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Applied Project Athabasca University MBA PM

Can "Strategy Maps" – guide, align and achieve an

understanding of business growth initiatives?

By

Eric Zvaniga

APRJ – 699 (02)

Word Count: 12,739

May 18, 2009

Athabasca University

Applied Project Coordinator: Dr. Kam Jugdev

Academic Coach: Mark Alpern

The "Strategy Map" -- ezvan-APRJ-699-a2 2

Table of Contents

Table of Contents ................................................................................................................ 2

List of Figures ...................................................................................................................... 3

Abstract ............................................................................................................................... 4

Research Problem........................................................................................................... 5 Significance of this Study ................................................................................................ 8 Hypothesis ...................................................................................................................... 9

Can the Strategy Map be an effective methodology? ........................................... 9 Research Design............................................................................................................. 9

Statement of Results ......................................................................................................... 11

Strategy Map Core Elements for Investigation: ............................................................. 11 Managed Services Overview............................................................................................. 11

Defining Managed Services .......................................................................................... 11 The Industry Opportunity............................................................................................... 12 Literature Review Considerations ................................................................................. 14

Managed Services.............................................................................................. 14 Outsourcing ........................................................................................................ 15 Strategy Mapping and Balanced Scorecards ..................................................... 16 Innovation - Ideation Mapping ............................................................................ 17 Best Practices..................................................................................................... 18 Cultural Impacts.................................................................................................. 19 The Strategy Map Framework ............................................................................ 20

The Approach for XYZ Corp.......................................................................................... 22 XYZ Corp. - Managed Services Assumptions..................................................... 22

Research Question............................................................................................................ 23

The Managed Service Strategy Map ................................................................................. 24

Analysis and Conclusions.................................................................................................. 25

Knowing the Stakeholder / Customer Audience ............................................................ 25 Stakeholder Identification ................................................................................... 25 Stakeholder Adoption Analysis ........................................................................... 29

Stakeholder / Customer Outcomes ............................................................................... 30 Stakeholder Outcomes ....................................................................................... 30

Competitive Outcomes.................................................................................................. 32 Core Objectives............................................................................................................. 33 Business Capabilities .................................................................................................... 36

Recommendations............................................................................................................. 37

References ........................................................................................................................ 40

Appendix - Tools for the Applied Project Planning Roadmap ............................................ 42


List of Figures Figure 1: Kaplan and Norton (2001) - Strategy Mapping Illustration ............................... 7 Figure 2: Kaplan and Norton (2001) – A New Approach to Managing .......................... 20 Figure 3: The Strategy Mapping Focus Areas............................................................... 24 Figure 4: Managed Service Metric Mapping.................................................................. 25 Figure 5: Kaplan and Norton (2001) – Generic Customer Value Proposition Items ...... 26 Figure 6: Generic Adoption Curve ................................................................................ 30 Figure 7: Proposal for a Managed Service Strategy Map.............................................. 39 Figure 8: Schedule and Key Activity Planning............................................................... 42


