The Idea in Brief
How does Mobil make sure that every gas station owner understands the company’s strategy—and implements it each time a customer drives up to his pumps? How did Mobil become the industry’s profit leader and boost its cash flow by $1 billion+ per year? By using a strategy map—a powerful new tool built on the balanced scorecard.
The balanced scorecard measures your company’s performance from four perspectives—financial, customer, internal processes, and learning and growth. A strategy map is a visual framework for the corporate objectives within those four areas. The authors created strategy map templates for various industries, including retail, telecommunications, and e-commerce.
Strategy maps put into focus the often-blurry line of sight between your corporate strategy and what your employees do every day—significantly enhancing collaboration and coordination.
The Idea in Practice
Why Strategy Maps?
Strategy maps are essential in the information age, when intangible assets—customer relationships, employee skills, the ability to innovate—are competitive advantages. But these assets have value only within the context of a strategy.
For example, a growth-oriented strategy might require in-depth customer knowledge, sales training, and incentive-based compensation. But none of these, alone, would be enough to implement that strategy. Strategy maps quantify the value of tangible and intangible assets—linking them all to your overarching strategy.
Building Your Strategy Map
Step 1. Clarify your mission and strategic vision. Mobil sought “to be the best integrated refiner-marketer in the U.S. by efficiently delivering unprecedented value to customers.”
Step 2. Specify objectives in the four scorecard areas to realize your company’s vision.
Financial. Balance revenue growth and productivity improvement. Example:
Mobil grew revenue by selling more non-gasoline products and services and more premium gas. It improved productivity by slashing operating expenses (e.g., reducing refinery downtime).
Customer. Differentiate your firm from competitors. Choose one of these value propositions: operational excellence, customer intimacy, or product leadership. Example:
Mobil emphasized customer intimacy, targeting premium customers by offering fast, friendly, and safe service. Satisfied customers gladly paid more.
Internal processes. Identify operational, customer-relationship, and innovation processes to support your customer and financial goals. Example:
Mobil reduced environmental and safety incidents (operational), built best-in-class franchise teams (customer relationships), and developed non-gasoline services (innovation).
Learning and growth. Define the skills, technologies, and corporate culture needed to support your strategy. Example:
Mobil’s objectives were: increase employee knowledge of refining business; nurture leadership skills necessary to articulate its vision.
Mobil’s strategy map linked the four perspectives, providing all its business units clear direction for creating their own more detailed maps.
Imagine that you are a general taking your troops into foreign territory. Obviously, you would need detailed maps showing the important towns and villages, the surrounding landscape, key structures like bridges and tunnels, and the roads and highways that traverse the region. Without such information, you couldn’t communicate your campaign strategy to your field officers and the rest of your troops.