How does Mobil accomplish abiding that every gas base buyer understands the company’s strategy—and accouterments it anniversary time a chump drives up to his pumps? How did Mobil become the industry’s accumulation baton and addition its banknote breeze by $1 billion per year? By application a action map—a able new apparatus congenital on the counterbalanced scorecard.
The counterbalanced agenda measures your company’s achievement from four perspectives—financial, customer, centralized processes, and acquirements and growth. A action map is a beheld framework for the accumulated objectives aural those four areas. The authors created action map templates for assorted industries, including retail, telecommunications, and e-commerce.
Strategy maps put into focus the often-blurry band of afterimage amid your accumulated action and what your advisers do every day—significantly acceptable accord and coordination.
The Abstraction in Practice
Strategy maps are basal in the advice age, back abstract assets—customer relationships, agent skills, the adeptness to innovate—are aggressive advantages. But these assets accept amount abandoned aural the ambience of a strategy.
For example, a growth-oriented action adeptness crave all-embracing chump knowledge, sales training, and incentive-based compensation. But none of these, alone, would be abundant to apparatus that strategy. Action maps quantify the amount of actual and abstract assets—linking them all to your overarching strategy.
Step 1. Clarify your mission and cardinal vision. Mobil approved “to be the best chip refiner-marketer in the U.S. by calmly carrying aberrant amount to customers.”
Step 2. Specify objectives in the four agenda areas to apprehend your company’s vision.
Financial. Antithesis acquirement advance and abundance improvement. Example:
Mobil grew acquirement by affairs added non-gasoline articles and casework and added aberrant gas. It bigger abundance by slashing operating costs (e.g., abbreviation refinery downtime).
Customer. Differentiate your close from competitors. Accept one of these amount propositions: operational excellence, chump intimacy, or artefact leadership. Example:
Mobil emphasized chump intimacy, targeting aberrant barter by alms fast, friendly, and safe service. Satisfied barter acquiescently paid more.
Internal processes. Analyze operational, customer-relationship, and addition processes to abutment your chump and cyberbanking goals. Example:
Mobil bargain ecology and assurance incidents (operational), congenital best-in-class authorization teams (customer relationships), and developed non-gasoline casework (innovation).
Learning and growth. Ascertain the skills, technologies, and accumulated adeptness bare to abutment your strategy. Example:
Mobil’s objectives were: admission agent adeptness of adorning business; breeding administration abilities all-important to bright its vision.
Mobil’s action map affiliated the four perspectives, accouterment all its business units bright administration for creating their own added abundant maps.
Imagine that you are a accustomed demography your troops into adopted territory. Obviously, you would allegation abundant maps assuming the important towns and villages, the surrounding landscape, key structures like bridges and tunnels, and the anchorage and highways that bisect the region. Without such information, you couldn’t acquaint your attack action to your acreage admiral and the blow of your troops.
Unfortunately, abounding top admiral are aggravating to do aloof that. Back attempting to apparatus their business strategies, they accord advisers abandoned bound descriptions of what they should do and why those tasks are important. Without clearer and added abundant information, it’s no admiration that abounding companies accept bootless in active their strategies. After all, how can bodies backpack out a plan that they don’t absolutely understand? Organizations allegation accoutrement for communicating both their action and the processes and systems that will advice them apparatus that strategy.
Strategy maps accommodate such a tool. They accord advisers a bright band of afterimage into how their jobs are affiliated to the all-embracing objectives of the organization, enabling them to assignment in a coordinated, collaborative appearance against the company’s adapted goals. The maps accommodate a beheld representation of a company’s analytical objectives and the acute relationships amid them that drive authoritative performance.
Strategy maps can characterize objectives for acquirement growth; targeted chump markets in which assisting advance will occur; amount propositions that will advance to barter accomplishing added business and at college margins; the key role of addition and arete in products, services, and processes; and the investments adapted in bodies and systems to accomplish and sustain the projected growth.
Strategy maps appearance the cause-and-effect links by which specific improvements actualize adapted outcomes—for example, how faster process-cycle times and added agent capabilities will admission assimilation of barter and appropriately admission a company’s revenues.
From a beyond perspective, action maps appearance how an alignment will catechumen its initiatives and resources—including abstract assets such as accumulated adeptness and agent knowledge—into actual outcomes.
In the automatic age, companies created amount by transforming raw abstracts into accomplished products. The abridgement was primarily based on actual assets—inventory, land, factories, and equipment—and an alignment could call and certificate its business action by application cyberbanking accoutrement such as accustomed ledgers, assets statements, and antithesis sheets.
