Leveraging Leadership

Understanding Cause and Effect Across Your Org Using Strategy Maps

• Emily Sander • Season 1 • Episode 144

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Emily Sander explains the cause and effect relationship between the four Balanced Scorecard perspectives: financial, customer, internal process, and learning and development. She shares examples like employee training programs leading to streamlined internal SOPs, which enhance customer experience and increase market share. She also talks about creating a visual strategy map to keep track of strategic objectives and the process her executive leadership team used to brainstorm and select these objectives.

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Who Am I?
If we haven’t yet before - Hi👋 I’m Emily, Chief of Staff turned Executive Leadership Coach. After a thrilling ride up the corporate ladder, I’m focusing on what I love - working with people to realize their professional and personal goals. Through my videos here on this channel, books, podcast guest spots, and newsletter, I share new ideas and practical and tactical tools to help you be more productive and build the career and life you want. 


Time Stamps:
00:00 Introduction to the Series
00:26 Recap of Balanced Scorecard Perspectives
00:42 Understanding Cause and Effect Relationships
02:25 Visualizing the Strategy Map
02:54 Describing the Strategy Map
04:18 Creating Strategic Objectives
05:18 Workshop Insights and Team Collaboration
06:39 Whittling Down Strategic Objectives
08:03 Connecting Strategic Objectives
10:19 Practical Application of Strategy Maps
11:26 Encouragement to Create Your Own Strategy Map
12:40 Preview of Next Episode

Speaker:

