am 4. Februar 2004
"Finally the book from Norton/Kaplan that links Scorecarding to Intangible Assets Management and that focuses on the holistic process (not on a tool) of managing strategically". That's what I thought BEFORE the book was published. That's what I expected. But this book takes a very different turn.
Strategy Maps fails in two critical aspects: First, it presents Strategy Maps as a TOOL. "As important as the Balanced Scorecard" (citation from the introduction!), the authors claim. This is CRAP. In fact, Strategy Maps are and have always been a critical part of that typical strategy management process that we might also call "scorecarding". They are NOT another tool that we might or might not use. They are simply an ESSENTIAL part of using the Balanced Scorecard. No Strategy Map = No (real) Scorecard. Period. Why? Without a Strategy Map, a Scorecard is just hollow numbers and graphs. (And by the way: I guess 90% of today's Scorecards in practice are just that. Hollow and useless...). So this book actually is not about a new tool, but on one specific aspect of the Scorecard process. Too bad that Norton/Kaplan try to hype this as "the next big thing!".
Second problem: Norton/Kaplan seem to be just too narrow-minded nowadays to acknoledge what OTHERS (outside the Balanced Scorecard Collaborative) have been doing lately. They fill plenty of pages this time with examples (the book is in fact very repetitive), and they could have used the pages better connecting the scorecard concept with fresh ideas. But they don't. They don't make use of valuable accomplishments regarding Intangible Assets Management. They ignore the highly relevant Beyond Budgeting framework.
Instead, as in their previous books, they resort to mostly technical issues of scorecarding, this time focussing - you might guess it already - on the "mapping" stuff, without reflecting enough about paradoxes such as how to manage stategy in connection with uncertainty, planning, resources, innovation etc. You will find many (TOO MANY!) mapping examples in this book, as if the problem nowadays was DESIGNING such maps. I think the problem is more about communication, involving people and executives "letting go".
I doubt that this book will contribute much to managing practice. It just answers the wrong questions. A real pity...
am 17. Juni 2005
If this book were a Hollywood film, it might be titled "Son of Balanced Scorecard" or even "Balanced Scorecard III." This book, however, is no mere spin-off or sequel. In two prior works, "The Balanced Scorecard" (which you may wish to read before reading this book) and "The Strategy-Focused Organization", authors Robert S. Kaplan and David P. Norton introduced the powerful concept of measuring the elusive intangibles that affect organizations. This information-dense book was born when the authors observed that CEOs instinctively draw arrows to explain their goals. This led to a breakthrough realization: "Objectives should be linked in cause-and-effect relationships." The graphic display of these relationships is a "strategy map." This book breaks new ground by providing a template so executives can be sure that their strategic planning omits nothing. It expands the concepts of "strategic themes" and "value-creating processes," and explains a system for aligning your organization's strategy with its intangible assets. However, the real-world examples may be lost on CEOs who are unfamiliar with MBA-style case studies. If you're implementing a "Balanced Scorecard" initiative or planning your firm's future, we say this is a blockbuster you don't want to miss.
am 11. April 2005
Whether you like Kaplan & Norton's concept of the balanced scorecard or not, we probably can agree that they have had huge adoption of their ideas in many of the biggest firms in the world.
Kaplan & Norton's focus on creating easy-to-understand frameworks for implementing strategy is admirable. They have published their ideas in articles and books over they last 10 years. This book - Strategy Maps - is the third book in their campaign for making strategy happen.
The first book from 1996 introduced the BALANCED SCORECARD (BSC). A tool that translates an organization's mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system. The performance measures were arranged into four PERSPECTIVES. Viewed horizontally, like in a grid, each perspective represents the set of objectives desired by a particular stakeholder (Financial, Customer, Internal Process/Organization, Learning & Growth/Employees). The perspectives, when taken together, permit a complete view of the strategy and "tell the story of a strategy" in a clearly understandable framework.
In 2001, the second book introduced the STRATEGY-FOCUSED ORGANIZATION that places strategy at the centre of its management processes - not only for measurement purposes. Strategy is now central to the firm's agenda. There are five principles to a Strategy-Focused Organization: Mobilize Change through Executive Leadership; Translate the Strategy to Operational Terms [that is, balanced scorecard and strategy map]; Align the Organization to the Strategy; Make Strategy Everyone's Job; Make Strategy a Continual Process.
Finally in 2004, this book expands the concept of the STRATEGY MAP, which is a visual representation of an organization's strategy and the processes and systems necessary to implement that strategy. A strategy map is basically a one-page graphical summary, showing employees how their jobs are linked to the organization's overall objectives.
This book adds some new contributions to the concept of strategy maps:
TEMPLATES. The main benefit of this book may be the (very) many templates that should stimulate most readers to build their own customised strategy map. Being a relatively experienced balanced scorecard practitioner myself, I certainly enjoyed the inspiration from the templates. Most benefit is derived from the templates that describe the basic components of how value gets created in the internal process perspective as well as the learning and growth perspective. I can highly recommend the strategy map templates reflecting the firm's generic competitive strategy - lowest-cost vs. product leader vs. customer intimacy.
STRATEGIC THEMES, which are based on a few selected key value-creating processes. The authors introduce a taxonomy that classifies internal value-creating processes into four clusters that each may have literally hundreds of sub-processes that create value in some way:
- operations management (i.e. producing and delivering. Also known as supply chain management)
- customer management (or CRM)
- innovation of products and processes (such as Product-Lifecycle Management etc.)