Abstract

The objective for this applied project paper, in the MBA – PM program at Athabasca University (2009), is to research the effectiveness and efficiencies of “Strategy Mapping”. A specific topic, called Managed Services, within the technological and networking industries, will be applied in the form of a case study. The application of the methodology of “Strategy Mapping” to a business growth initiative will be reviewed. Strategy Mapping is an extension of the “Balance Scorecard” approach. Many variations of both Balanced Scorecard and Strategy Mapping exists from multiple authors, as they interpret the Kaplan and Norton1 approach for placing strategy in to action. In corporate applications, these variations explode into both meaningful and meaningless approaches, which try to link the strategy of a corporation to the actions required to implement it. Some are very successful, others are moderately so, while many fail. Companies may find themselves lost in their ability to address key customer and stakeholder outcomes, while simultaneously missing the competitive objectives needed to gain market share and achieve sustained growth. Often success or failure, as defined by Raynor M.E. (2007) in “The Strategy Paradox”2, is the result of the right commitments, or “good luck” with the wrong commitments, or “bad luck” with the wrong commitments, being adapted to the needs, despite the uncertainty surrounding which strategy it addresses. Raynor M.E. (2007) refers to this as “Strategic Uncertainty”, and later in the opening stages of his arguments, discusses the total transformation required to survive (success) as being the organizations mechanisms of adaptability, and how they are attuned to different rates of change; frequently occurring at the same time. He looks at “Strategic Uncertainty” as the organizations effectiveness or ineffectiveness to adapt and be agile. Raynor M.E. (2007), references the observations of Eisenmann T. from a Harvard Business Review article, who suggests that a “hands-off” corporate office, not imposing the top-down processes, is not able to handle “Strategic Uncertainty”. He provides an example of a department within the organization faced with a decision, subject to the boundaries that define the specific division of the organization. Therefore, the department is unable to deal with the unpredictable change and make the right commitments, which undermines the overall the profits of the corporation. This document’s concentration is on the Kaplan and Norton (1992) conclusion of “focus” and “alignment” being driven by a “Strategy Map”. The deliverable of a

1 Kaplan, R.S., Norton D.P (1996). The Balanced Scorecard: Translating Strategy into Action. Boston, Massachusetts: Harvard Business School Press 2 Raynor, M. E. (2007) The strategy paradox: Why committing to success leads to failure (and what to do about it). New York, NY ; Toronto, ON. Doubleday (p.4, p.82-83)


Strategy Map appears to be its ability to be a corporate communications and decisions vehicle that could be applied as an alternate framework for dealing with strategy paradoxes and the top-down approaches discussed by Raynor M.E, and Eisenmann T. This document’s hypotheses; “Can the Strategy Map be an effective methodology?” True or False; validating the Kaplan and Norton (1992 -1996) conclusions on the effectiveness of Strategy Mapping by providing “focus” and “alignment”, and thereby removing or minimizing the effects of “Strategic Uncertainty” and imposed top-down processes.

Research Problem

Can "Strategy Maps" – guide, align and achieve an understanding of business growth initiatives?

The two key Strategy Map success factors of “focus” and “alignment”, originally brought forward by Kaplan and Norton (1996)3, will be explored when reviewing the Balanced Scorecard effectiveness. By utilizing the Strategy Map technique to develop and build a Managed Services strategy and operational scenario, this Applied Project paper will analyze whether to confirm or revoke, the Kaplan and Norton (1992) conclusion. The result will identify if using a Strategy Map in a specific business initiative, lacks clarity, or can provide “focus” and “alignment” between Stakeholder Outcomes and Business Capabilities / Needs. Focus as referenced and defined within “The Balanced Scorecard: Translating Strategy into Action.” (1996), by Kaplan and Norton, has a slightly different meaning or presentation when it is analyzed within various types of organizations or applications. In the “Top to Bottom” context of a Balance Scorecard, Kaplan and Norton summarize that corporate scorecards require explicit levels of strategy articulations to achieve and maintain focus, while in government and/or non-profit organizations, the scorecard provides a rationale for existence and communicates the performance drivers leading to success. In both cases, Kaplan and Norton continue to review “focus” as value-added themes, shared services, and competitive advantages that convey a consistent outcome message to business units, marketing segments, and external / internal constituents or stakeholders.

