Concept developed by Norton and Kaplan from the development of the Balanced Scorecard provide an overview and a graphic description of the strategy defined by an organization. They can be likened to cartographic maps that outline a simplified representation of the positioning strategy where we are and where we can go.
If the Balanced Scorecard (CMI) is based on the principle that “you can not control what you can not measure” so that companies have relevant indicators to monitor your progress, Strategy Maps are based on the criterion that “you can not measure what can not be described”, and its ultimate goal the linking of intangible assets with value creation processes in a company, determining the leadership of an entity.
The core of the definition of a Strategic Map is its design by the cause-efectoque determine how the four perspectives of Balanced Scorecard relate:
1. At the top we have the financial results (will mark what we should do as well as financial objectives must raise) which are achieved through customer satisfaction so this perspective depends on the client.
2. The second level is constituted by the value proposition (closely related to the concept of Value Chain Porter) that develops for customers describing the methodology for generating sales, customer loyalty, etc. (Implies what we do and how we measure our value proposition to the customer in order to ensure their satisfaction.) This phase is directly related to the internal processes of the organization.
3. Internal processes would mark the third level being its configuration which defines the implementation of manufacturing processes and / or service in order to create and develop the value proposition to our customers (processes mark the value chain where we should be excellent: core competencies). This third level is fueled by intangible assets.
4. Intangible assets considered as human capital, information capital and organizational culture would be at the basis of the defined part thereof diagram and support in the development of internal processes located “upstream” by providing the basics the strategy. Without considering the needs of the latter link value creation will not be achieved and the strategy will not develop satisfactorily (determine strategic capabilities of the company and define which are the critical aspects of maintaining excellence and our resources of people, competencies, skills and technology available to us).
The alignment (strategic compatibility Porter) of the objectives of the four perspectives is the key to the development of good and centradaestrategia and internally consistent. Developing a good strategy map enables companies to identify a number of financial or economic to set objectives and make your programming touring map designed down level in the corresponding relations so that a visual way can be identified needs (and capabilities) to achieve the strategy you want to develop.
The Strategic Map of a company develops in relation to five basic principles:
1. There must be a balance of fuerzascontradictorias. The long-term performance, vital to ensure increased value for Company executives, “hits collection” of good financial results in the short term. The results can be improved by spending cuts and investments “mortgaging” innovation actions, and personnel training. The search for balance between cost rationalization in the short term and making investments is vital for any entity.
2. The definition of proper customer value proposition. Placing customer satisfaction as a starting point for creating sustainable value in organizations (which constitutes one of the sides of the Strategic Triangle Kenichi Ohmae), the correct definition of them, the points of conjunction as the company with the same as well as the characteristics of the product or service they need is key to any business strategy. There is no use a product or service perfect if the customer does not provide any value.
3. The value is set in the internal processes. Under the framework of vision Scorecard financial perspective and client are external aspects describing the results which the entity expects to achieve (via revenue growth or productivity improvement-or both-). On the other aspects of internal processes and strategic capabilities they correspond to an internal business perspective and define the “practical development,” the development of the chosen strategy. It will be the development and control of internal processes and the relationship of the different strategic capabilities of the company that ultimately determine the success of the strategy chosen by the entity.
4. The strategy must be comprehensive. It must be related to all the processes of the company to ensure its success covering at least a factor of each group as this dynamic guarantees average benefits and improves short (improvement of operative processes), (improvements in customer relations ) and long term (investment in innovation and attention to regulatory and social processes).
5. The value of the intangible assets comes from its ability to support the implementation of the strategy of the company. Considering the intangible assets of any entity as human capital (skills, talent and motivation of staff), capital of information (databases, information systems and technology infrastructure) and organizational capital (culture, leadership, etc.), they can not materialize or measured independently finding a value in its ability to assist the company in developing its strategy. The correct integration of the three types of intangible assets is necessary for the proper execution of the strategy defined condition.
Summarizing the strategic map defines the lines of action (strategy) of an organization in a coherent way in preparation for the establishment and management of its objectives and indicators and becomes the link between strategy formulation (in order to get by the company a competitive advantage over its competitors) and its realization. Furthermore, its development requires organizations to determine a logical way value is created and for whom, must outline a few strategic objectives and a cause-effect relationships well defined, which will see quickly the strategy of the organization.
“The essence of strategy is not simply choose what to do; also it requires choosing what not to do “.
Robert S. Kaplan (consultant and teacher) and David Norton (consultant and executive) US and creators of the Balanced Scorecard.