Strategy Mapping and the Balanced Scorecard Explained

Successful performance management can create a competitive advantage in virtually any industry. Furthermore, the failure to manage performance can also make an organization vulnerable to external threats. As a result of the importance of implementing strategies and managing performance, many organizations have begun to understand the value of using a wider array of metrics than just the traditional financial metrics to create value. Models such as the balanced scorecard provide a comprehensive platform that can be customized to help an organization manage performance and create value in the market for both customers and investors. Still, even with a good strategy in hand, an organization must also have an execution strategy that can help implement it before it can create a competitive advantage. This analysis examines the ability of strategy mapping to serve as a supplement to the balanced scorecard, ensuring that the organization executes its strategy successfully.

Today's management teams have a plethora of different options and tools to help them create an effective strategy. Beyond the balanced scorecard, strategic planning may include — but is not limited to — Porter's 5 Forces, STEEP (Social, Technological, Economic, Environmental, and Political) analysis, SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis, PMI (Plus, Minus, Interesting), and Red and Blue Ocean strategies, among many others (Armitage & Scholey, 2006). Most competent managers can devise a relatively well-crafted strategy grounded in the organization's particular set of circumstances. However, no matter how good the strategy is, it will not do much good unless it is successfully implemented.

Some estimates have claimed that seventy percent of strategic failures are due to poor execution (Armitage & Scholey, 2006). Other estimates have put the figure closer to ninety percent, while also noting that whether the actual figure is sixty or ninety, it would not change the fact that this issue should be at the forefront of every manager's consideration (Keyte, 2012). There is often a huge effort devoted to determining what the best strategy should be in an organization. However, strategic execution is frequently an afterthought — if it is considered at all. This is despite the fact that execution is often the critical success factor that determines whether a strategy succeeds in the first place.

There are many essential benefits that a strategy map can offer an organization, and it serves as a complementary exercise relative to the balanced scorecard. Management can use these maps to better develop their strategies and build them in a more dynamic context. One of the primary advantages of developing a strategy map is that it allows a complex strategy to be communicated through a relatively simple, rich, and succinct visual, as opposed to trying to deliver a "strategy by hope and magic" (Jones, 2011). Not only does it allow individual employees to better understand their role in fulfilling strategic expectations, but it also helps them visualize how their roles connect to the larger organizational objectives.

Not only can a strategy map be a useful tool for communicating strategy, but it can also help management fine-tune their performance management initiatives. When building a strategy map, the management team must drill down the strategy into a more detailed version of the broader plan. Furthermore, it also helps the management team build a focused assessment of the factors that will be inherent in implementing a change plan. Much of the power of strategy maps can be illustrated through the links among the various objectives defined in the balanced scorecard, and can be further explored by asking questions such as (Jones, 2011):

Although the strategy map and the balanced scorecard have many similarities, there are also important differences. For example, the balanced scorecard summarizes the results of the strategy model in a picture format. By contrast, a well-developed strategy map adds another dimension to the portrayal of a strategy by more fully illustrating the "strategy story" (Armitage & Scholey, 2006). Since the two models are closely related, it is perfectly acceptable — and often advantageous — to use both together. The focus of the strategy map is to assist in execution by describing and communicating more information about the overall strategy (Armitage & Scholey, 2006). Therefore, a strategy developed through the balanced scorecard, or virtually any other strategic management tool, can be translated into a strategy map so that it can be more effectively illustrated and communicated throughout the organization, thereby facilitating execution.