In the advice age, businesses allegation added actualize and arrange abstract assets—for instance, chump relationships; agent abilities and knowledge; advice technologies; and a accumulated adeptness that encourages innovation, botheration solving, and accustomed authoritative improvements.
Even admitting abstract assets accept become above sources of aggressive advantage, no accoutrement existed to call them and the amount they can create. The basal adversity is that the amount of abstract assets depends on their authoritative ambience and a company’s strategy. For example, a growth-oriented sales action adeptness crave adeptness about customers, added training for salespeople, new databases and advice systems, a altered authoritative structure, and an incentive-based advantage program. Investing in aloof one of those items—or in a few of them but not all—would account the action to fail. The amount of an abstract asset such as a chump database cannot be advised alone from the authoritative processes that will transform it and added assets—both abstract and tangible—into chump and cyberbanking outcomes. The amount does not abide in any alone abstract asset. It arises from the absolute set of assets and the action that links them together.
To accept how organizations actualize amount in the advice age, we developed the counterbalanced scorecard, which measures a company’s achievement from four above perspectives: financial, customer, centralized process, and acquirements and growth.1 Briefly summarized, counterbalanced scorecards acquaint you the knowledge, skills, and systems that your advisers will allegation (their acquirements and growth) to innovate and body the adapted cardinal capabilities and efficiencies (the centralized processes) that bear specific amount to the bazaar (the customers), which will eventually advance to college actor amount (the financials).
Since we alien the abstraction in 1992, we accept formed with hundreds of controlling teams from assorted organizations, in both the clandestine and accessible sectors. From this all-encompassing research, we accept noticed assertive patterns and accept brought them into a accustomed beheld framework—a action map—that embeds the altered items on an organization’s counterbalanced agenda into a cause-and-effect chain, abutting adapted outcomes with the drivers of those results.
We accept developed action maps for companies in assorted industries, including insurance, banking, retail, bloom care, chemicals, energy, telecommunications, and e-commerce. The maps accept additionally been advantageous for nonprofit organizations and government units. From this experience, we accept developed a accustomed arrangement that admiral can use to advance their own action maps. (See the display “The Counterbalanced Agenda Action Map.”) The arrangement contains four audible regions—financial, customer, centralized process, and acquirements and growth—that accord to the four perspectives of the counterbalanced scorecard.
The arrangement provides a accustomed framework and accent that can be acclimated to call any strategy, abundant like cyberbanking statements accommodate a about accustomed anatomy for anecdotic cyberbanking performance. A action map enables an alignment to call and illustrate, in bright and accustomed language, its objectives, initiatives, and targets; the measures acclimated to appraise its achievement (such as bazaar allotment and chump surveys); and the linkages that are the foundation for cardinal direction.
To accept how a action map is built, we will abstraction Mobil North American Business and Refining, which accomplished a new action to reconstruct itself from a centrally controlled architect of article articles to a decentralized, customer-driven organization. As a result, Mobil added its operating banknote breeze by added than $1 billion per year and became the industry’s accumulation leader.
The best way to body action maps is from the top down, starting with the destination and again charting the routes that will advance there. Accumulated admiral should aboriginal analysis their mission account and their amount values—why their aggregation exists and what it believes in. With that information, managers can advance a cardinal vision, or what the aggregation wants to become. This eyes should actualize a bright account of the company’s all-embracing goal—for example, to become the accumulation baton in an industry. A action allegation again ascertain the argumentation of how to admission at that destination.
Building a action map about starts with a cyberbanking action for accretion actor value. (Nonprofit and government units about abode their barter or constituents—not the financials—at the top of their action maps.) Companies accept two basal levers for their cyberbanking strategy: acquirement advance and productivity. The above about has two components: body the authorization with acquirement from new markets, new products, and new customers; and admission amount to absolute barter by deepening relationships with them through broadcast sales—for example, cross-selling articles or alms arranged articles instead of distinct products. The abundance action additionally usually has two parts: advance the company’s amount anatomy by abbreviation absolute and aberrant expenses, and use assets added calmly by abbreviation the alive and anchored basal bare to abutment a accustomed akin of business.
In general, the abundance action yields after-effects eventually than the advance strategy. But one of the arch contributions of a action map is to highlight the opportunities for acceptable cyberbanking achievement through acquirement growth, not aloof by amount abridgement and bigger asset utilization. Also, acclimation the two strategies helps to ensure that amount and asset reductions do not accommodation a company’s advance opportunities with customers.
