As we discussed in previous posts, the elaboration of the strategic map is the stage of strategy development in which the vision of the future (“strategic vision” or simply “vision”) is decomposed into strategic objectives that are later represented in the various paths of the strategic map that represent each of the perspectives of the balanced scorecard.
The strategic map, therefore, is a representation of the strategic objectives of a company and how they interrelate. The map is developed during the strategic planning process and should be used as a reference and as consultation material for the implementation of the strategy. It is also used during evaluation and realignment meetings of the strategy.
A strategic map is a management tool that represents business objectives and/or strategic objectives in a single image. It presents in a concise way information that is contained in often highly detailed strategic plans. Although these plans are important, few people read them in full; even when read by executives, the strategic objectives end up hidden amid less relevant information.
The corporate strategy is therefore summarized by a strategic map that identifies the sources of synergies. Then, if the company is in different businesses, managers will drill down into this corporate map for each of the company’s businesses, producing “local” strategic maps that reflect the objectives related to their particular strategies, integrated into corporate strategy and other business strategies.
Considering that every strategy is dynamic and designed for a given context, it is essential that the strategic map be reviewed periodically and adjusted to capture the changes made in the strategy and, especially, in the vision.
As a developed strategy is implemented and evaluated, gaps and unachieved results are identified. This generates the need to rethink the strategy by adjusting and course-correcting in the direction of the expected results.
Strategic maps should follow this guidance. Since the strategic objectives of the perspectives of internal processes, of learning and growth, of social and environmental responsibility, and of people cannot be optimized in isolation or individually, it is necessary that they be integrated and aligned, in order to achieve the value proposition inherent in the business strategy.
A well-developed strategic map should highlight the interrelationships between the company’s processes and intangible assets that provide sustainable competitive advantage. Different strategies are represented by different strategic maps. The strategic map should tell the story of the strategy that differentiates the company from competitors.
There is no set frequency for map revision. It needs to be updated every time strategic objectives are changed, deleted, or included, or when cause-and-effect relationships between those objectives change.
Well-designed and up-to-date strategic maps help companies achieve better results. They also improve the alignment of other corporate functions, such as marketing, budgeting, controllership and operations. Maps improve the likelihood of successful execution of the strategy and, therefore, superior operational and financial performance.
With the aid of the strategic map, processes and projects are evaluated for their impact and performance, which helps professionals identify KPIs (key performance indicators) and OKRs (objectives and key results), develop dashboards, and better align individual performance plans with what is most relevant to and effective for the company.