Strategy & competition
Strategy Maps
A one-page causal picture of a strategy: objectives arranged across the four balanced scorecard perspectives, with hypothesised cause-and-effect arrows running upward from learning and growth through internal processes and customer outcomes to financial results.
Also known as Strategy mapping, Balanced scorecard strategy map. First set out by Robert S. Kaplan and David P. Norton in 2000; the primary source is cited in full below.
- Format
- Structural model
- Level
- Corporate · Business unit
- Best for
- Plan execution · Prioritise
- Decision stage
- Plan · Execute
- Difficulty
- Intermediate
- Time to apply
- Two or three leadership workshops to draft; a quarter to attach measures and embed.
Plate · The model
The components
Financial perspective
The top band and the destination of every causal chain: the growth and productivity outcomes the strategy must produce. Arrows arrive here; in the map's logic nothing starts here, because financial results are consequences.
Signals of strength
A stated balance between growth and productivity objectives · Each financial objective is fed by at least one arrow from below · Public-sector variants put mission outcomes here instead · The objectives are few enough to steer by
Customer perspective
The chosen customers and the explicit value proposition that will win them. This band carries the strategy's central bet, and its objectives should read as promises specific enough to disappoint someone.
Signals of strength
A named value proposition, with what it declines to offer visible · Objectives distinguish target customers from everyone else · Customer outcomes link upward to specific financial results · You could tell from this band which rival the strategy fears
Internal process perspective
The few processes at which the organisation must genuinely excel to deliver the value proposition: operations management, customer management, innovation, and regulatory and social processes.
Signals of strength
A short list of critical processes rather than a department inventory · Each process links upward to a specific customer objective · Process objectives imply real investment and neglect elsewhere · Innovation processes appear when the strategy claims differentiation
Learning and growth perspective
The foundation band: the human capital, information capital and organisational capital every chain above depends on. Habitually the most neglected layer, and in Kaplan and Norton's argument the place where strategy execution actually begins.
Signals of strength
Named capabilities and systems, tied to the critical processes above · Culture and leadership objectives are concrete enough to act on · Investment here is defended when budgets tighten · The band is more specific than 'our people are our greatest asset'
When it earns its keep
- A balanced scorecard exists but has decayed into a list of measures nobody can connect. The map supplies the missing why: which objectives are supposed to drive which.
- Strategy has been decided and now has to travel: a map on one page communicates the causal logic to hundreds of staff in a way a forty-page plan never will.
- You want to test whether the stated strategy is a coherent chain or a wish list, since drawing the arrows forces every claimed linkage into the open where it can be challenged.
- You lead a public-sector or education organisation where money is fuel rather than the finish line, and the perspectives can be rearranged so mission sits at the top.
And when it doesn't
- The strategy has not actually been chosen. The map describes choices already made; a map drawn without them is a wish list with arrows, and it will launder vagueness into apparent rigour.
- The business is pivoting fast enough that the causal hypotheses would be redrawn monthly. Map when the strategy has a horizon worth communicating.
- You need a measurement and target system on its own. That is the balanced scorecard's job; the map is its causal front page and neither substitutes for the other.
- Leadership wants a poster for the reception wall. A map nobody argues over during drafting has not been drawn seriously, and framing it changes nothing.
How to run it
Before starting, gather the inputs the analysis depends on:
- An actual strategy: a chosen customer value proposition and a view on where the organisation will win, arrived at before the mapping starts.
- A candidate set of objectives for each perspective, small enough to fight over.
- Leadership time in the room together, because the value of the map is largely in the argument about the arrows.
- Baseline data on current performance in each perspective, so the map starts from reality rather than aspiration.
- Knowledge of the intangible assets available: people, systems, culture, since the bottom layer is where every chain begins.
- 1
Set the destination at the top
Define the financial objectives the strategy must deliver, typically a balance of productivity and growth. In a public-sector or education version, put the mission outcome at the top and let financial sustainability become an enabling objective; the logic of the map survives the rearrangement.
- 2
Choose the customer value proposition
Specify which customers matter and what they will get: operational excellence, customer intimacy or product leadership in Kaplan and Norton's telling. This is the heart of the map, and a map with no chosen value proposition is a symptom that no strategy exists to draw.
- 3
Identify the critical internal processes
Select the handful of processes at which the organisation must excel to deliver that value proposition: operations, customer management, innovation, and regulatory or social processes. The discipline is exclusion, since a map that flatters every department has already failed.
- 4
Specify the learning and growth foundations
Define the human, information and organisational capital the critical processes depend on: skills, systems, data, culture, leadership. Kaplan and Norton's later work argues these intangibles only acquire value through the chains that connect them upward, which is why this layer is drawn last and funded first.
- 5
Draw and challenge the causal links
Connect the objectives bottom-up: this capability improves that process, which delivers that customer outcome, which produces that financial result. Every arrow is a hypothesis. Force each one to be said aloud in if-then form, and delete any arrow nobody will defend with a mechanism.
- 6
Attach measures and revisit the hypotheses
Hand the mapped objectives to the balanced scorecard for measures, targets and initiatives, then treat evidence against an arrow as information. A map whose broken links are quietly ignored has become decoration, and Nørreklit's critique names the failure precisely.
Reading the result
A one-page causal model of the strategy: objectives in four stacked perspectives connected by explicit bottom-up cause-and-effect arrows, ready to be measured through a balanced scorecard and communicated across the organisation.