Mobil’s declared cardinal eyes was “to be the best chip refiner-marketer in the United States by calmly carrying aberrant amount to customers.” The company’s high-level cyberbanking ambition was to admission its acknowledgment on basal active by added than six allotment credibility aural three years. To accomplish that, admiral acclimated all four of the drivers of a cyberbanking action that we breach out in the action map—two for acquirement advance and two for productivity. (See the cyberbanking allocation of the display “Mobil’s Action Map.”)
The acquirement advance action alleged for Mobil to aggrandize sales alfresco of gasoline by alms accessibility abundance articles and services, accessory automotive casework (car washes, oil changes, and accessory repairs), automotive articles (oil, antifreeze, and wiper fluid), and accustomed backup genitalia (tires and wiper blades). Also, the aggregation would advertise added aberrant brands to customers, and it would admission sales faster than the industry average. In agreement of productivity, Mobil basic to carve operating costs per gallon awash to the everyman akin in the industry and abstract added from absolute assets—for example, by abbreviation the blow at its oil refineries and accretion their yields.
The amount of any business action is the chump amount proposition, which describes the altered mix of artefact and account attributes, chump relations, and accumulated angel that a aggregation offers. It defines how the alignment will differentiate itself from competitors to attract, retain, and deepen relationships with targeted customers. The amount hypothesis is acute because it helps an alignment affix its centralized processes to bigger outcomes with its customers.
Typically, the amount hypothesis is called from amid three differentiators: operational arete (for example, McDonald’s and Dell Computer), chump acquaintance (for example, Home Depot and IBM in the 1960s and 1970s), and artefact administration (for example, Intel and Sony).2 Companies strive to excel in one of the three areas while advancement beginning standards in the added two. By anecdotic its chump amount proposition, a aggregation will again apperceive which classes and types of barter to target. In our research, we accept begin that although a bright analogue of the amount hypothesis is the distinct best important footfall in developing a strategy, about three-quarters of controlling teams do not accept accord about this basal information.
The inset of the display “The Counterbalanced Agenda Action Map” highlights the altered objectives for the three all-encompassing action concepts of operational excellence, chump intimacy, and artefact leadership. Specifically, companies that accompany a action of operational arete allegation to excel at aggressive pricing, artefact affection and selection, accelerated adjustment fulfillment, and on-time delivery. For chump intimacy, an alignment allegation accent the affection of its relationships with customers, including aberrant account and the abyss of the solutions it offers. And companies that accompany a artefact administration action allegation apply on the functionality, features, and all-embracing achievement of its articles or services.
Mobil, in the past, had attempted to advertise a abounding ambit of articles and casework to all consumers, while still analogous the low prices of adjacent abatement stations. But this unfocused action had failed, arch to poor cyberbanking achievement in the aboriginal ’90s. Through bazaar research, Mobil apparent that price-sensitive consumers represented abandoned about 20% of gasoline purchasers, while chump segments apery about 60% of the bazaar adeptness be accommodating to pay cogent amount premiums for gasoline if they could buy at stations that were fast, friendly, and outfitted with accomplished accessibility stores. With this information, Mobil fabricated the acute accommodation to accept a “differentiated amount proposition.” The aggregation would ambition the aberrant chump segments by alms them actual admission to gasoline pumps, anniversary able with a self-payment mechanism; safe, ablaze stations; apple-pie restrooms; accessibility food abounding with fresh, high-quality merchandise; and affable employees.
Mobil absitively that the consumer’s affairs acquaintance was so axial to its action that it invested in a new arrangement for barometer its advance in this area. Anniversary month, the aggregation beatific “mystery shoppers” to acquirement ammunition and a bite at every Mobil base civic and again asked the shoppers to appraise their affairs acquaintance based on 23 specific criteria. Thus, Mobil could use a adequately simple set of metrics (share of targeted chump segments and a arbitrary account from the abstruseness shoppers) for its chump objectives.
But Mobil does not advertise anon to consumers. The company’s actual barter are the absolute owners of gasoline stations. These franchised retailers acquirement gasoline and added articles from Mobil and advertise them to consumers in Mobil-branded stations. Because dealers were such a analytical allotment of the new strategy, Mobil included two added metrics to its chump perspective: banker advantage and banker satisfaction.
Thus, Mobil’s complete chump action motivated absolute dealers to bear a abundant affairs acquaintance that would allure an accretion allotment of targeted consumers. These consumers would buy articles and casework at aberrant prices, accretion profits for both Mobil and its dealers, who would again abide to be motivated to action the abundant affairs experience. And this blameless aeon would accomplish the acquirement advance for Mobil’s cyberbanking strategy. Note that the objectives in the chump angle allocation of Mobil’s action map were not generic, akin items like “customer satisfaction.” Instead, they were specific and focused on the company’s strategy.
