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Title: Strategy Maps: Converting Intangible Assets into Tangible Outcomes by Robert S. Kaplan, David P. Norton ISBN: 1-59139-134-2 Publisher: Harvard Business School Press Pub. Date: 02 February, 2004 Format: Hardcover Volumes: 1 List Price(USD): $35.00 |
Average Customer Rating: 2.92 (13 reviews)
Rating: 5
Summary: Organizational Cartography of the Highest Order
Comment: Kaplan and Norton co-authored an article which was published in the Harvard Business Review (January/February 1993). In it they introduce an exciting new concept: the balanced scorecard. They have since published three books: this one, preceded by The Balanced Scorecard: Translating Strategy into Action (1996) and The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment (2000). Here's some background on the two books before we shift our attention to Strategy Maps.
In The Balanced Scorecard, as Kaplan and Norton explain in their Preface, "the Balanced Scorecard evolved from an improved measurement system to an improved management system." The distinction is critically important to understanding this book. Senior executives in various companies have used the Balanced Scorecard as the central organizing framework for important managerial processes such as individual and team goal setting, compensation, resource allocation, budgeting and planning, and strategic feedback and learning. When writing this book, it was the authors' hope that the observations they share would help more executives to launch and implement Balanced Scorecard programs in their organizations.
Then in The Strategy-Focused Organization, Kaplan and Norton note that, according to an abundance of research data, only 5% of the workforce understand their company's strategy, that only 25% of managers have incentives linked to strategy, that 60% of organizations don't link budgets to strategy, and 85% of executive teams spend less than one hour per month discussing strategy. These and other research findings help to explain why Kaplan and Norton believe so strongly in the power of the Balanced Scorecard. As they suggest, it provides "the central organizing framework for important managerial processes such as individual and team goal setting, compensation, resource allocation, budgeting and planning, and strategic feedback and learning." After rigorous and extensive research of their own, obtained while working closely with several dozen different organizations, Kaplan and Norton observed five common principles of a Strategy-Focused Organization:
1. Translate the strategy to operational terms
2. Align the organization to the strategy
3. Make strategy everyone's job
4. Make strategy a continual process
5. Mobilize change through executive leadership
The first four principles focus on the the Balanced Scorecard tool, framework, and supporting resources; the importance of the fifth principle is self-evident. "With a Balanced Scorecard that tells the story of the strategy, we now have a reliable foundation for the design of a management system to create Strategy-Focused Organizations."
Those who have not as yet read The Balanced Scorecard and/or The Strategy-Focused Organization are strong urged to do so. Brief comments about them in commentaries such as these merely indicate the nature and extent of the brilliant thinking which Kaplan and Norton provide in each.
What we have in Strategy Maps are two separate but related components: Further development and refinement of core concepts introduced in the earlier two books, and, a rigorous examination of new ideas and new applications by which to convert intangible assets into tangible outcomes. In the Introduction, Kaplan and Norton explain that their direct involvement with more than 300 organizations provided them with an extensive database of strategies, strategy maps, and balanced scorecards. This abundance of material has revealed a number of strategies and tactics by which literally any organization (regardless of size or nature) can create and then increase value. The strategies and tactics are embraced within three targeted approaches for aligning intangible assets to strategy:
"1. Strategic job families that align human capital to the strategic themes
2. The strategic IT portfolio that aligns information capital to the strategic themes
3. An organization change agenda that integrates and aligns organizational capital for continued learning and improvement in the strategic themes."
Kaplan and Norton carefully organize their material within five Parts. I presume to suggest that Part I be read and then re-read before proceeding to Value-Creating Processes, Intangible Assets, and Building Strategies and Strategy Maps. Part Five provides a number of case files generated by private-sector, public-sector, and nonprofit organizations. In fact, I strongly suggest that Chapter 2 be re-read several times because it offers an invaluable primer on strategy maps. When reading and then re-reading Chapter 2, be sure to check back on Figure 1-2 (Page 8) and Figure 1-3 (Page 11) in the Introduction.
One word of caution from Kaplan and Norton: "It is important (if not imperative) to describe an organization's strategy with word statements of strategic objectives in the four linked perspectives BEFORE turning to measurements. Many organizations building BSCs attempt to go directly from somewhat vague strategy statements to measures without this step, and often omit critical aspects of the strategy or else select from measures that are already available, rather than selecting measures that quantify their strategic objectives."
