Why you should use a Strategy Map | 2GC

Why you should use a Strategy Map

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Successful organisations need to balance doing the ‘day job’ with work to prepare for the future.

“You’ve got to eat while you dream. You’ve got to deliver on short-range commitments, while you develop a long-range strategy and vision and implement it. The success of doing both. Walking and chewing gum if you will.”

Jack Welch

Surveys routinely find that developing these visions and formulating the strategies required to achieve them is something that is done in almost all organisations. Yet effective strategy implementation remains a challenge for most organisations: various studies suggest that the majority of strategies fail to achieve their objectives; and despite this issue having been the focus of considerable attention from management thinkers, over the last 35 years, things haven’t really improved.

So what can be done about it?

Avoid Strategy Failures

Many studies have shown a strong association between strategic success and the use of a strategic performance monitoring system (SPMS) e.g. Balanced Scorecard (other tools are available!).  But why has this correlation occurred? 

SPMS typically are structured using a set of strategic objectives. Strategy execution concerns the work done by the organisation to realise these strategic objectives, a key part of which is managerial - leading the implementation of the organisational changes identified as necessary, while concurrently ensuring the operational performance of the organisation is maintained.  A key thing to note is that being effective in this role of leading strategy execution is just as important as ensuring day-to-day performance is maintained: 

“A vision and strategy aren’t enough. The long-term key to success is execution. Each day. Every day.”

Richard M. Kovacevich

This strategic leadership is more likely to happen if the managers concerned engage with the strategic objectives identified i.e. internalise and prioritise the strategic goals assigned to them.  Recent research indicates that use of SPMS tools helps to strengthen this engagement.

In their 2012 paper The Differential Improvement Effects of the Strategy Map and Scorecard Perspectives on Managers' Strategic Judgments Mandy Cheng and Kerry Humphries consider the way of communicating strategic objectives to managers who will use a Balanced Scorecard might affect the effectiveness of the managers’ strategy implementation work.  Their complicated and thorough work reaches reassuringly straightforward conclusions, 

  • the more clearly that managers understand the objectives assigned to them, the more effective they are at implementing them, and 

  • that providing a graphical representation of the strategic objectives in a way that highlights the relationships between the objectives (via a strategic linkage model or strategy map) enhances this understanding

“our overall results indicate significant judgmental benefits associated with presenting strategic objectives as a strategy map”

Cheng, Mandy M; Humphreys, Kerry A. The Accounting Review; Sarasota Vol. 87, Iss. 3,  (May 2012): 899-924. 

These findings extend the general principles established in some pioneering work by Canadian researcher Alan Webb.  In his innovative paper Commitment to the Goals Contained in a Strategic Performance Measurement System (Contemporary Accounting Research; Winter 2004; 21, 4), Webb looked at the effect of using a strategic linkage model or strategy map to communicate goals - he found that managers engaged more strongly with goals communicated using a strategy map than they did to equivalent goals communicated without such devices.  Further, his work also found that awareness of the relationships between the goals on a strategy map directly affected how these managers responded to incentives - finding that they would be more likely to consider or focus on a goal that had no incentives attached if they could see that its delivery contributed to the achievement of a related goal that was incentivised.

Another insightful recent study looked at what factors determine whether a manager would engage with some or all of the strategic objectives proposed for an organisation.  In their very recent paper On Establishing Legitimate Goals and Their Performance Impact, George Shinkle and colleagues describe research that confirms what some might consider common sense, that managers are more likely to engage with a goal if they had some involvement in its definition.  In their paper the authors report that approaches which explicitly aim to involve stakeholders in the goal setting process are,

…more likely to stimulate higher organizational performance, result in stakeholders (especially employees) who are positively motivated, and reduce the probability that organizational members will behave unethically.

Shinkle, George A et al, Journal of Business Ethics Vol. 157, Iss. 3,  (Jul 2019): 731-751. 

Putting Strategy Maps to work

Step 1 - get a strategy map!

So we’ve seen from the studies that strategy maps are a good idea in the quest for strategic success and the theory of them is very simple.  For a clear guide to Balanced Scorecard design and implementation see the book Balanced Scorecard by Nils Göran Olve and Anna Sjostrand - more info here. However real-world implementation can still be tricky so, sometimes, an outside consultant (like 2GC!) can be the best option. 

Step 2 - embed your strategy map in a strategy execution framework

As this article has highlighted, to get the best from a strategy map you need it to catalyse your organisation's engagement with the strategy.  This can only happen if the device is part of a bigger / broader programme focused on implementing the strategy - like the 2GC ACME framework.

Learn from others

2GC has a wealth of information concerning successful strategy implementation projects - we have helped many client organisations to develop their strategy implementation capabilities; several of these projects are described in the case studies section of this website.

For example, our work with the Al Khamsa' company (name anonymised for client privacy) helped them to develop a new strategic Balanced Scorecard via a time-efficient process that actively engaged the management team who would be subsequently involved in implementing the strategic plans it described. 

From the case study:

Over two months, and using only some five days of management time, Al Khamsa managers were able to develop a clear strategic logic, a sensible set of plans, and a mechanism for controlling the implementation of strategy. The Managing Director and his managers believed that these instruments would enable the firm to meet its ambitious strategic goal of doubling revenues over the next three years.

Put the right processes in place

Our ACME strategy implementation framework has been in at the heart of our work since the firm first began work in 1999 - and from the outset we have worked hard to ensure that the methods and approaches it incorporates build upon proven practical experience and align with the best management thinking on strategy implementation and organisational control. These recent research papers confirm that the core concepts ACME relies upon - including the clear communication of strategy goals using strategic objectives and strategic linkage models, and the active involvement of the managers who will be responsible for the achievement of goals in their selection and specification, continue to define best practices.

“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”   

Jack Welch

Get in touch now to find out how we can help you.


Some more information about the references used to write this article

On strategy implementation success

The low success rate of organisations trying to implement strategies was highlighted in research by Lawrence Hrebriniak in his book Implementing Strategy published in 1984.  A good summary of that book can be found in this article - Hrebiniak, L. G. (1990). Implementing strategy. Chief Executive, (57), 74.  He revisited this work after 20 years and found that little has changed - see a summary of his updated research in this article Hrebiniak, L. (2008). Making Strategy Work Overcoming the obstacles to effective execution. Ivey Business Journal (Online), 72(2), 1.  The book that is summarised in the 2008 article is one of the books in our recommended reading list.

SPMS

Here are some research papers that look at the effectiveness of using Strategic Performance Monitoring Systems (such as the Balanced Scorecard) as an aid to strategy implementation.

  • Tayler, W. B. 2010. The balanced scorecard as a strategy-evaluation tool: The effects of implementation involvement and a causal-chain focus. The Accounting Review 85 (3): 1095–1117.
  • Widener, S. 2007. An empirical analysis of the levers of control framework. Accounting, Organizations and Society 32:757–788.
  • Cheng, M. M., and K. A. Humphreys. 2009. A Study of Strategic Performance Measurement System Uses in the Current Business Environment. Working paper, The University of New South Wales.
  • Hoque, Z and James, W 1998.  Associating Balanced Scorecard Performance Reporting with Size and Market Factors: Impact on Organizational Performance.  Working Paper.  Griffith University, Gold Coast, Australia.