3 Kaplan, R.S., Norton D.P (1996). The Balanced Scorecard: Translating Strategy into Action. Boston, Massachusetts: Harvard Business School Press (p.188) (p.199)


Alignment of the organization and its activities from “Bottom to Top”, as discussed by Kaplan and Norton (1996), begins with the education and involvement of people who must execute the strategy. They quickly identify that today’s senior management teams must realize that they cannot determine and communicate all actions for success. In fact, Kaplan and Norton, by their comments, appear to be supporting the definition of the “The Strategy Paradox” 4 defined by Raynor, M.E. (2007) from the opposite direction of “Bottom to Top”. Kaplan and Norton (1996) define the alignment of the Balanced Scorecard as an organization’s wish to have every employee contribute and share in the long-term vision and strategy for achievement of success. They continue to look at alignment as the ability of every person involved, from “the board to the back room”, to be provided with the information and tools to understand how his or her individual actions might support the “big picture”. Kaplan and Norton (2001) expanded upon Strategy Mapping as the technique of putting strategy at the center of an organizations management process. In the text called “The Strategy-Focused Organization; How Balanced Scorecard Companies Thrive in the New Business Environment (2001)”5, they define the strategy map as an illustration of the processes for transforming intangible assets into tangible customer and financial outcomes, providing executives with the framework for describing and managing strategy in a knowledge-based economy. (Principle 1: Translate Strategy into Operational Terms) Realizing that an “executive only” view, as outlined and defined in their first principle, does not allow for organizations to focus there strategy, Kaplan and Norton (1992-2001) develop and expand upon the value-add of Strategy Mapping. During this time period, Kaplan and Norton (1992-2001), look at how the adherence to the five principles of the balance scorecard, and the utilization in the strategy mapping technique begin to merge. These five principles provide employees with the knowledge of what must be aligned with the strategy in order to create value. They are:

1. Translate the strategy into operational terms. 2. Align the organization to the strategy. 3. Make strategy everyone’s everyday job. 4. Make strategy a continual process. 5. Mobilize change through executive leadership.

Kaplan and Norton (2001) summarized that many corporations still used tools to measure success in terms of tangible assets, yet today’s business is more dependent on the intangibles such as knowledge, capabilities, and relationships to stay competitive

4 Raynor, M. E. (2007). The Strategy Paradox: Why committing to success leads to failure (and what to do about it). New York, NY ; Toronto, ON. Doubleday 5 Kaplan, R.S., Norton D.P (2001). The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston, Massachusetts: Harvard Business School Press


and be successful. They perceived the need for a new tool to clearly and simply communicate strategy into a common language, outlining the outcomes, measures, and systems and processes for its implementation, to be used by all employees to create value-added activities for stakeholders and customers. The development of the Strategy Map methodology allowed for cause and effect linkages, with the current and required business capabilities, the core objectives of the strategy, and desired customer and competitive outcomes. The strategy map was perceived to create a simple messenger as a vehicle to deliver a customer / stakeholder value proposition, combined with other intangible and tangible assets. In “The Strategy-Focused Organization” (2001), Kaplan and Norton introduced an example of the Strategy Map to illustrate the process for transformation, and to provide a framework to communicate and operationally define strategy in a knowledge-based economy.

“Strategy-Focused Organizations have transformed the Balanced Scorecard from a performance management tool into a strategic tool.” … Kaplan and Norton (2001)(Chap.1-3)

Figure 1: Kaplan and Norton (2001) - Strategy Mapping Illustration

6

6 The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. by Robert S. Kaplan and David P. Norton. Soundview Executive Book Summaries. © 2000. Books24x7. <http://ezproxy.athabascau.ca:2066/book/id_7734/book.asp> (accessed April 19, 2009)

