all reviews (34 customer reviews)
• Amazon Best Sellers Rank: #32,880 in Books (See Top 100 in Books)
  • #13 in Books > Business & Investing > Management & Leadership > Planning & Forecasting

Most Helpful Customer Reviews

189 of 197 people found the following review helpful

1.0 out of 5 stars Disappointing -- this should have stopped at an HBR article February 23, 2004

By Mark P. McDonald TOP 1000 REVIEWERVINE™ VOICE

Format:Hardcover|Amazon Verified Purchase

While the strategy map examples are helpful, this book is definately not worth the money nor the time to read it. Instead I recommend reading K&N's articles in the Harvard Business Review as you will get everything that you need -- do not bother with the book. And here is why:

First, the book is very repetitive and while there are many examples of the strategy maps the distinctions between them are not always very apprent so if you have seen a strategy map you have by in large seen them all.

Second, I believe that K&N did not write the book, rather it was put together by a ghost writer who borrowed just about every consulting phrase or description I have read in other books. Comments regarding things like the supply chain tend toward being so simplistic that they damage the credibility of the authors. I do not think we get an idea of what K&N think, rather than a ghost writer.

Third, the strategy map does not address key issues associated with strategy deployment and management. The treatment of Information Technology is more akin to a 1970's view of technology than what companies are doing now. The structure, while supportive of the balance scorecard, does not provide a map on how you get from where you are to where you want to be.

So take a big pass on this book, read the Harvard Business Review articles as they are much better and give you all you need to know. It is a shame since K&N's other work has been very powerful and influential.

104 of 111 people found the following review helpful

1.0 out of 5 stars Disappointing and a rehash March 15, 2004

By dnsh

Format:Hardcover

I was extremely disappointed by this book.

My most serious concern was the failure of the authors to cite John Thorpe's "The Information Paradox: Realizing the Business Benefits of Information Technology". Results Chains were first developed in the late 80s and early 90s by DMR Consulting and Fujitsu Consulting. Basically, Strategy Maps are simplified Result Chains with a Balance Scorecard flavor. Harvard professors MUST do a review of the literature BEFORE they publish.

This is important because a Results Chain avoids 3 problems that will bedevil Strategy Map users.
1) A Results Chain is more much explicit about the role that assumptions play in achieving business outcomes. Assumptions are either statements about uncertainty (e.g. price is an important criteria for customers) or they are things that are outside of your control (e.g. a competitor will not enter this market). Strategy Maps DO NOT talk about risks or assumptions. This is bizarre.

2) The book continually mixs up inputs, outputs (from internal processes), and outcomes. (Osborne's "Reinventing Government" has a nice appendix about the differences.) It is not clear whether the elements on the Strategy Maps are actions to be taken or the results of these actions.
The failure to understand these distinctions will cause confusion down the road.

3) Results Chains are much more explicit about the contributions that one element plays in achieving business outcomes. In contrast, all the Strategy Maps have many-to-many relationships.
What will happen if the benefits are not achieved? How are you going to do any kind of root-cause analysis with a Strategy Map?

As the other reviewers have noted, the Strategy Maps in the book are very generic.... This may provide a starting point for developing your own Results Chain.

Take a look at Thorpe's book. Read more ›

64 of 72 people found the following review helpful

5.0 out of 5 stars Organizational Cartography of the Highest Order June 3, 2004

By Robert Morris HALL OF FAMETOP 100 REVIEWERVINE™ VOICE

Format:Hardcover

Kaplan and Norton co-authored an article which was published in the Harvard Business Review (January/February 1992). In it they introduce an exciting new concept: the balanced scorecard. They have since published three books: this one, preceded by The Balanced Scorecard: Translating Strategy into Action (1996) and The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment (2000). Here's some background on the two books before we shift our attention to Strategy Maps.

In The Balanced Scorecard, as Kaplan and Norton explain in their Preface, "the Balanced Scorecard evolved from an improved measurement system to an improved management system." The distinction is critically important to understanding this book. Senior executives in various companies have used the Balanced Scorecard as the central organizing framework for important managerial processes such as individual and team goal setting, compensation, resource allocation, budgeting and planning, and strategic feedback and learning. When writing this book, it was the authors' hope that the observations they share would help more executives to launch and implement Balanced Scorecard programs in their organizations.

