Strategy Maps Chapter One: Introduction Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard

Strategy Maps

Chapter One: Introduction

Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.3-pp.28.

品管課張恩欣 2003.3.1

The Story of Gray-Syracuse

How companies can now focus their human capital investment in all intangible assets to create distinctive and sustainable value

Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.3.

Increasing focus of intangible assets

From a product-driven economy to a knowledge and service-driven economy

Intangible assets account for more than 75% of a company’s value

Intangible assets drive long-term value creation at both the macroeconomic and microeconomic levels


Strategy

“A general method for achieving specific objectives. It describes the essential resources and their amounts, which are to be committed to achieving those objectives. It describes how resources will be organized, and the policies that will apply for the management and use of those resources”

Source: “Engineering Strategy Development ； Definition of Strategy”, Feb.18.2000, http://www.johnstark.com/es5.html(Feb.29.2004)

Findings from Kaplan & Norton’s observation

No two companies thought about the strategy in the same way

Views of strategy were one-dimensional

A generally accepted way to describe strategy did not existSource: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible

assets into tangible outcomes, Harvard Business School Press: Boston,pp5.

Consequences of inexplicitly described strategies

Executives cannot communicate the strategy among themselves or to their employees

Without a shared understanding of the strategy, executives cannot create alignment around it

Without alignment, executives cannot implement their new strategy for the changed environment of global competition, deregulation, customer sovereignty, advanced technology, and competitive advantage derived from intangible assets


Elements of the BSC framework

I. For private-sector organizations:

Financial performance Customer Internal processes Learning and growth



cont.Financial performance Provides the ultimate definition of

an organization’s success Describes how an organization

intends to create sustainable growth ion shareholder value



cont.Customer perspective To improve financial performance, an

organization has to have a success with targeted customer

Defines the value proposition for targeted customer segment. The central element of strategy is choosing the customer value proposition



cont.Internal processes Create and deliver the value

proposition for customers A leading indicator of the

following improvement in customer and financial outcomes



cont.Learning and growth Describe how the people,

technology, and the organization climate combine to support the strategy

A leading indicator of the following improvement in customer and financial outcomes



cont.

II. For public-sector and nonprofit

organizations :

The achievement of mission

The fiduciary perspectives


Strategy maps: Describing how the organization creates

value

Advantages

Providing a uniform and consistent

way to describe that strategy

Providing the missing link between

strategy formulation and strategy

execution


Strategy maps: Describing how the organization creates value

cont.

Principles of the strategy map:1. Strategy balances contradictory forces

2. Strategy is based on a differentiated customer value proposition

3. Value is created through internal business process

- Operations managements

- Customer management

- Innovation

- Regulatory and social


Strategy maps: Describing how the organization creates value

cont.

Principles of the strategy map:

4. Strategic alignment determines the

value of intangible assets - Human capital - Information capital

- Organization capital


Customer Value Proposition

SelectionAvailabilityQualityPrice

Organization Capital

Figure 1-3 A Strategy Map Represents How the Organization Creates Value

•Supply•Production•Distribution•Risk Management

Operational ManagementProcesses

•Selection•Acquisition•Retention•Growth

Customer ManagementProcesses

•Opportunity ID•R&D Portfolio•Design/Develop•Launch

InnovationProcesses

•Environment•Safety and Health•Employment•Community

Regulatory and SocialProcesses

InternalPerspective

Human Capital

Information Capital

Culture Leadership Alignment Teamwork

Learning andGrowthPerspective

CustomerPerspective

FinancialPerspective

Functionality Service Partnership Brand

Product / Service Attributes Relationship Image

Improve CostStructure

Increase AssetUtilization

Long-TermShareholder Value

Expand RevenueOpportunities

EnhanceCustomer Value

Productivity Strategy Growth Strategy


The strategy map template, customized to the organization’s particular strategy, describe how intangible assets drive performance enhancements to the organization’s internal process that have the maximum leverage for delivering value to customers, shareholders, and communities

Conclusion


Documents

Strategy Maps Chapter One: Introduction Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard