Readings week 6
Readings week 6
Article 1: Having trouble with your strategy? Then map it - Kaplan, R.S. and D.P. Norton
(2000)
Article 2: Strategic implementation: Five approaches to an elusive phenomenon - Bourgeois,
L.J. and D.R. Brodwin (1984)
Article 3: Breakdowns in Implementing Models of Organization Change - Van de Ven and Sun
(2011)
Article 4: Reflecting on the strategy process - Mintzberg, H. and J. Lampel (1999)
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,Readings week 6
Article 1 - Having trouble with your strategy? Then
map it
Kaplan, R.S. and D.P. Norton (2000)
● The key to executing your strategy is to have people in your organization understand it.
● Many executives only provide employees with limited descriptions of what they should
do and why those tasks are important when implementing the business strategy -> this
leads to failed strategy execution
● Strategy maps are tools that help communicate the strategy and the processes and
systems that will help the organisation implement the strategy.
○ A clear description of employees jobs and how they are linked to the overall
objectives of the organisation
○ Provide a visual representation of the company’s critical objectives and the
crucial relationships among them that drive organisational performance
○ They look at: objectives for revenue growth, targeted customers markets, value
propositions, the key role of innovation and excellence in products, services
and processes, investments required in people and systems
○ Show the cause-and-effect links by which specific improvements create desired
outcomes
○ Show how an organisation will convert its initiatives and resources (including
intangible assets such as corporate culture and employee knowledge) into
tangible outcomes
Why strategy maps?
● Industrial age:
○ raw materials -> finished products;
○ An economy based on tangible assets (factory, land, inventory) -> describe and
document the business strategy by using financial tools (general ledgers,
income statements, balance sheets)
● Information age:
○ create and deploy intangible assets (customer relationships, employee skills
and knowledge, information technologies) and a corporate culture that
encourages innovation, problem-solving and general organisational
improvements
○ Intangible assets -> sources of competitive advantage -> no tools exist to
describe them and the value they can create
○ That the value of intangible assets depends on their organizational context and
a company's strategy
■ Investing in only one of the intangible assets, or in a few but not all that
is needed for the success of the strategy -> strategy will fail
■ The value does not reside in any individual intangible asset. It arises
from the entire set of assets and the strategy that links them together.
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,Readings week 6
● The balanced scorecard:
○ A tool that helps understand how organisations create value in the information
age
■ Describe and illustrate in clear and general language the objectives,
initiatives, targets; the measures used to assess its performance (such
as market share and customer surveys); and the linkages that are the
foundation for the strategic direction
○ It measures a company’s performance from four major perspectives:
■ Learning and growth: knowledge, skills and systems that employees will
need...
■ Internal process: ...need to innovate and build the right strategic
capabilities and efficiencies...
■ Customer: ...that delivers specific value to the market...
■ Financial: ...which will eventually lead to higher shareholder value.
● From the customer perspective, companies typically select one of three strategies:
○ Operational excellence
○ Customer intimacy
○ Product leadership
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, Readings week 6
From the top-down - building a strategy map
● The best way to build strategy maps is from the top-down, starting with the destination
and then charting the routes that will lead there.
○ First: Review the mission statement (why the company exists) and the core
values (what it believes in)
○ Second: develop a strategic vision (what a company wants to become)
■ A clear picture of the company’s overall goal
○ Third: define the logic of how to arrive at that destination -> the map
Financial perspective
● Start building the map with a financial strategy for increasing shareholder value.
● Two basic levers for their financial strategy:
○ Revenue growth, with two components:
■ Build the franchise with revenue from new markets, new products and
new customers
■ Increase value to existing customers by deepening relationships with
them through expanded sales (i.e. cross-selling products or offering
bundled products instead of single products)
○ Productivity, with two components:
■ Improve the company’s cost structure by reducing direct and indirect
expenses
■ Use assets more efficiently by reducing the working and fixed capital
needed to support a given level of business
● Productivity -> generally, it yield results sooner than the growth strategy
● A strategy map helps highlight the opportunities for enhancing financial performance
through revenue growth, not just by cost reduction and improved asset utilisation
○ Balancing the two strategies helps to ensure that cost and asset reductions do
not compromise a company’s growth opportunities with customers
Customer perspective
● The core of any business strategy is the customer value proposition.
● Value proposition:
○ Describes the unique mix of product and service attributes, customer relations,
and corporate image that a company offers.
○ Defines how the organization will differentiate itself from competitors to attract,
retain, and deepen relationships with targeted customers.
○ It is crucial because it helps an organization connect its internal processes to
improve outcomes with its customers.
○ It is chosen from three differentiators:
■ Operational excellence: excel at competitive pricing, product quality and
selection, speedy order fulfilment and on-time delivery
■ Customer intimacy: quality of its relationship with customers,
exceptional service and the completeness of the solution it offers -
objectives are specific and focused on the company’s strategy
■ Product leadership: functionality, features and overall performance of its
products and services.
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