Then in The Strategy-Focused Organization, Kaplan and Norton note that, according to an abundance of research data, only 5% of the workforce understand their company's strategy, that only 25% of managers have incentives linked to strategy, that 60% of organizations don't link budgets to strategy, and 85% of executive teams spend less than one hour per month discussing strategy. These and other research findings help to explain why Kaplan and Norton believe so strongly in the power of the Balanced Scorecard.... As they suggest, it provides "the central organizing framework for important managerial processes such as individual and team goal setting, compensation, resource allocation, budgeting and planning, and strategic feedback and learning." After rigorous and extensive research of their own, obtained while working closely with several dozen different organizations, Kaplan and Norton observed five common principles of a Strategy-Focused Organization:

1. Translate the strategy to operational terms

2. Align the organization to the strategy

3. Make strategy everyone's job

4. Make strategy a continual process

5. Mobilize change through executive leadership

The first four principles focus on the the Balanced Scorecard tool, framework, and supporting resources; the importance of the fifth principle is self-evident. "With a Balanced Scorecard that tells the story of the strategy, we now have a reliable foundation for the design of a management system to create Strategy-Focused Organizations."

Those who have not as yet read The Balanced Scorecard and/or The Strategy-Focused Organization are strong urged to do so. Brief comments about them in commentaries such as these merely indicate the nature and extent of the brilliant thinking which Kaplan and Norton provide in each.

What we have in Strategy Maps are two separate but related components: Further development and refinement of core concepts introduced in the earlier two books, and, a rigorous examination of new ideas and new applications by which to convert intangible assets into tangible outcomes. In the Introduction, Kaplan and Norton explain that their direct involvement with more than 300 organizations provided them with an extensive database of strategies, strategy maps, and balanced scorecards. This abundance of material has revealed a number of strategies and tactics by which literally any organization (regardless of size or nature) can create and then increase value. The strategies and tactics are embraced within three targeted approaches for aligning intangible assets to strategy:

"1. Strategic job families that align human capital to the strategic themes

2. The strategic IT portfolio that aligns information capital to the strategic themes

3. An organization change agenda that integrates and aligns organizational capital for continued learning and improvement in the strategic themes."

Kaplan and Norton carefully organize their material within five Parts. I presume to suggest that Part I be read and then re-read before proceeding to Value-Creating Processes, Intangible Assets, and Building Strategies and Strategy Maps. Part Five provides a number of case files generated by private-sector, public-sector, and nonprofit organizations. In fact, I strongly suggest that Chapter 2 be re-read several times because it offers an invaluable primer on strategy maps. When reading and then re-reading Chapter 2, be sure to check back on Figure 1-2 (Page 8) and Figure 1-3 (Page 11) in the Introduction.

One word of caution from Kaplan and Norton: "It is important (if not imperative) to describe an organization's strategy with word statements of strategic objectives in the four linked perspectives BEFORE turning to measurements. Many organizations building BSCs attempt to go directly from somewhat vague strategy statements to measures without this step, and often omit critical aspects of the strategy or else select from measures that are already available, rather than selecting measures that quantify their strategic objectives."

This is a much longer review than I usually compose because I am convinced that only what is measurable is manageable. Also because, after extensive prior experience helping corporate clients with formulating process maps of various kinds, I am convinced that organizational "journeys" to increased sales, profits, and value need maps by which to reach those destinations just as those who drive vehicles do when seeking their own destinations. One of the greatest benefits of strategy maps is that the process by which they are devised helps to ensure that the most appropriate destination is identified. Think of Kaplan and Norton as travel agents and cartographers, to be sure, but also as consultants whose services you can retain merely by purchasing their three books, then by absorbing and digesting the information and counsel those three books provide. For many decision-makers in all manner of organizations, Strategy Maps may well prove to be the most valuable business book they ever read. Read more ›

64 of 77 people found the following review helpful

5.0 out of 5 stars Essential Reading for Those Who Want to Implement Strategy! January 9, 2004

By Donald Mitchell HALL OF FAMETOP 100 REVIEWERVINE™ VOICE

Format:Hardcover

Robert S. Kaplan and David P. Norton are the innovators behind the Balanced Scorecard, which has proven to be a potent way of turning strategy into reality. Before the Balanced Scorecard, most strategies failed in execution . . . because people didn't know what they were supposed to do. With the Balanced Scorecard, a very high percentage of strategies are implemented and do succeed. In The Strategy-Focused Organization, Professor Kaplan and Dr. Norton explained the management processes that make implementing the Balanced Scorecard most successful.

