course material

1. (Mt) – University of Phoenix Change initiative for Nokia Paper
Strategy Maps Once change leaders have framed their vision and strategy for the change,
they can develop a visual representation of the end state and the action paths that will get
them there. The tool was developed by Robert Kaplan and David Norton and is called a
strategy map.27 As can be seen from Figure 10.3, financial outcomes are driven by
customer results. These customer results come from the performance of internal systems
and processes, which in turn rest on the organization’s resources (human, informational,
and capital).28 Once the change vision and strategy are defined, Kaplan and Norton
recommend starting with financial goals and objectives and then setting out the objectives,
initiatives, and paths needed to generate those outcomes. The financial perspective drives
the goals and objectives. If the vision for change is achieved, how will it look from the
perspective of the financial results achieved? To accomplish these financial outcomes, what
initiatives have to be undertaken from a customer perspective to deliver on the value
proposition in ways that generate the desired financial results? To accomplish these
customer outcomes and/or contributions directly to the financial outcomes through
efficiencies, what changes must be tackled from an internal business process perspective?
Finally, to attain the internal process goals and objectives, what must be undertaken from a
learning and growth perspective to increase the organization’s capacity to do what is
needed with the internal processes and customers? Figure 10.3 Generic Strategy Source:
From H. M. Armitage and C. Scholey, “Using Strategy Maps to Drive Performance,” CMA
Management, Vol. 80, #9, 2007, pg. 24. The learning and growth perspective embodies
people, information, and organizational cap ital (e.g., culture, intellectual property,
leadership, internal alignment, and teamwork). For not -for-profit organizations, many
recommend placing the customer perspective at the top of the model (some have relabeled
it as the stakeholder perspective), since this is the reason for the organization’s existence.
Some place the financial perspective parallel with the customer or stakeholder perspective,
while others place it below learning and growth or elsewhere. Others have added levels or
changed labels on the strategy map. However, the goal remains the same: develop a
coherent picture that aligns your change strategy with the organization’s purpose so it
generates the desired outcomes. It is all about translating the change vision into action,
communicatin g with key constituents, integrating and aligning the specific action plans,
implementing, and learning and refining as you go. The assumption underlying strategy
maps in for-profit organizations is that financial outcomes are the end goals that they are
striving for and that other objectives within the change program should be aligned to

2. produce and support those desired outcomes. If particular activities and the objectives don’t
support the changes, they should be seriously questioned and either dropped or reduced in
importance. Each of the change initiatives identified by the strategy map will need to be
managed as to goals and objectives, success measures, timelines, resource requirements,
and an action plan. These, in turn, need to be integrated with th e other change initiatives
that are embodied in the strategy map. When properly deployed, strategy maps provide
change leaders with a powerful organizing and communication tool.29 This visualization
helps people understand what is being proposed and why. It clarifies why certain actions
are important and how they contribute to other outcomes that are critical to achieving the
end goals of the change (i.e., cause–effect relationships). It helps people focus and align their
efforts and appropriately measure and report progress. It can assist change leaders to
identify gaps in their logic, including missing objectives and measures. When Mobil used
strategy maps, it helped them to identify gaps in the plans that had been developed for one
of their business units. Objectives and metrics were missing for dealers—a critical
component for a strategy map focused on selling more gasoline.30 To give you a concrete
example of how a strategy map can be used to help, one is set out in Figure 10.4. It shows
the vision and mission for Control Production Systems, Inc. (discussed earlier in this
chapter). Then it shows the specific measures used in each category. Figure 10.4 Strategy
Map for Control Production Systems Source: Adapted from: Simon, T. “ How Risky is Your
Company?”, Harvard Business Review, Vol. 77, #3, 1999, 85–94. The Balanced Scorecard If
the strategy map links capabilities, change strategies, and outcomes, the balanced scorecard
integrates measures into a relatively simple way of tracking the critical success f actors.
Kaplan and Norton argue that four categories of goals and measures need to be highlighted
in a balanced scorecard: financial, a company’s relationship with its customers, its internal
business process, and its learning and growth. In doing so, management can achieve a
balanced, integrated, and aligned perspective concerning what needs to be done to produce
the desired strategic outcomes.31 Among these indicators, some will lead while others will
lag. For example, improvements in service levels such as the response time to a customer’s
inquiry could be lead indicators of improvements in customer satisfaction. However, this
may not immediately translate into new sales and increased profitability. Improvements in
such measures will often be lag indicators of improvements in service levels because of the
nature of the purchase cycle involved. The balanced scorecard recognizes that not all effects
are immediate. By setting out assumptions concerning what leads to what, it makes it easier
for the change lea der to test assumptions, track progress, and make appropriate
alternations as necessary. When developing a strategy map and balanced scorecard for an
internal change initiative, remember that the relevant customers may be employees in
other departments of the organization. Kaplan and Norton argue that the use of multiple
measures ensure a more balanced perspective on what a successful change will require. The
likelihood that multiple measures will inadvertently mislead change leaders about what a
successful change will require is much less than if they rely on a single indicator. Figure 10.5
outlines a generic balanced scorecard for a change project. Figure 10.6 outlines the
scorecard for Control Production Systems. Toolkit Exercise 10.4 asks you to construct a
strategy map and balanced scorecard for an organization that you know. Remember that

3. customers can be internal or external to the firm. Strategy Map for CPS Revenue Growth
Strategy Financial Perspective Gross sales growth of 15% Profitability growth of 20% Sales
to existing customers increase by 15% and sales to new customers increase by 15%
Productivity Growth Strategy Reduce customer servicing costs by 10% Reduce new product
development costs by 10% Margins improved by 10% Customer Perspective Attract and
Retain High-Value Customers Increase customer satisfaction to 95% Increase customer
retention to 100% Increase the penetration rate in target sectors by 20% Build brand
loyalty with existing customers, increasing referrals by 20% Increase Revenue per
Customer Increase sales to existing customers by 10% Increase software update sales by
30% Increase sales to new customers by 10% Product Innovation Operational Excellence
Customer Intimacy Develop a customer advisory Council Vision for change: Our valued
industrial partners will experience service and performance that delight. We will exceed all
our competitors’ standards through superbly designed and expertly installed and supported
control equipment and software. R and increased to 8% sales, award-winning. scalable
products Internal Process Customer-centric sales and service teams Regular contacts with
customers Lowest downtime; best warranty performance; 100% on-time delivery CRM
deployed. Pre- and post-service excellence at 10% lower cost Decrease new product
development cycle time Annual software updates Customers responded to in 1 hour;
problems resolved within 24 hours Enablers Learning and Growth Human Capital Training
in CRM Develop technically and interpersonally excellent staff Information Capital Increase
IT capacity to respond to service requests quickly Organizational Capital Align structures
and teams to support customer portfolios Select, modify, and install CRM software Ensure
value proposition is understood Strengthen teamwork, employee commitment Maximize
organizational value Financial What do we want Revenue growth strategy Productivity
strategy Asset utilization Customer Add/retain high-value customer Increase revenue per
customer Reduce cost per customer accomplish? Current Migrated New New offerings
Solutions focus Scalability strategies (e.g., web) Internal Customer management leadership
Innovation and commercialization supremacy Internal operations excellence Effective
governance and control Perception; public relations How do we plan to accomplish this?
Learning and growth 1) Human capital (staff competencies) 2) Information capital
(technology infrastructure) 3) Organizational capital (climate for action)