Strategy Map
Strategy Map
What is a strategy map?
- Link the 4 perspectives with cause-and-effect arrows
- Linking a path beneath the financial objective
- Limit to 3–5 per perspective
Once you draw a strategy map, the questions asked in management meetings change. When only financial numbers are on the table, people ask “Why did we fall short?” and the executive in charge prepares excuses; when the path is drawn out, they ask which arrow broke. When the question shifts from people to links, blame turns into root-cause analysis, and initiatives scattered across departments show where they sit in the same chain. A front-line manager fills in next week’s calendar differently depending on whether “7% operating margin” stands alone or has a three-step path attached.
In practice, it is often confused with a KPI tree. A KPI tree is a decomposition expressed as a formula, such as “revenue = number of customers × average spend per customer.” The arrows in a strategy map, by contrast, are causal hypotheses to be tested. They are claims, not calculations, so they can be wrong, and correcting them when they are is the system working as intended. Another thing people miss is time lag. Investments made in the learning and growth layer usually show up in the financial layer only 6–18 months later, so if you demand results in the same quarter, the two lower layers will be recorded as “no impact” every time. Aim for 3–5 objectives per perspective and about 15 overall, and draw the map with vertical columns for each strategic theme, such as growth and productivity, to noticeably reduce tangled arrows.
The most common failure is drawing the map backward. If you lay the initiatives you’re already running along the bottom and attach arrows upward, every project looks strategic, and initiatives that should have been dropped get a justification tool. Training departments also often put activity-volume metrics like “100% training completion for all employees” in the learning & growth box; such metrics don’t connect to any process improvement in the layers above, so they become the first to be cut from the budget. Many organizations draw one in a workshop, frame it, and never take it out again at quarterly reviews. If you don’t verify even one arrow with data each quarter, the map is a dead picture the day it is drawn.
John KimAuthor of B2B Marketing Design and CEO of Nanum Consulting
Eunpyo HongExpert in company analysis, startups, and venture fundraisingRobert Kaplan and David Norton developed the Balanced Scorecard further, introduced the strategy map concept in the 2000 Harvard Business Review, and consolidated it in their 2004 book of the same name.
Let’s walk through a hypothetical case. Company A, a medical device distributor, has 180 employees and annual revenue of KRW 94 billion (≈ US$70,327,700). Its operating margin had slipped from the 7% range to the 4% range over two consecutive years, yet management meetings had repeated the same line, “restore a 7% margin,” for a third straight quarter. The strategic planning team gathered 11 executives for a two-day strategy map workshop.
- When Kim, the head of Strategic Planning, taped the company’s 63 active KPIs to a wall, 41 turned out to be financial metrics, and the only learning-and-growth item was “training completion rate.”
- The head of sales declared, "Repurchases aren’t happening because of delivery, plain and simple," so they placed “on-time delivery rate” in the customer perspective and linked it with an arrow to “urgent-order lead time from 5 days to 2 days” in the process perspective.
- In the learning & growth box, they dropped the completion rate and replaced it with “number of product lines sales reps can advise on specifications, from 120 to 300,” and the training team designed a new 3-month program.
- While narrowing the objectives down to 15, a brand awareness survey the marketing team had been pushing did not connect to any arrow, so its KRW 80 million (≈ US$59,900) budget was cut on the spot.
- At the Q2 review, the CEO asked, "Which arrow broke this time?" On-time delivery had gone up but repurchase rate hadn’t moved, so they revised their hypothesis to point to quote reply speed as the real cause.
- A year later, urgent-order lead time had fallen from 5.4 days to 2.3 days, the repurchase rate among existing customers had risen from 61% to 73%, and operating margin recovered from 4.1% to 6.8%.