This is a much longer review than I usually compose because I am convinced that only what is measurable is manageable. Also because, after extensive prior experience helping corporate clients with formulating process maps of various kinds, I am convinced that organizational "journeys" to increased sales, profits, and value need maps by which to reach those destinations just as those who drive vehicles do when seeking their own destinations. One of the greatest benefits of strategy maps is that the process by which they are devised helps to ensure that the most appropriate destination is identified. Think of Kaplan and Norton as travel agents and cartographers, to be sure, but also as consultants whose services you can retain merely by purchasing their three books, then by absorbing and digesting the information and counsel those three books provide. For many decision-makers in all manner of organizations, Strategy Maps may well prove to be the most valuable business book they ever read.
Rating: 5
Summary: Great addition to the trilogy
Comment: "Strategy Maps: Converting Intangible Assets into Tangible Outcomes" by Robert S. Kaplan, David P. Norton is a great third addition to the trilogy - "The Balanced Scorecard: Translating Strategy into Action" and "The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment"
The book goes into extraordinary detail of how both private and public organizations have succeeded in today's competetive environment by using the Balanced Scorecard to transform into what Kaplan and Norton call "Strategy-Focused Organizatons."
I particularly like the fact that the authors do not rely on theoretical "what if" examples like many academic theorists do -Kaplan and Norton have tested their ideas with real organizations that now endorse the concenpt (indeed, they created a Balanced Scorecard Hall of Fame to recognize those organizations that achieve exemplary results). The authors provide many examples of how such organizations have achieved breakthrough results through case studies.
This is a must have for all Balanced Scorecard enthusiasts and a great tool for managers to have to help think through the articulation of strategy, a pre-requisite to its actual implementation.
Rating: 1
Summary: Disappointing and a rehash
Comment: I was extremely disappointed by this book.
My most serious concern was the failure of the authors to cite John Thorpe's "The Information Paradox: Realizing the Business Benefits of Information Technology". Results Chains were first developed in the late 80s and early 90s by DMR Consulting and Fujitsu Consulting. Basically, Strategy Maps are simplified Result Chains with a Balance Scorecard flavor. Harvard professors MUST do a review of the literature BEFORE they publish.
This is important because a Results Chain avoids 3 problems that will bedevil Strategy Map users.
1) A Results Chain is more much explicit about the role that assumptions play in achieving business outcomes. Assumptions are either statements about uncertainty (e.g. price is an important criteria for customers) or they are things that are outside of your control (e.g. a competitor will not enter this market). Strategy Maps DO NOT talk about risks or assumptions. This is bizarre.
2) The book continually mixs up inputs, outputs (from internal processes), and outcomes. (Osborne's "Reinventing Government" has a nice appendix about the differences.) It is not clear whether the elements on the Strategy Maps are actions to be taken or the results of these actions.
The failure to understand these distinctions will cause confusion down the road.
3) Results Chains are much more explicit about the contributions that one element plays in achieving business outcomes. In contrast, all the Strategy Maps have many-to-many relationships.
What will happen if the benefits are not achieved? How are you going to do any kind of root-cause analysis with a Strategy Map?
As the other reviewers have noted, the Strategy Maps in the book are very generic. This may provide a starting point for developing your own Results Chain.
Take a look at Thorpe's book.
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Title: The Future of Competition: Co-Creating Unique Value with Customers by C. K. Prahalad, Venkat Ramaswamy ISBN: 1578519535 Publisher: Harvard Business School Press Pub. Date: 18 February, 2004 List Price(USD): $29.95 |
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Title: The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment by Robert S. Kaplan, David P. Norton ISBN: 1578512506 Publisher: Harvard Business School Press Pub. Date: September, 2000 List Price(USD): $29.95 |
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Title: The Innovator's Solution: Creating and Sustaining Successful Growth by Clayton M. Christensen, Michael E. Raynor ISBN: 1578518520 Publisher: Harvard Business School Press Pub. Date: September, 2003 List Price(USD): $29.95 |
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Title: The Balanced Scorecard: Translating Strategy into Action by Robert S. Kaplan, David P. Norton ISBN: 0875846513 Publisher: Harvard Business School Press Pub. Date: September, 1996 List Price(USD): $35.00 |
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Title: Beyond the Core: Expand Your Market Without Abandoning Your Roots by Chris Zook ISBN: 1578519519 Publisher: Harvard Business School Press Pub. Date: 02 January, 2004 List Price(USD): $29.95 |
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