Strategy maps can be, and often are, used as standalone tools that organisations employ to develop, understand and convey their strategic story. To maximise their value, however, they need to be seen and used as core building blocks in an aligned strategy initiative.
There are 6 steps of strategy mapping, 2 of which will be outlined in this blog article.
Step 1: Specify an overriding objective
In the next few years, what will it take to succeed? This first step is critical because it links the strategy map to the earlier phase of creating/reaffirming an organisation’s mission, core values and vision. This step must differentiate between what the organisation truly understands as its overriding objective and the strategies it plans to implement.
There is considerable confusion on this point. Many mission and vision statements are often mistakenly portrayed as the ultimate objective to be achieved – satisfied customers, service excellence, best-in-field, market leader, low-cost provider and so on. Indeed, these are critical outcomes and are highly desired by all organisations. However, for profit-making organisations, the overriding objective must be economic.
There is no question that serving customers effectively, developing new and unique products and achieving market dominance are worthy objectives. But in a profit-making environment, these are all the ingredients for success, not success itself. Success is achieved by significant revenues and/or cost containment that lead to superior economic returns — the overriding objective.
The overriding objective should be the first element of the strategy map. It should contain a financial target and a time dimension.
Step 2: Choose the value proposition
The second step in strategy mapping is to choose the value proposition that will help the organisation win the market. The idea behind the value proposition approach is to choose one dominant value proposition, and provide breakthrough customer value in it. For the two propositions not chosen, it is imperative not to lead but to compete, at least to some threshold level. The three value propositions put forth by Treacy and Wiersema provide an excellent framework for competing in today’s markets:
1. Operational excellence (also referred to as best total cost)
2. Product leadership
3. Customer intimacy (also referred to as customer solutions)