All right. This is our third installment of operationalizing strategy through the lens of balanced scorecard. Quick recap from last time, we went over the four main perspectives or themes of balanced scorecard, which are financial, customer, internal process and learning and development. And today we're going to talk about the cause and effect relationship between these four perspectives. So these four perspectives properly constructed, should tell a story of your business's strategy. You should be able to tell a story about what your business is trying to do or what your team is trying to do. And each perspective is linked to the others in this certain sequence. So on the screen here, if you're watching YouTube, I'll describe this visual. There's the four perspectives stacked on top of each other. And the bottom layer is learning and development. And then there's an upward arrow to internal process, another upward arrow to the customer perspective, and finally an upward arrow to the financial perspective. And that's the sequence, or that's the cause and effect, or domino effect, between the perspectives. so for example, here, I'll make up a short high level story. Um, if we train our employees and build a culture of information sharing, then our employees will make the business run better. And if we have a business that runs more smoothly, we will have happier customers and happier customers buy more things that we're selling. And that's our short story. It can be as simple as that, but it's simple, but powerful. Okay. So here is a more specific story. So it's kind of stories within stories. We have the overarching high level story, which I just told and then one sub story within that might be something like, here's the four perspectives. In order, employee training program, which leads to streamlined internal SOPs, which in turn drives an enhanced target customer experience, which then results in increased market share for our target customer segment. So you heard all four of the perspectives there in order in that sequence. okay, then we can get into this really cool thing called a strategy map. And a strategy map is a one page visual of your company's story across the perspectives. And we would have, I would have like our company's strategy map and my department's strategy map literally at my desk. So I would have them like right next to me to have like a quick visual reference. So if you're watching on YouTube, you see this pretty cool visual chart here. Um, if you're listening, I'll describe it to you and I'll also have the team try to put a link in the show notes just for a static image, um, of this for, for quick reference, but to describe it for people who are like driving or whatever, we have four rows or four bands that represent those perspectives. So again, learning and developments on the bottom. On top of that is internal process, stacked on top of that is the customer perspective, and finally on top is the financial perspective. And then within each one of those rows or bands, so within the learning and development perspective on the bottom, there's these little boxes or bubbles within that band. And these represent the strategic objectives for that perspective. So for example, in learning and development, there's optimized tech stack, And invest in marketing efforts and develop employee training program. And those are the three in this case, strategic objectives for learning and development. To do one more quick layer here, internal process has four strategic objectives, which are update products. Create dynamic pricing system, identify strategic partners and streamline internal SOPs. And then you've got the customer perspective with two strategic objectives or boxes and the financial perspective on top with three strategic objectives and little boxes to go with that. Let me take a pause here. How do you get to this? So when we did balance scorecard, um, we had a huge offsite with our entire ELT. And the, the first part of that offsite and workshop was just introducing balanced scorecard to the team. Cause that was like brand new to a lot of us. Like what we're doing balanced scorecard. Okay. That's our methodology. Got it. What the heck is this thing? So we went over that whole, that whole overview and got people familiar with that. Then a secondary part of our workshop was coming up with the strategic objectives for each one of these four perspectives for the overall company. And in following episodes, I'll talk about the different levels of scorecard and strategy map, which in brief are corporate level, department level, team level, and individual level. And we'll talk about the interplay between all those different layers and levels. But for the offsite with our ELT, with our executive leadership team, we were discussing that corporate levels, the highest level of scorecard and strategy map. And we did this huge brainstorming exercises with like whiteboards galore and sticky notes and color codes and people shouting out different things and people getting up and talking about it, breakout sessions, the whole, the whole nine yards and a couple of cool things happened in that part of the workshop. First of all, importantly, importantly. We were not acting or operating as heads of our functional area. We weren't acting as I'm in charge of operations. I'm coming at this from the CFO seat. I'm coming at this from CHRO. It was, we are all members of this leadership team together. We are all working together and we all want the same thing for our company overall to do well for this. ELT, this executive leadership team overall to do well, it's not just about me and quote unquote, my department. So part of this process was to get us into that mindset and get us into taking that approach, which was huge by the way. So I wanted to highlight that. And then we would literally throw out any idea, any, thing that came to mind, any silly idea, any stupid idea, you know, Hey, I'm, I'm thinking about it from this perspective. I'm thinking about it from that perspective. I'm tilting it this way. I'm tilting it that way. And we had probably like hundreds, like at least a hundred different ideas for strategic objectives across these four different perspectives. Now, best practice is to have about 10 to 15, 10 to 15 strategic objectives across these four perspectives. So we had a huge process of whittling them, whittling all these hundreds down to 10 to 15. And that was a really, really hard process. Um, interesting and good process for us to go through as a team. So we got down, we could easily kind of cut out like, okay, that one's like, that one was kind of like a funny one or a silly one. Let's cut that one out. Or like this one doesn't really make any sense in reality. It's like kind of a valid one or a good one in a sense, but not really kind of what we're trying to do. Um, and then we got down to like about 40 where it's like all of these. are valid. I could make an argument for all of these things. Um, all of these things are important. All of these things would be good to do, but we obviously can't do all of them. And part of this process is saying, what is most important? All of these 40 things are important. What is most important for us as a team? Um, for us as a company, for us right now, so for the next 18 to 24 months, what's important for us to keep our eye on and to execute towards right now. And so that's how we came up with, um, which little bubbles or which strategic objectives were on our strategy map. So I just wanted to take a pause and let you know how we, how we get to this place. That's one way to get to this place and it worked very well for us. So back to the visual I have in front of me, we've got the four layers or the four bands representing the four. perspective stacked on top of each other. And within each of those, we have these little boxes for the strategic objectives. And then by the power of my click here, why I've just changed the screen to have a sequence of arrows connecting all these boxes. So similar to when I first described the The general cause and effect and domino effect of learning and development, upward arrow to internal process, upward arrow to customer, upward arrow to financial. Now I've connected the boxes from these strategic objectives to the corresponding boxes In, the next layer. So let me just explain this a little bit and you'll probably get it by listening. If you can look at this visual, I would really encourage that as well. Okay. So one story I could tell here is that we're going to invest in our marketing efforts. And therefore, that's going to lead us to identify strategic partners. And that's going to lead to enhancing our target customer experience, which is going to lead to increasing market share of our target customer segment. Another story I could tell from that, it's going to start the same way. We're going to invest in our marketing efforts. We're going to identify strategic partners, And that's going to lead to increased awareness to our target market, which is going to grow our profits. Here's another story. We're going to optimize our tech stack, learning and development. We're going to update our products. Internal process, we're going to create a dynamic pricing system also within the internal process. That's like a lateral horizontal arrow. And then that's going to lead to increased awareness to our target market. That's in the customer perspective. And that's going to lead to us growing our profits in the financial perspective. One more story here for you. We're going to optimize our tech stack. That's going to update our products, which is going to reduce costs. So not when I skipped the customer perspective, there were only three. So optimized tech stack, which is in learning and development goes to updating our products, internal process. We're going to skip customer for a second, cause this goes straight to financial impact, which is reduced costs. And that's why we're. That's actually part of why we're doing that. That's part of why we're optimizing the tech stack. Okay, if that was a little bit confusing listening to, you can rewind it and hear it again, or I would encourage you to see the visual, because it makes perfect sense with the visual in front of you. Again, I would have our corporate scorecard and our corporate strategy map in front of me, like literally by my computer on my desk. And this was super, super helpful to just have a quick visual cue throughout my day. I would have like 47 things coming in my inbox and people walking into my office or people calling me on the phone or whatever. It would be like, all right, let me take a step back here. Whoosh. What am I trying to accomplish here? What is my team's job? How does my team contribute to the overall success of the company? What is the company trying to do here? What's our priorities? Oh, yeah, that's our story. That's what we're trying to achieve. That's what we're trying to prioritize. Okay, now, Out of the 47 things that are in my inbox, you know what, 10 of these are actually relevant to what we're trying to do. Five of these are within my control and two of them I can do right now. So I'm going to do those two things right now. And it just added clarity to the day to day process. So takeaway for you, I would highly encourage you to create a strategy map for your company or for your team, or even just for yourself. If you have the, the time and your company is set for creating this visual. I would go through that process because it's super, super helpful. If you're like, Emily, that's not going to happen. We're not going to do an offsite. We're not even going to have a team meeting for whatever reason. The team isn't set up for that. That's fine. I would at least try to have a conversation around it or build that into our dialogue or at like baseline, you should be able to answer the question. We are doing this. We're doing this action because we think it'll produce this result. That can be like your very short one, two punch story. We're doing this because we think it makes this happen. If you can't do that, I would stop and question or challenge your, yourself and your team to to at least be able to do that. So at a baseline, be able to have some intentionality and some thought behind the action you're taking. If you can build that out further and expand that out further and include other people in that conversation and in that strategy map, I would absolutely do that. So that's your takeaway. for, uh, this episode. Next time we're going to be talking about the different layers and levels of the scorecard and strategy map at different levels of the organization. So, corporate, department, team, and individual, and the interplay and interaction between those levels. All right. So we'll talk all about that next time on leveraging leadership.