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Can You Have a Meaningful Balanced Scorecard without a Strategy Map?

While strategy maps have been around for a while (at least since 2004 when Kaplan and Norton published their book on the topic), they are still used infrequently in organizations. However, many organizations have and use a balanced scorecard. So, does this mean that it is possible to have a balanced scorecard without a strategy map? I guess the answer appears to be yes but I believe that it is easier to have a meaningful balanced scorecard (i.e. one that is effective for the management of strategy execution and mission and vision achievement) when it is built with/cascaded from a strategy map.

So, what is the basis for my opinion?

Well, as you know, a strategy map is a picture of the key elements of your business strategy. It includes your organization’s core values, mission, and vision, your balanced scorecard perspectives, and the strategic objectives that, when executed against, will result in the achievement of your company’s mission and vision. In a good strategy map, these strategic objectives are written in actionable terms (i.e. short statements using a verb), making the business strategy feel more tangible than the typical high level strategic direction statements. That is, employees and stakeholders can more easily see what the business strategy, via the strategic objectives, looks like in action and how what they do on a day to day basis relates to the business strategy.

Making your business strategy more operational and actionable via a strategy map is the first step in making it easier to determine good/meaningful balanced scorecard indicators.

An important companion to a strategy map is the detailed definitions for each of its strategic objectives. These definitions describe, in a few short sentences, what is meant by a strategic objective (i.e. what it does and doesn’t include) and why it is important to strategy achievement. Ideally, each balanced scorecard indicator represents a specific strategic objective as characterized by its definition. The specificity provided by a good strategic objective definition provides you with a necessary filter to put all possible balanced scorecard indicators through.

Helping you select balanced scorecard indicators that are truly representative of your business strategy is perhaps the most critical contribution a strategy map makes to your balanced scorecard development process.

Basically, the strategy map is an essential tool in the balanced scorecard development process. While it is possible to create a balanced scorecard from a traditional strategic plan, it is far easier, and you reliably get a better product, when you leverage your strategy map to create your balanced scorecard indicator set.

So what are you waiting for? If you and your organization are thinking of using a balanced scorecard to measure and manage strategy execution and mission and vision achievement, start by building your strategy map first!

2 Comments

  1. Alan S Michaels
    Dec 21, 2010

    Excellent article – thank you.
    I agree completely about the importance of step one – leveraging the strategy maps – and if the company has a clear understanding of its lines of business (and makes their success the goal of each cost center) – all the better.

  2. Sandy Richardson
    Dec 21, 2010

    Hi Alan: I’m glad that you enjoyed this blog post. When put together, a strategy map and the balanced scorecard form a powerful partnership that, together, optimize the chances of strategy execution excellence for the organization utilizing them – it’s really unfortunate that more companies don’t take advantage! Regards, Sandy