The Strategy Map and Its Balanced Scorecard

The balanced scorecard recognizes the shortcoming of executive managements’ excessive emphasis on after-the-fact, short-term financial results. This chapter explores why people are familiar with the term balanced scorecard but so few familiar with the term strategy maps. It explains how strategy maps and a scorecard system remove the 'wall of disconnects' that prevents the existing measures from aligning with the organization's vision and strategy by selecting the few key performance indicators (KPIs) that point like vectors toward the organization's vision, mission, and strategy. The chapter discusses how value-based management adds a variation to the balanced scorecard, how balanced scorecards and dashboards are different and the difference between KPIs from normal and routine measures referred as performance indicators. A strategy diagram illustrates how that KPIs should be derived from the executives’ strategic objectives and plans. The plan-do-check-act cycle is a great practice for learning organizations.