Strategic Mapping and Performance Management
Every organization must regularly formulate and implement new and unique strategies in order to achieve its desired goals. Therefore, it is paramount for an organization to develop a strategic map that contains the measures that the company has planned to adopt on its path to accomplish its targets. Simply put, a strategic map is a diagram that shows how an organization will implement its objectives in order to achieve its desired targets. Therefore, strategic maps are essential in enabling a business to achieve its desired performance. Generally, a strategic map enables a business to focus on the change that it desires to implement. This occurs because the structure of the strategic map is usually comprehensive with clear outlines of the financial, customer, internal operations, and learning and growth objectives. Effectively, these outlines enable an organization’s management to have objective discussions on the manner in which they will improve the business’ performance.
Analysis of the Relationship Between Strategic Mapping and Performance Management
The main purpose of strategic mapping is to enable the business to focus on achieving its intended objectives. Through strategic mapping, a company’s management is able to specify the overriding objective. In this case, an organization is able to focus all its energies on achieving its key agenda by avoiding distractions from minor objectives (Burton, Obel, & DeSanctis, 2011). Additionally, the management is also able to see how minor goals interact to enable the business achieve its overriding objective.
For example, a business may have various objectives such as increasing its profits by 20% within 2 years, reducing its expenses by 10% in one year, reducing its staff turnover by 15% within three years, opening five new branches in four years’ time, and increasing its share price by 11% within an year. However, despite these many objectives, the business may only have one primary objective. In the stated example, the overriding objective for the business may be to increase its profits by 20%. Consequently, the organization should focus on achieving this objective. Importantly, an overriding objective must have a specified period so that the business can regularly evaluate its performance.
In the Glacier Inn example, the organization’s management was faced with a challenge of selecting the overriding objective for their business, which had failed to meet its expected performance. To enumerate, the hotel’s occupancy rate was 91% and not 98% as planned (Armitage & Scholey, 2006). Among various choices such as: increasing the company’s revenue, increasing the rate of return on investment to the shareholders, and reducing operations cost, the management selected profitability and cash flow as the business’s overriding objective.
Having chosen an overriding objective, the next step in strategic mapping is identifying the value proposition that will make the business attract new customers. In practice, there are only three value propositions for the business: operational excellence, product leadership, and customer intimacy. Ideally, the business selects one value proposition and makes it its dominant value proposition to customers. Nonetheless, it also ensures that it has reasonable performance in other value propositions. The idea behind this strategy is, if a business tries to be a leader in the provision of all value propositions it will end up being mediocre in everything. In order to avoid this mess, an organization must always select one value proposition where it focuses all its energies.
Effectively, by a business maximizing in the provision of high-quality value proposition, it is able to build a good reputation and image in the market. In this case, customers may build an image of the business based on price, uniqueness of the goods or services, or relationship level. When considering price, a commodity may create a market perception of its affordability by constantly charging low prices (Ackermann & Eden, 2011). Alternatively, the product may have unique features and be highly priced. With regards to uniqueness, a product may have extremely high-quality features or have just enough features to meet the market’s threshold. Finally, a company may provide minimal customer relationships or high-level customer care. Overly, the manner in which a business is able to create its image in the market influences its overall performance.
To sum up, the ability of an organization to form a strategic map has an overall positive impact on its performance. Notably, a strategic map enables a company to focus on its main agenda by enabling it to form an overriding objective. Primarily, the overriding objective steers the company to achieve its targets. Further, a strategic map also enables a business to form a value proposition that will enable it to win the market. Through the use of this tactic, an institution is able to create its own unique image among customers. In turn, a business image influences the kind of customers that it attracts. Effectively, this determines whether it is able to achieve its overall objectives. Generally, this shows that strategic mapping provides a systematic approach through which an organization may achieve its objectives. Consequently, all companies must embrace the use of this method so that they may achieve their set targets and goals.
Ackermann F., & Eden, C. (2011). Making strategy: Mapping out strategic success(2nd Ed.). New York, NY: Sage Publications Ltd.
Armitage, H., & Scholey, C. (2006). Management strategy measure: Management accounting guideline. Canada: CMA-Canada.
Burton, R., Obel, B., & DeSanctis, G. (2011). Organizational design: A step-by-step approach (2nd Ed.). Cambridge, UK: Cambridge University Press.