Strategy Maps Chapter One: Introduction

1. Strategy MapsChapter One: Introduction 品管課 張恩欣 2003.3.1 Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.3-pp.28.

2. The Story of Gray-Syracuse • How companies can now focus their human capital investment in all intangible assets to create distinctive and sustainable value Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.3.

3. Increasing focus of intangible assets • From a product-driven economy to a knowledge and service-driven economy • Intangible assets account for more than 75% of a company’s value • Intangible assets drive long-term value creation at both the macroeconomic and microeconomic levels Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.3-pp.4.

4. Strategy “A general method for achieving specific objectives. It describes the essential resources and their amounts, which are to be committed to achieving those objectives. It describes how resources will be organized, and the policies that will apply for the management and use of those resources” Source: “Engineering Strategy Development；Definition of Strategy”, Feb.18.2000, http://www.johnstark.com/es5.html(Feb.29.2004)

5. Findings from Kaplan & Norton’s observation • No two companies thought about the strategy in the same way • Views of strategy were one-dimensional • A generally accepted way to describe strategy did not exist Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp5.

6. Consequences of inexplicitly described strategies • Executives cannot communicate the strategy among themselves or to their employees • Without a shared understanding of the strategy, executives cannot create alignment around it • Without alignment, executives cannot implement their new strategy for the changed environment of global competition, deregulation, customer sovereignty, advanced technology, and competitive advantage derived from intangible assets Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.5-pp.6.

7. Elementsof the BSC framework I. For private-sector organizations: • Financial performance • Customer • Internal processes • Learning and growth Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.7.

8. Elementsof the BSC frameworkcont. Financial performance • Provides the ultimate definition of an organization’s success • Describes how an organization intends to create sustainable growth ion shareholder value Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.7.

9. Elementsof the BSC frameworkcont. Customer perspective • To improve financial performance, an organization has to have a success with targeted customer • Defines the value proposition for targeted customer segment. The central element of strategy is choosing the customer value proposition Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.7.

10. Elementsof the BSC frameworkcont. Internal processes • Create and deliver the value proposition for customers • A leading indicator of the following improvement in customer and financial outcomes Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.7.

11. Elementsof the BSC frameworkcont. Learning and growth • Describe how the people, technology, and the organization climate combine to support the strategy • A leading indicator of the following improvement in customer and financial outcomes Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.7.

12. Elements of the BSC framework cont. II. For public-sector and nonprofit organizations : • The achievement of mission • The fiduciary perspectives Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.7-pp.9.

13. Strategy maps: Describing how the organization creates value Advantages • Providing a uniform and consistent way to describe that strategy • Providing the missing link between strategy formulation and strategy execution Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.10.

14. Strategy maps: Describing how the organization creates valuecont. Principles of the strategy map: • Strategy balances contradictory forces • Strategy is based on a differentiated customer value proposition • Value is created through internal business process - Operations managements - Customer management - Innovation - Regulatory and social Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.10-pp.12.

15. Strategy maps: Describing how the organization creates valuecont. Principles of the strategy map: 4. Strategic alignment determines the value of intangible assets • - Human capital •   - Information capital - Organization capital Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.13.

16. Operational Management Processes Regulatory and Social Processes • Environment • Safety and Health • Employment • Community Innovation Processes • Opportunity ID • R&D Portfolio • Design/Develop • Launch • Supply • Production • Distribution • Risk Management Customer Management Processes • Selection • Acquisition • Retention • Growth Figure 1-3 A Strategy Map Represents How the Organization Creates Value Productivity Strategy Long-Term Shareholder Value Growth Strategy Financial Perspective Improve Cost Structure Increase Asset Utilization Expand Revenue Opportunities Enhance Customer Value Customer Value Proposition Customer Perspective Price Quality Availability Selection Functionality Service Partnership Brand Product / Service Attributes Relationship Image Internal Perspective Human Capital Learning and Growth Perspective Information Capital Organization Capital Culture Leadership Alignment Teamwork Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.3-pp.28.

17. Conclusion The strategy map template, customized to the organization’s particular strategy, describe how intangible assets drive performance enhancements to the organization’s internal process that have the maximum leverage for delivering value to customers, shareholders, and communities Source: Kaplan R. S. & Norton D. P.,2004,Strategy Maps: Converting intangible assets into tangible outcomes, Harvard Business School Press: Boston,pp.14.