The following case was excerpted from the Management Accounting Guideline, “Strategy Mapping” by Howard Armitage and Cam Scholey. This Guideline was developed for the AICPA, CIMA and CMA Canada.

Strategy maps allow organizations to describe and communicate their strategies through visual well-constructed maps that show how the organization plans 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.

A systematic approach is key to realizing the benefits of strategy mapping. The following six steps have proven very useful and can be used by managers to effectively create and implement strategy mapping initiatives in their own organization:

1. Determine the overriding objective.
2. Determine the dominant value proposition.
3. Choose the key financial strategies.
4. Choose the key customer related strategies.
5. Choose the key internal business process strategies.
6. Choose the key learning and growth strategies.

Six Steps to Success

The following case describes how one company made critical changes in their corporate culture using strategy mapping.

ATS Automation Tooling — A Case in Point

ATS Automation Tooling Systems Inc. is one of the world’s leading designers and producers of turn-key automated manufacturing and test systems. Headquartered in Cambridge, Canada, and listed on the Toronto Stock Exchange (TSX: ATA), ATS serves a variety of industries including health care, computer/electronics, automotive and consumer products. ATS is also an emerging leader within the solar industry with its energy cells and modules.

ATS was founded in 1978 by Klaus Woerner as a special purpose die shop with four employees. By 2000, the company had grown to nearly 4,000 employees at 26 manufacturing facilities around the world with annual revenues approaching Cdn$700 million. As the new millennium unfolded, however, ATS’ markets weakened and issues related to ATS’ entrepreneurial way of developing and managing its business began to appear.

The entrepreneurial culture that had so successfully helped ATS to grow was now creating impediments to future growth. The ATS management team realized that business opportunities were being missed when customers began expressing frustration at the lack of integration across the company.

ATS Strategy Map

Ron Jutras, the former long-time CFO of ATS took over as CEO after Woerner’s death. Under pressure for improved shareholder results, he made strategic planning and execution within ATS a priority project for the company. The time had come to evolve the entrepreneurial approach into a more disciplined and systematic approach to running the business. A decision was made in 2004 to leverage the skills already in place and reshape ATS into a structured, results-driven machine that would deliver increased value to its stakeholders.

In 2005, Jutras launched several directives and meetings to build on the significant strengths and reputation of ATS and encouraged the executive team to revisit and refine the firm’s core mission, vision and values.

These discussions led to explicit recognition that framed the ATS overriding objective in 1) a desired share price within five years and 2) a financial benchmark against other competitors. After considerable discussion and analysis, ATS selected a value proposition that revolved around becoming “a total solutions provider” to its customers, as the means to reach its financial objectives.

Jutras used this map as the basis for obtaining approval for the new strategy from the Board of Directors and then developing tentative “drill-down” strategy maps for each of their three business groups. In the months that followed, they visited each ATS region and had the regional VP present the corporate mission, vision, values and map. These presentations summarized the strategic planning process at ATS. Along with the presentation, a communication workshop was conducted with the managers, and an electronic “toolkit” was given to each business unit that included a soft copy of a video made that reinforced the importance of the company’s new direction.

With the strategy in place and being communicated to increasingly lower levels, scorecard measures were developed and used to monitor the extent to which specific financial, customer, internal process and learning and growth objectives were being realized. Tthese measures have now become part of the regular ATS quarterly, annual and long range budget process and newly-instituted quarterly and annual operating plan processes.

Results

In talking about the process of developing and communicating the strategy throughout ATS via the strategy map, Jutras explained:

It has brought our organization together more globally. There is no question in my mind that our regional people are now more closely integrated. The strategy map has encouraged the regions to be more closely joined at the hips, to consider the organization as a whole and to focus on strategy rather than just day to day events. As a result, we have more coordination, better alignment and better understanding. For example, we are beginning to see the early benefits of us doing a much better job at leveraging our global purchasing power.

The strategy map has played a significant role in helping us understand, communicate and execute our strategy. We are committed to it.

If your firm is having issues explaining strategies, follow the above steps to visually show your team what you have in mind. Before you know it, you’ll be on the road to success, just like Jutras and his team at ATS Automation Tooling Systems Inc.

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.