The "Strategy Map" -- ezvan-APRJ-699-a2 8 Significance of this Study

Whether it is human nature to understand and define, or management’s preconceived ideas of Outsourcing and Managed Services, they all have lead the networking and technology industries to many definitions of Managed Services. Some of these ideas are truly core to strategic planning and growth, while others form an alternative to the common outsourcing model as a means of controlling OPEX (Expense Management) within an organization. If the Kaplan and Norton (1992) conclusion of “focus” and “alignment” are validated by this study’s hypothesis, then usage of the Strategy Map can facilitate a clear and simple communication of the corporate strategy in a common language. Organizations in this industry can create operational excellence by focusing their strategic plan to allow the day-to-day alignment of programs, projects, and process activities for Managed Services, therefore driving shareholder value, growth, and profitability. Efficiencies of the Strategy Mapping model will be assessed, to bring focus, alignment, and understanding into designing an effective approach to integrate Managed Services within a business, and into the strategic plan. It will also be reviewed whether a business needs to use other performance and project management methodologies to accomplish this alignment of Managed Services. In this economic environment, all organizations struggle to link their long-term plans towards growth, strengthening themselves alongside the global competitive and economic stresses of 2008–2010, while supporting business survival and shareholder value. If the predictions of Managed Services as a growth opportunity are true, within the networking industry, then to be positioned for success, the organizations need to correctly focus and align stakeholders / customer desires, competitive outcomes, core objectives (metrics) and business investments. Corporate stakeholders look for operational and growth initiatives that drive profitability and corporate stability. However, with companies needing to adopt the new Internet 2.x technologies, build infrastructure and provide quality support, costs of execution may erode any profits. Managed Services is emerging as an alternative approach, to support new mobility requirements and collaborative initiatives. This alternative approach appears to be required to achieve growth and navigate the rapid changes in the global economies, impacting a company’s value case. “Focus” and “alignment” of stakeholder desired outcomes, linked to the business capabilities of Managed Services, should be the method to gain clarity and harmony towards these new technologies, and ultimately provide an Operational Excellence model and understanding for the strategy to succeed. However, can it provide guidance towards communicating and positioning the strategy to create overall organizational understanding and harmony?

The "Strategy Map" -- ezvan-APRJ-699-a2 9 Hypothesis

Can the Strategy Map be an effective methodology? When reviewing the hypotheses and comments of Kaplan and Norton (1996) chapter 7 (p.149) concerning cause-and-effect relationships, the paper will consider the following issues:

1. Can the cause and effect linkages with the current and required business capabilities, core objectives of the strategy, desired customer and competitive outcomes ultimately be linked to core outcome measures refluxing the goals of the overall strategy?

2. Are Kaplan and Norton correct, in that every element of a chain in the

Balanced Scorecard communicates the meaning of the business strategy to the organization?

3. If so, will the application of the Strategy Map to the Managed Service

business initiative prove the hypothesis to be “True” or “False”? If Kaplan and Norton are correct, and the Strategy Mapping technique is now the central focus of the original Balanced Scorecard approach, subsequently, Operational Excellence within an organization can originate from linking current and new business capabilities to stakeholder and core outcomes. If a business can achieve growth by focus and alignment, through the use of a “Strategy Map”, then the stakeholder and competitive outcomes will have been achieved.

Research Design The focal point will be on development of the strategy map structure related to a company looking to implement and utilize a Managed Service offering to its partners and customers. It will concentrate on the ability of the tool to provide clarity and understanding of the topic of Managed Services, and allow the formulation of strategy to be translated into action. The approach and topic for this applied project is a personal case study of a technology and networking growth business initiative, called Managed Services. During the development of the analysis, related to the hypothesis above, a Strategy Map structure will be developed based on research and industry knowledge, to support the company, XYZ Corp., in the development of their long term strategic plan. For XYZ Corp., industry research indicates that the Managed Services business will grow from $2B to $12B USD over the next few years. The senior management team of XYZ Corp. needs to look at the current stakeholder and customer base, along with their


