Strategy in essence is a plan of action designed to achieve a specific aim or objective. Formulation typically begins in abstract terms and gradually solidifies into on-page-prose. One way of doing so is through developing a strategy map.
A strategy map is a visualisation of the strategy planning process. A strategy map categorises the organisation’s core objectives within a series of perspectives. In this example, a fictional online sports betting company breaks down its strategic themes into four pillars:
- Financial Performance
- Customer Experience
- Operations
- Innovation
Each theme is then further broken down into its constituent parts, or goals, those which support the achievement of the overall strategic theme. In our example, financial performance could include the gross margin per a customer, the annual amount spent per a customer, the overall loss-win margin per a customer, gross profit, and gross income.
While each theme has its constituent parts, those that exist in Operations for example – office space rental, payroll, IT and maintenance – impact those within Financial Performance, as would Customer Experience and Innovation. In a complex setting such as this, the strategy map is an effective tool for displaying the casual links between these different parts.
The map will show these causal links within the organisation through visual means, be it an arrow or other visual device, creating clear, logical links which graphically demonstrate the interdependencies that exist between all strategic and sub-strategic areas of the organisation. For the organisation to achieve its strategic goals, both strategic themes and their constituent parts or goals must be achieved.
A process for strategy mapping
To develop a strategy map, a development process can be as follows:
- Define your organisation’s strategic themes. These will be sourced from the organisation’s mandate, vision, target market, and mission.
- Break down each strategic theme into its constituent parts or goals
- Provide a rationale for why these parts or goals have been selected in relation to their strategic theme and how these goals serve as enablers for the strategic theme
- Define initiatives to support the achievement of these strategic goals, noting how they relate to other strategic themes and goals across the organisation
- Cascade the strategy themes and goals to business unit level to create an integrated, actionable plan, one known across the entire organisation to ensure organisational alignment
Beyond being a visual means of strategic planning that makes for easy consumption and understanding, a strategy map can be an effective tool to replace siloed strategic thinking.
The benefits of developing a strategic map include:
- Accountability:By visualising the logical relationships between strategic themes and goals, their interdependencies are made transparent. As a result, it becomes increasingly clear which leaders are responsible for achieving the organisation’s strategic themes and goals
- Collaboration: Key links between divisional strategies are no longer blurred but made plainly visible and understandable. For example, goals unconnected to other goals should raise the question of why that goal was included and is being pursued in the first place
- Monitoring and evaluation: Through key links and dependencies being easily consumable, a monitoring and evaluation framework can be devised to accurately assess the achievement of strategic themes and goals. The appropriate metrics, aligned to key inputs towards these themes and goals, can be allocated as appropriate
- Increased budget allocation accuracy: As the strategy map picture becomes clear, the weighting of allocated budgets within each business unit can be measured against the relevant strategic theme, themes and goals. Budget allocation methodology can also be potentially addressed during the development process
The strategy mapping process can occur at the beginning or end of a business cycle, dependent on what is most appropriate for the organisation and its operating markets.
Strategy mapping is an effective way for an organisation to align its different parts to lead in the same direction. If your organisation requires assistance on how to map its strategic process, contact Letsema at info@letsema.co.za.