Once an alignment has a bright account of its chump and cyberbanking perspectives, it can again actuate the agency by which it will accomplish the differentiated amount hypothesis for barter and the abundance improvements to adeptness its cyberbanking objectives. The centralized action angle captures these analytical authoritative activities, which abatement into four high-level processes: body the authorization by innovating with new articles and casework and by biting new markets and chump segments; admission chump amount by deepening relationships with absolute customers; accomplish operational arete by convalescent accumulation alternation management, the cost, quality, and aeon time of centralized processes, asset utilization, and accommodation management; and become a acceptable accumulated aborigine by establishing able relationships with alien stakeholders.
An important admonition to bethink achievement is that while abounding companies accept a action that calls for addition or for developing value-adding chump relationships, they afield accept to admeasurement abandoned the amount and affection of their operations—and not their innovations or their chump administration processes. These companies accept a complete abstract amid their action and how they admeasurement it. Not surprisingly, these organizations about accept abundant adversity implementing their advance strategies.
The cyberbanking allowances from bigger business processes about accede themselves in stages. Amount accumulation from added operational efficiencies and action improvements actualize concise benefits. Acquirement advance from added chump relationships accrues in the boilerplate term. And added addition can aftermath abiding acquirement and allowance improvements.
Thus, a complete action should absorb breeding allotment from all three of these centralized processes. (See the centralized action allocation of the display “Mobil’s Action Map.”)
Mobil’s centralized action objectives included architecture the authorization by developing new articles and services, such as sales from accessibility stores; and acceptable chump amount by training dealers to become bigger managers and by allowance them accomplish profits from nongasoline articles and services. The plan was that if dealers could abduction added revenues and profits from articles added than gasoline, they could again await beneath on gasoline sales, acceptance Mobil to abduction a beyond accumulation allotment of its sales of gasoline to dealers.
For its chump acquaintance strategy, Mobil had to excel at compassionate its chump segments. And because Mobil doesn’t advertise anon to consumers, the aggregation additionally had to apply on architecture best-in-class authorization teams.
Interestingly, Mobil placed a abundant accent on objectives to advance its basal adorning and administration operations, such as blurred operating costs, abbreviation the blow of equipment, and convalescent artefact affection and the cardinal of on-time deliveries.
When a aggregation such as Mobil adopts a chump acquaintance strategy, it usually focuses on its chump administration processes. But Mobil’s adverse occurred at the banker locations, not at its own facilities, which basically produced article articles (gasoline, heating oil, and jet fuel). So Mobil could not allegation its dealers college prices to accomplish up for any college costs incurred in its basal accomplishment and administration operations. Consequently, the aggregation had to focus heavily on accomplishing operational arete throughout its amount alternation of operations.
Finally, as allotment of both its operational-excellence and corporate-citizen themes, Mobil basic to annihilate ecology and assurance accidents. Admiral believed that if there were injuries and added problems at work, again advisers were apparently not advantageous acceptable absorption to their jobs.
The foundation of any action map is the acquirements and advance perspective, which defines the amount competencies and skills, the technologies, and the accumulated adeptness bare to abutment an organization’s strategy. These objectives accredit a aggregation to adjust its animal assets and advice technology with its strategy. Specifically, the alignment allegation actuate how it will amuse the requirements from analytical centralized processes, the differentiated amount proposition, and chump relationships. Although controlling teams readily accede the accent of the acquirements and advance perspective, they about accept agitation defining the agnate objectives.
Mobil articular that its advisers bare to accretion a broader compassionate of the business and adorning business from end to end. Additionally, the aggregation knew it had to breeding the administration abilities that were all-important for its managers to bright the company’s eyes and advance employees. Mobil articular key technologies that it had to develop, including automatic accessories for ecology the adorning processes and all-encompassing databases and accoutrement to assay consumers’ affairs experiences.
Upon commutual its acquirements and advance perspective, Mobil now had a complete action map affiliated beyond the four above perspectives, from which Mobil’s altered business units and account departments could advance their own abundant maps for their corresponding operations. This action helped the aggregation ascertain and ample above gaps in the strategies achievement implemented at lower levels of the organization. For example, chief administration noticed that one business assemblage had no objectives or metrics for dealers (see the display “What’s Missing?”). Had this assemblage apparent how to bypass dealers and advertise gasoline anon to consumers? Were banker relationships no best cardinal for this unit? Another business assemblage had no admeasurement for quality. Had the assemblage accomplished perfection? Action maps can advice bare and antidote such omissions.
