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Kenneth Witt

Should Your Firm Use Strategy Mapping?

Six key benefits revealed.

August 18, 2008
by Kenneth Witt, CPA

* Adapted from the Management Accounting Guideline, “Strategy Mapping” by Howard Armitage and Cam Scholey. This Guideline was developed for the AICPA, CMA Canada, and the Chartered Institute of Management Accountants. 

Experts say effective execution of strategy is paramount to success and essential for survival. Unfortunately, few companies are truly successful at implementing the strategies they select and fall far short of both their own and others’ expectations. How come?

Perhaps the single most significant reason for poor strategy implementation is that leaders who chart the course are unable to communicate their vision clearly to others.

While the vast majority of organizations have well-defined procedures for developing strategic plans, there is a major disconnect between the formulation and execution phases of those plans. How can leaders cascade an organization’s vision, mission and core strategies into the actionable behaviors that achieve critical objectives?

Basics of Strategy Mapping

Reader Note: Don’t miss the upcoming conference with sessions on Strategy Mapping at the 2008 International Financial Executives Leadership Forum, September 24-26, National Harbor, MD

Strategy maps describe how organizations create value by building on strategic themes such as “growth” or “productivity.” These themes determine which specific strategies organizations will adopt at their customer, process, learning and growth levels. Well-constructed maps describe how to meet its specific customer promises through a combination of employee, technology and business processes that satisfy customer expectations and meet shareholder demands. In short, they provide the conceptual framework that organization leaders and their followers can use to better understand and execute strategy.

Benefits of Strategy Mapping

If you’re a manager, the following six steps can by quite helpful for effectively creating and implementing strategy mapping initiatives at your own organization: 

  1. Determine the overriding objective. While customer satisfaction and quality are worthwhile pursuits, the overriding objective(s) for profit-making enterprises must be economic.
  2. Determine the dominant value proposition. No organization can be all things to all people. The key here is to select one dominant value proposition and provide breakthrough customer value in that proposition.
  3. Choose the key financial strategies. Deciding on your dominant value proposition will guide your selection of financial strategies.
  4. Choose the key customer-related strategies. Similarly, your dominant value proposition will determine how much emphasis you place on adding and retaining customers, increasing revenues per customer, or reducing costs per customer.
  5. Choose the key internal business process strategies. Once the appropriate financial and customer strategies are identified, the “what” you want to accomplish becomes the “how.”
  6. Choose the key learning and growth strategies. Finally, the inevitable gaps in knowledge skills and abilities necessary for effective execution are addressed with learning and growth strategies in three key areas: human capital, information capital and organization capital.

Conclusion

This six-step process will help you produce an effective strategy map and a reliable navigation tool that your entire organization can use to maintain focus on the ultimate destination of success. Case studies on how companies have used strategy mapping successfully will be provided in a future column.

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Kenneth W. Witt, CPA, serves as Technical Manager on the AICPA’s Business Industry and Government team supporting CPAs practicing the profession in business and industry. Witt served as project leader for the development of the AICPA Audit Committee Toolkit: Not for Profit Organizations and as a taskforce member for the COSO Internal Control Over Financial Reporting – Guidance for Smaller Public Companies.