- regulatory and social: conforming to regulations and societal expectations
INTANGIBLE ASSETS FRAMEWORK, which attempts to describe, measure, and align the three intangible assets in the learning and growth perspective to the strategic processes and objectives in the internal perspectives. The three types of intangible assets are:
- Human capital: employees' skills, talent, and knowledge.
- Organization capital: culture, leadership, employee alignment, teamwork, and knowledge management
- Information capital: Databases, information systems, network, and technology infrastructure
I have worked in practice with the balanced scorecard since 1998. This book is a natural follow-up to the authors' previous work. I fully acknowledge the critical issues mentioned by some of the reviewers. So if you don't want to work with balanced scorecard, let this book go.
But if you are already working within this strategy framework in your organization, you really shouldn't miss this book. It expands on many of the interesting ideas that you probably already know. It also brings you up to date with their current thinking. That's why I rate it four stars.
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business
Robert S. Kaplan and David P. Norton are the innovators behind the Balanced Scorecard, which has proven to be a potent way of turning strategy into reality. Before the Balanced Scorecard, most strategies failed in execution . . . because people didn't know what they were supposed to do. With the Balanced Scorecard, a very high percentage of strategies are implemented and do succeed. In The Strategy-Focused Organization, Professor Kaplan and Dr. Norton explained the management processes that make implementing the Balanced Scorecard most successful.
Strategy Maps now becomes another essential building block in strategy implementation. Importantly, this building block should be the starting point in your search for success. In the preface, the authors describe the three essential elements behind breakthrough results:
You must first describe the strategy, then measure the strategy for what needs to be executed and then manage the strategy by the measurements. Describing the strategy is the task addressed in Strategy Maps, measuring the strategy is addressed in the Balanced Scorecard, and The Strategy-Focused Organization looks at managing the strategy by the measurements.
Here's the philosophy the authors provide behind this conclusion:
"You can't manage (third component) what you can't measure (second component) [and] [y]ou can't measure what you can't describe (first component)."
In Strategy Maps, the authors have shown the way to communicate how each element of a company's activities contributes to the overall success of the strategy. Using the Balanced Scorecard, everyone in the organization knows what to be done. With Strategy Maps, each person will understand the context of what they must do and implementation improves.
Here's what a template of a typical strategy map includes for a for-profit company in Strategy Maps. First, all of the information is contained on one page. Second, that page has four perspectives: Financial; Customer; Internal; Learning and Growth. Third, the financial perspective looks at creating long-term shareholder value, and builds from a productivity strategy of improving cost structure and asset utilization and a growth strategy of expanding opportunities and enhancing customer value. Fourth, these last four elements of strategic improvement are aided by changes in price, quality, availability, selection, functionality, service, partnerships and branding. Fifth, from an internal perspective, operations and customer management processes help create product and service attributes while innovation, regulatory and social processes help with relationships and image. Sixth, all of these processes are enriched by the proper allocation of human, information and organizational capital. Organizational capital is comprised of company culture, leadership, alignment and teamwork capabilities. Seventh, the cause and effect relationships are describe by connecting arrows.
The book is a marvel of clarity. The authors describe what a strategy map is and proceed to share dozens of examples that have been successfully used in both for-profit and non-profit organizations around the world. The examples are carefully chosen to illuminate each element of the strategy map template that they suggest you begin with. In Part IV, they make the task of strategy map building even easier by taking typical strategies that are most often employed and showing how to build a strategy map that characterizes such a strategy. Finally, every chapter also refers to the best published work on what strategies and actions are most likely to succeed. So even if you are not familiar with the literature of creating and implementing successful strategies, you can use Strategy Maps to learn what you need to know.
Strategy Maps will be as valuable for small organizations as for large ones. All organizations need to have a better understanding of how all the pieces of a strategy need to fit together. In fact, if you only read one book written about strategy in 2004, you would be wise to choose this one.
As a student of continuing business model innovation, I was particularly pleased to see the authors explain how processes can be put in place to improve business models as part of a strategy map.
The only missing element in the book from my perspective is how to make strategy maps more compelling for the viewers. In strategy presentations across the country, I've often seen strategy maps that use colorful illustrations and enticing numerical relationships to help those in the trenches to grasp the full scope of how their work connects to everything else. When Strategy Maps is ready for its next edition, I hope the authors will consider adding a section in this regard. In the meantime, they offer a look at this element in the software they advertise for making strategy maps. See their on-line offering for more details.
If you have not yet read The Balanced Scorecard and The Strategy-Focused Organization, I strongly encourage you to read those outstanding books as well after you finish Strategy Maps. With the combined perspective of the three books, you should easily outdistance the competition!
As I finished the book, I thought about what else keeps strategies from being successful. In my experience, the typical remaining problem other than miscommunication is setting a direction that cannot be implemented in the appropriate time frame. I strongly encourage those who are planning new strategies to develop a strategy map before committing to the new strategy. Then use that strategy map to ask those who would have to implement the strategy what problems they foresee in implementation. In this way, you can adapt the strategy to what you can reasonably hope to execute.
This book also made me realize that drawing such a system effects graphic can help explain anything to others. I plan to do so much more often.