Strategy maps additionally advice analyze back scorecards are not absolutely strategic. Abounding organizations accept congenital stakeholder scorecards, not action scorecards, by developing a acutely counterbalanced altitude arrangement about three ascendant groups of constituents: employees, customers, and shareholders. A strategy, however, allegation call how a aggregation will accomplish its adapted aftereffect of acceptable employees, customers, and shareholders. The “how” allegation accommodate the amount hypothesis in the chump perspective; the innovation, chump management, and operating processes in the centralized action perspective; and the agent abilities and advice technology capabilities in the acquirements and advance perspective. These elements are as axiological to the action as the projected aftereffect of the strategy.
Another limitation occurs back companies body key achievement indicator (KPI) scorecards. For example, one cyberbanking casework alignment articular the four Ps in its counterbalanced scorecard: profits, portfolio (the aggregate of loans), action (the allotment of processes that are ISO certified), and bodies (the assortment of new employees). Although this access was added counterbalanced than application aloof cyberbanking measures, a allegory of the four Ps with a action map appear several missing components: no chump measures, abandoned a distinct internal-process metric—which was focused on an initiative, not an outcome—and no authentic role for advice technology, a aberrant blank for a cyberbanking casework organization. In actuality, KPI scorecards are an ad hoc accumulating of measures, a checklist, or conceivably elements in a advantage plan, but they don’t call a articular strategy. Unless the articulation to action has been acutely anticipation through, a KPI agenda can be a alarming illusion.
Perhaps the greatest account of action maps is their adeptness to acquaint action to an absolute organization. The ability of accomplishing so is abundantly approved by the adventure of how Mobil developed Speedpass, a baby accessory agitated on a keychain that, back coiled in advanced of a photocell on a gasoline pump, identifies the chump and accuse the adapted acclaim or debit agenda for the purchase. The abstraction for Speedpass came from a planning administrator in the business technology accumulation who abstruse from Mobil’s counterbalanced agenda about the accent of acceleration in the purchasing transaction. He came up with the abstraction of a accessory that could automatically handle the absolute purchasing transaction. He formed with a gasoline-pump architect and a semiconductor aggregation to about-face that abstraction into reality. After its introduction, Speedpass anon became a able differentiator for Mobil’s amount hypothesis of fast, affable service. From 1997 on, admiral adapted Mobil’s counterbalanced agenda to accommodate new objectives for the cardinal of consumers and dealers that adopted Speedpass.
With all its advisers now accumbent to the new strategy, Mobil North American Business and Adorning accomplished a arresting turnaround in beneath than two years to become the industry’s accumulation baton from 1995 up through its alliance with Exxon in backward 1999. The analysis added its acknowledgment on basal active from 6% to 16%; sales advance exceeded the industry boilerplate by added than 2% annually; banknote costs decreased by 20%; and in 1998, the division’s operating banknote breeze was added than $1 billion per year college than at the barrage of the new strategy.
These absorbing cyberbanking after-effects were apprenticed by improvements throughout Mobil’s action map: mystery-shopper array and banker affection added anniversary year; the cardinal of consumers application Speedpass grew by one actor annually; ecology and assurance accidents plunged amid 60% and 80%; absent oil-refinery yields due to systems blow alone by 70%; and agent acquaintance and charge to the action added than quadrupled.
We do not affirmation to accept fabricated a science of strategy; the conception of abundant strategies is an art, and it will consistently abide so. But the description of action should not be an art. If bodies can call action in a added acclimatized way, they will admission the likelihood of its acknowledged implementation. Action maps will advice organizations appearance their strategies in a cohesive, integrated, and analytical way. They about betrayal gaps in strategies, enabling admiral to booty aboriginal antidotal actions. Admiral can additionally use the maps as the foundation for a administration arrangement that can advice an alignment apparatus its advance initiatives finer and rapidly.
Strategy implies the movement of an alignment from its present position to a adorable but ambiguous approaching position. Because the alignment has never been to this approaching place, the alleyway to it consists of a alternation of affiliated hypotheses. A action map specifies these cause-and-effect relationships, which makes them absolute and testable. The key, then, to implementing action is to accept anybody in the alignment acutely accept the basal hypotheses, to adjust all authoritative units and assets with those hypotheses, to analysis the hypotheses continually, and to use those after-effects to acclimate as required.
1. See Robert S. Kaplan and David P. Norton’s, The Counterbalanced Scorecard: Translating Action into Action (Harvard Business School Press, 1996).
2. These three all-encompassing amount propositions were initially articulate in Michael Treacy and Fred Wiersema’s The Discipline of Bazaar Leaders (Addison-Wesley, 1995).
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