Strategy Map

A strategy map shows the logic of a strategy in a picture. It arranges strategic objectives in layers, usually the four perspectives of the balanced scorecard, and draws arrows between them to show how achieving one objective helps achieve another. For example, building employee skills might improve the quality of a key process, which raises customer satisfaction, which increases revenue. Seeing these links on a single page helps leaders test whether their strategy hangs together and helps employees understand how their work contributes to results. It turns a list of objectives into a story about how the organization intends to succeed.

Robert Kaplan and David Norton introduced strategy maps around 2000 as an extension of the balanced scorecard, and described them in detail in their 2004 book Strategy Maps. They found that organizations using the scorecard benefited from a visual way to describe the cause-and-effect relationships behind their measures. For strategy and planning teams, strategy maps provide a clear way to design, communicate and review strategy, and to connect objectives to the initiatives and investments that support them.

Definition of a Strategy Map

A strategy map is a visual representation of an organization's strategy that arranges strategic objectives across perspectives and links them with cause-and-effect relationships, showing how intangible assets and internal processes create customer and financial value.

It is a key tool for strategic alignment and strategy execution, and each objective on the map is typically paired with measures on a balanced scorecard.

The Four Layers of a Strategy Map

The financial layer, at the top, shows the ultimate results the organization wants, such as revenue growth, productivity or return on capital.

The customer layer shows the value proposition that will win and retain customers, such as low price, product quality or close relationships.

The internal process layer shows the processes the organization must excel at to deliver the value proposition, such as innovation, operations or customer management.

The learning and growth layer, at the bottom, shows the people, systems and culture needed to support the processes, such as skills, information technology and leadership.

Public sector and nonprofit maps often place mission outcomes at the top instead of financial results.

Cause-and-Effect Links

Arrows on the map show how objectives in lower layers enable objectives in higher layers.

Each link represents a hypothesis about how the strategy works, such as the assumption that faster service will increase customer retention. These hypotheses are rarely written down in traditional strategic plans.

Making these hypotheses explicit allows leaders to test them with data over time and change the strategy if they prove wrong.

Links also help identify gaps, such as a customer objective with no supporting process objective.

Importance of a Strategy Map in Strategic Planning

A strategy map tests the coherence of a strategy. Laying out objectives and links on one page reveals missing pieces and objectives that do not connect to results.

It improves communication. A single picture of the strategy is easier to share and remember than a long document. Employees can find their own part of the map and see how it connects to results.

It also guides investment and measurement. Knowing which objectives drive results helps leaders decide where to invest and which measures to track.

Strategy Maps and Financial Management

The financial layer connects the map to the organization's financial goals, showing how non-financial objectives are expected to produce financial results.

Linking strategic initiatives to objectives on the map shows which investments support which parts of the strategy, helping leaders prioritize funding.

Identifying objectives with no supporting initiatives, or initiatives with no supporting objective, highlights gaps and waste in the investment portfolio.

Tracking measures along the cause-and-effect chain gives finance teams early signals of future financial performance, since improvements in processes and customers tend to precede financial results.

Common Challenges

Maps can become cluttered with too many objectives and arrows, losing the clarity that makes them useful.

Cause-and-effect links are sometimes drawn without real evidence, turning the map into a diagram of assumptions that are never tested.

Maps created for a planning workshop may not be used afterward, so they have little effect on decisions. Displaying the map in review meetings and linking it to strategic initiatives keeps it in use.