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Methods and concepts for Value Based Management (VBM)

Strategy Maps

In their 2001 book The Strategy-Focused Organization, Kaplan and Norton transformed their Balanced Scorecard, in 1992 introduced in the Harvard Business Review as a performance measurement system, to a strategic management system. A lot of that transformation was done in introducing the so called strategy map.

What are strategy maps?
A Strategy Map is a diagram that describes how an organization creates value by connecting strategic objectives in explicit cause-and-effect relationship with each other in the four BSC objectives (financial, customer, processes, learning and growth). See the figure on the left. You can click on the graph to download a bigger one in pdf format. Strategy Maps are a strategic part of the Balanced Scorecard framework to describe strategies for value creation.
Here's a description of strategy maps:


Why strategy maps?
By connecting such things as shareholder value creation, customer management, process management, quality management, core capabilities, innovation, human resources, information technology, organizational design and learning with one another in one graphical representation, strategy mapping help greatly in describing the strategy and to communicate the strategy among executives and to their employees. In this way alignment can be created around the strategy, which makes a successful implementation of the strategy more easy. No small thing, bearing in mind that often, the implementation of a constructed strategy is the biggest challenge.

What are the main principles behind Strategy Maps?