Strategy Maps now becomes another essential building block in strategy implementation. Importantly, this building block should be the starting point in your search for success. In the preface, the authors describe the three essential elements behind breakthrough results:

You must first describe the strategy, then measure the strategy for what needs to be executed and then manage the strategy by the measurements. Describing the strategy is the task addressed in Strategy Maps, measuring the strategy is addressed in the Balanced Scorecard, and The Strategy-Focused Organization looks at managing the strategy by the measurements.

Here's the philosophy the authors provide behind this conclusion:

"You can't manage (third component) what you can't measure (second component) [and] [y]ou can't measure what you can't describe (first component)."

In Strategy Maps, the authors have shown the way to communicate how each element of a company's activities contributes to the overall success of the strategy. Using the Balanced Scorecard, everyone in the organization knows what to be done. With Strategy Maps, each person will understand the context of what they must do and implementation improves....

Here's what a template of a typical strategy map includes for a for-profit company in Strategy Maps. First, all of the information is contained on one page. Second, that page has four perspectives: Financial; Customer; Internal; Learning and Growth. Third, the financial perspective looks at creating long-term shareholder value, and builds from a productivity strategy of improving cost structure and asset utilization and a growth strategy of expanding opportunities and enhancing customer value. Fourth, these last four elements of strategic improvement are aided by changes in price, quality, availability, selection, functionality, service, partnerships and branding. Fifth, from an internal perspective, operations and customer management processes help create product and service attributes while innovation, regulatory and social processes help with relationships and image. Sixth, all of these processes are enriched by the proper allocation of human, information and organizational capital. Organizational capital is comprised of company culture, leadership, alignment and teamwork capabilities. Seventh, the cause and effect relationships are describe by connecting arrows.

The book is a marvel of clarity. The authors describe what a strategy map is and proceed to share dozens of examples that have been successfully used in both for-profit and non-profit organizations around the world. The examples are carefully chosen to illuminate each element of the strategy map template that they suggest you begin with. In Part IV, they make the task of strategy map building even easier by taking typical strategies that are most often employed and showing how to build a strategy map that characterizes such a strategy. Finally, every chapter also refers to the best published work on what strategies and actions are most likely to succeed. So even if you are not familiar with the literature of creating and implementing successful strategies, you can use Strategy Maps to learn what you need to know.

Strategy Maps will be as valuable for small organizations as for large ones. All organizations need to have a better understanding of how all the pieces of a strategy need to fit together. In fact, if you only read one book written about strategy in 2004, you would be wise to choose this one.

As a student of continuing business model innovation, I was particularly pleased to see the authors explain how processes can be put in place to improve business models as part of a strategy map.

The only missing element in the book from my perspective is how to make strategy maps more compelling for the viewers. In strategy presentations across the country, I've often seen strategy maps that use colorful illustrations and enticing numerical relationships to help those in the trenches to grasp the full scope of how their work connects to everything else. When Strategy Maps is ready for its next edition, I hope the authors will consider adding a section in this regard. In the meantime, they offer a look at this element in the software they advertise for making strategy maps. See their on-line offering for more details.

If you have not yet read The Balanced Scorecard and The Strategy-Focused Organization, I strongly encourage you to read those outstanding books as well after you finish Strategy Maps. With the combined perspective of the three books, you should easily outdistance the competition!

As I finished the book, I thought about what else keeps strategies from being successful. In my experience, the typical remaining problem other than miscommunication is setting a direction that cannot be implemented in the appropriate time frame. I strongly encourage those who are planning new strategies to develop a strategy map before committing to the new strategy. Then use that strategy map to ask those who would have to implement the strategy what problems they foresee in implementation. In this way, you can adapt the strategy to what you can reasonably hope to execute.

This book also made me realize that drawing such a system effects graphic can help explain anything to others. I plan to do so much more often. Read more ›