- Read the map bottom-up, the direction the arrows run: capabilities enable processes, processes deliver the customer value proposition, and customer outcomes produce the financial results. The top band is an effect, never a lever.
- Interrogate the arrows before the boxes. An objective with no arrow leaving it is a hobby; an arrow with no mechanism behind it is a hope; and the strategy is only as strong as its weakest defended link.
- Treat the whole map as a testable argument. When results contradict a link, the finding is strategic intelligence about the business, and redrawing the map is the system working.
A worked example
A further-education college maps its route back to sustainability
A medium-sized further-education college in the East Midlands faces flat funding, falling 16-18 enrolment against school sixth forms, and a 'requires improvement' inspection grade. The new principal has agreed a strategy with governors: become the region's default route into skilled technical work, concentrated on construction, health and digital. To connect a demoralised staff to that choice, and to force the governors' investment debate into the open, the leadership team builds a strategy map with mission at the top and finance folded into it.
- Financial perspective
- Recast for a college: the top band pairs the mission outcome, learners progressing into skilled local employment, with the sustainability objectives that permit it: breakeven within two years, apprenticeship and adult-skills income up 20 per cent, and reduced dependence on a single funding stream. Placing progression above surplus settled a governors' argument about what the college is for.
- Customer perspective
- Two customer groups with distinct promises. To learners: courses that lead somewhere, visible employer involvement, and support that keeps them enrolled. To employers: work-ready recruits and responsiveness measured in weeks. The value proposition deliberately concedes A-level prestige to the school sixth forms, and writing that concession down was the band's hardest sentence.
- Internal process perspective
- Four critical processes: annual curriculum alignment to labour-market data, a teaching improvement cycle run by heads of department, an employer-partnership pipeline with named owners, and an early-warning retention process triggered by attendance data. A fifth candidate, estates rationalisation, was demoted to an initiative because no arrow connected it to a customer promise.
- Learning and growth perspective
- The chains all originate here, and the band exposed the real deficit: vocational tutors whose industry knowledge had aged out of relevance, course teams without live retention data, and a culture in which results belonged to management. Objectives: funded dual-professional CPD with industry placements, live dashboards for every course team, and course-team ownership of outcomes.
The read. The map's central chain reads: industry-current tutors and live data enable better teaching and faster intervention, which improve achievement and retention, which win learners and employer confidence, which restore enrolment and income. Its honest implication is uncomfortable: the first spending priority of a deficit college is tutor CPD and data plumbing, and the governors approved it only because the arrows made the dependency explicit. The map is a hypothesis, and per Nørreklit the college should treat it as one: the CPD-to-achievement link gets tested against results annually, and if it fails, the map gets redrawn rather than laminated.
Pitfalls
- Copying a generic map from the book with the company name changed. A map that could belong to any organisation describes no strategy at all.
- Overcrowding: forty objectives and a hundred arrows is an organisation chart of wishes. Kaplan and Norton's own examples stay ruthless about what makes the page.
- Drawing arrows nobody would defend aloud. Every link should survive being read as an if-then sentence with a mechanism in the middle.
- Mapping without a strategy and mistaking the resulting artefact for one. The map can only describe choices; it cannot make them.
- Treating the map as finished. The causal links are hypotheses, and an organisation that never redraws its map has stopped learning from its own results.
- Letting each perspective be drafted by its corresponding function, which produces four departmental shopping lists and no chains between them.
What the critics say
The causal chains are asserted rather than demonstrated. Nørreklit's analysis of the balanced scorecard argues that the claimed cause-and-effect relationships between the perspectives are really logical and means-ends relationships, that time lags between cause and effect are ignored, and that building control systems on invalid causal assumptions produces faulty anticipation and dysfunctional behaviour. The strategy map inherits this critique wholesale, since it is precisely the causal claims drawn as a picture.
Nørreklit, H. (2000) 'The balance on the balanced scorecard: a critical analysis of some of its assumptions', Management Accounting Research, 11(1), pp. 65-88.
The persuasive power of the apparatus outruns its evidence. Nørreklit's rhetorical analysis argues Kaplan and Norton's texts convince through analogy, metaphor and appeal to authority rather than through argument and data, which matters for a tool whose main product is a confident-looking causal diagram.
Nørreklit, H. (2003) 'The Balanced Scorecard: what is the score? A rhetorical analysis of the Balanced Scorecard', Accounting, Organizations and Society, 28(6), pp. 591-619.
A map can dress a list of goals as a strategy. Rumelt's broader attack on template-style planning applies directly: filling in perspectives and drawing arrows can substitute for the hard work of diagnosis and coherent choice, yielding what he calls bad strategy with excellent production values.
Rumelt, R. P. (2011) Good Strategy Bad Strategy: The Difference and Why It Matters. New York: Crown Business.
Sources and further reading
- Kaplan, R. S. and Norton, D. P. (2000) 'Having Trouble with Your Strategy? Then Map It', Harvard Business Review, 78(5), September-October 2000, pp. 167-176. ↗
- Kaplan, R. S. and Norton, D. P. (2004) Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Boston, MA: Harvard Business School Press.
- Nørreklit, H. (2000) 'The balance on the balanced scorecard: a critical analysis of some of its assumptions', Management Accounting Research, 11(1), pp. 65-88. ↗