Strategy Maps: Converting Intangible Assets into Tangible Outcomes (Hardcover)

by Robert S. Kaplan (Author), David P. Norton (Author) "Even though we manage everyone's competencies, we had been biased toward the high-skill jobs..." (more)
Key Phrases: strategic job families, critical few processes, human capital readiness, Balanced Scorecard, Consumer Bank, New York (more...)

Editorial Reviews

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

Product Description

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 epiphany 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.

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Product Details

• Hardcover: 454 pages
• Publisher: Harvard Business School Press; 1 edition (February 2, 2004)
• Language: English
• ISBN-10: 1591391342
• ISBN-13: 978-1591391340
• Product Dimensions: 9.2 x 6.4 x 1.7 inches
• Shipping Weight: 1.9 pounds (View shipping rates and policies)
• Average Customer Review: 3.6 out of 5 stars See all reviews (30 customer reviews)
• Amazon.com Sales Rank: #54,797 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

155 of 162 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	M. McDonald (Chicago, IL United States) - See all my reviews (TOP 1000 REVIEWER)    (REAL NAME)

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.

87 of 92 people found the following review helpful:

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

By	dnsh (Ottawa, Canada) - See all my reviews

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.

57 of 64 people found the following review helpful:

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

By	Robert Morris (Dallas, Texas) - See all my reviews (TOP 50 REVIEWER)    (REAL NAME)

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.