What is a Strategy Map?

This is our short and simple guide to strategy maps. It's updated for 2020, and tells you all the basics in plain English.

Overview

A strategy map is a diagram that shows your organization's strategy on a single page. It’s great for quickly communicating big-picture objectives to everyone in the company.

With a well-designed strategy map, every employee can know your overall strategy and where they fit in. It helps keep everyone on the same page, and it allows people to see how their jobs affect the company’s strategic objectives.

If you’re using balanced scorecard software, your strategy map will also show how your organization is performing at a glance. Each bubble is automatically colored red, yellow, or green based on your actual measures and the goals you set for them.

This article assumes that you know about the general idea of balanced scorecards. If you’ve never heard of them, don’t worry. We’ve written a short article that will get you up to speed in no time.

The Basics

The main idea of a strategy map is that each strategic objective in your balanced scorecard is represented by a shape, usually oval. Very rarely are there more than 20 objectives. Tracking too many will dilute your overall message, making your strategy difficult to communicate.

These objective ovals are then grouped into perspectives like “Financial” or “Learning and Growth.” Every organization is different, but most strategy maps have four perspectives, and they’re often similar to the ones shown here.

For more information on choosing your perspectives and objectives, check out our “What is a Balanced Scorecard?” article.

Adding Arrows

Many strategy maps also have arrows between the objectives to show their cause and effect chain. By following the arrows’ paths, you can see how the objectives in the lower perspectives drive the success of the higher ones.

These causal relationships are central to the idea of the balanced scorecard. If you train your employees and build a culture of information sharing (Learning and Growth), they’ll make your company run more smoothly (Internal Business Processes).

A better running business takes better care of its customers (Customer), and happy customers buy more of what you’re selling (Financial). Strategy maps show how fuzzy intangible assets, like company culture and employe knowledge, are turned into concrete tangible results.

The vast majority of the things that executives can change in an organization don’t contribute directly to the bottom line. We know that it’s important to have happy employees and updated infrastructure, but it’s hard to see how those objectives feed into the company’s end goals. Your strategy map shows these relationships and encourages strategic thinking that goes far beyond your balance sheet.

Themes

Some strategy maps have strategic themes. They represent the three or four big-picture strategic focuses in your organization. Themes vertically group together related objectives across your entire strategy map.

Unlike perspectives, themes are very specific to your organization. For example, themes may be things like:

Operational Excellence
Culture of Safety
Sustainability
Clinical Leadership

Some organizations find it helpful to show themes on their strategy map. Others think that themes add unnecessary complexity. Ultimately, it’s up to you do decide if themes are right for your strategy map.

a strategy map showing colored objectives

Showing Performance

Some balanced scorecard software packages allow you to build your strategy map directly in the software. There are many benefits to automating your balanced scorecard, but the ability see your strategy map light up with real performance colors may be the biggest.

Your static strategy map becomes a live performance dashboard. You can see at a glance how your organization is performing, and you can click on a colored bubble to drill down to more information.

Variations

Every organization is different, and there’s no single way to make a great strategy map.

For example, most companies put the financial perspective on top because their end goal is to make more money. Public utilities and nonprofits, however, have different motivations. Their finances are just a means to an end.

A nonprofit’s final goal is to provide the best services it can. For these organizations, it’s common to switch the Customer and Financial perspectives so that Customer is on top. Their funding (Financial) allows them to help people (Customer).

Likewise, some objectives may not fit neatly within a single perspective and it may make more sense for them to straddle the line between two perspectives. There may even be strategic objectives that don’t affect other objectives, so they don’t have arrows.

What’s important to remember is that your strategy map should reflect your actual organizational strategy. It’s completely fine to deviate from the traditional layout to accommodate your unique goals.

What's Next?

If you haven’t yet read our article on balanced scorecards, that’s a great place to head next. We also recommend the Balanced Scorecard Institute’s “What is the Balanced Scorecard?” article. The Wikipedia entry for strategy maps is a great resource, but it can get pretty wordy. Finally, Amazon has some great books available if you really want to get some deep insight.

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