The strategy map is the visual part of the Performance Management System (PMS). It is the generic architecture for describing the strategy. Its creation is fundamental for subsequent elements to be able to define the metrics and translate actionable terms. The strategy map tells the story of the strategy. The arrangement of the map is achieved by grouping and placing the Critical Success Factors (CSFs) within a specified structure that includes several elements such as perspectives and themes, that complete the overall strategy picture. The strategy map not only demonstrates the placement of the CSFs, but it also clarifies their interaction.
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One model, Balanced Scorecard, has developed the idea of different perspectives that will broaden the scope of measurements. Because many organizations focus too strongly on the financial perspective, a process was needed to extend perspectives to other areas. Pure financial focus bears the risk that opportunities and needs for changes are recognized too late. Fast and proactive reactions to underperforming business processes throughout the organization are essential. Therefore, the concept of multiple perspectives was established. This approach allows the organization to broaden the focus to various areas. The Balanced Scorecard method suggests four main perspectives:
Perspectives |
Statement |
Finance |
To succeed financially, how should we appear to shareholders? |
Customer |
To achieve our vision, how should we appear to our customers? |
Internal Business Process |
To satisfy our shareholders and customer, what business processes must we excel at? |
Learning and Growth |
To achieve our vision, how will we sustain our ability to change and improve? |
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The selection of perspectives is the individual choice of the particular organization. Depending on the nature of business, other perspectives such as environment or safety need to be considered as well, though. With that in mind, it is left to the imagination of leadership to define perspectives specific to the organization’s particular needs.
Strategic themes often result from the strategic plan and are derived from the determined goals. Those themes are useful if the organization wants to stress within the strategy map the focus on the strategic goals. The strategic themes are additional dimensions in the Strategy Map, and they require that leaders actively consider how each perspective enables the strategic goals to be met in relation to the various themes.
| Cause-Effect Relationship |
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There is relationship between individual Critical Success Factors in which the outcome of one can influence others. This means that they have a Cause-Effect relationship. As mentioned earlier the Strategic Plan is a hypothesis to be tested. The Strategy Map visualizes the Strategic Plan, and allows the management to predict the interaction of cause and effect of these Critical Success Factors. During the monitoring, those interactions can be reviewed and their assumption can be confirmed. If certain outcomes do not emerge as planned, it gives an early indication that the Strategic Plan has to be modified and re-tested.