current business capabilities, to evaluate and communicate how, when, and why they will engage the Managed Services model to capture a portion of this large revenue opportunity. They need to determine what outcomes, both tactical and behavioral, they want and need from employees and partners, for a competitive advantage and ultimately to be successful in achieving their long-term strategic plan. The senior leadership team of XYZ Corp. needs to analyze how they can focus company activities, measure leading / lagging indicators, and communicate direction for success. By defining the terminology and components of the Strategy Map for Managed Services, the Strategy Map methodology, from Kaplan and Norton (2001), will review the principles and the functionality of the tool to communicate a focused and aligned message, its strength and weaknesses, and the impact on cause and effect metrics driven by the Kaplan and Norton (1992) realization. Kaplan and Norton (1996) published and hypothesized that a Strategy Map enforces the basic Balanced Scorecard concepts, and ultimately becomes the methodology that brings understanding with the two required key success factors of “focus” and “alignment”. This document, written for the applied project criteria of the MBA – PM program at Athabasca University (2009) will be conceptually based on data (examples, studies and surveys, etc.) gathered from pre-existing studies and authors. Exploring available literature will form a backbone for the research, and conclusions, written about the success and failure of the Balanced Scorecard approach, and the extended use of the Strategy Map, by Kaplan and Norton 1992 through 2001. To support the research, reference sources have been included in the bibliography and include topics, such as:

• The Power of Alignment: how great companies stay centered and accomplish extraordinary things by Labovitz, G. H., Rosansky, V.

• Strategic Planning: a practical guide by Rea, P., Kerzner, H. • The Strategy Paradox: why committing to success leads to failure (and what to

do about it) by Raynor, M. E. Key search words / phrases will be used in accessing pre-existing studies and authors:

• Stakeholder Alignment • Desired Outcomes • Competitive Definition • Metrics ( DMAIC or Six Sigma ) <> Core Objectives • Balanced Scorecards <> Kaplan and Norton • Cultural Needs for Global Strategies • Outsourcing • Innovation / Ideation

Both qualitative and quantitative approaches are not suitable or required given the vast amount of relevant research on the Balanced Scorecard. By using a personal case approach to this paper, for research and conclusions and reviewing the issues and evidence of the past authors, this review will allow focus with a cause and effect model, bringing forward the five principles / elements of the Strategy Map.

The "Strategy Map" -- ezvan-APRJ-699-a2 11 Statement of Results

To validate the hypothesis as being true or false, a sample structure of a Strategy Map of Managed Services for XYZ Corp. will be built as a primary tool to drive “focus” and “alignment” of this business growth initiative. The final analysis and Strategy Map to be created will provide the basis for conclusions and recommendations in approaching the strategic planning of Managed Services and similar initiatives. The results will indicate the strategic elements of success and the overall methodology of mapping a strategic model and growth value proposition. It will validate or rescind the basic hypothesis about cause-and-effect relationships presented by Kaplan and Norton (1996). The initiative around Managed Services will generically provide a company with a map to a Strategy-Focused Organization, and ultimately lead to Operational Excellence.

Strategy Map Core Elements for Investigation:

Stakeholder Identification (Customers and Cultures) Customer Outcomes – Expected Results from the Business Initiative Competitive Outcomes – Positioning the Competitive Advantages Core Objective – The Key Performance (Metrics) Indicators - DMAIC Business Capabilities – Existing and Required, to facilitate the desired outcomes

Managed Services Overview Many opinions about Managed Services and its definition exist in industry literature, resulting in a confused direction and operational approach as to how this potential growth opportunity integrates into the corporate strategic plan. Defining Managed Services using a commonly identified source attributed to Macioce, G. Dr.7:

“A practice of transferring day-to-day related management responsibility [to an outsourced provider] as a strategic method for improved effective and efficient operations.”8

For XYZ Corp., the Managed Services business growth from $2B to $12B USD over the next few years needs a focused and aligned long-term strategic plan to look at the current stakeholder and customer base. The strategic plan, along with XYZ Corp.’s

7 Gerard E. Macioce, D.Sc. as taken February 2009 from the worldwide web - http://dic.academic.ru/dic.nsf/enwiki/505265 8 A Managed Service definition found at numerous Web sources and attributed to Dr. Gerard Macioce from the worldwide web - http://carolinanewswire.com/news/News.cgi?database=columns.db&command=viewone&id=262


current business capabilities, competitive landscape, and the communications of how, when, and why to engage the Managed Services model, are required to capture a portion of this revenue opportunity. However, the industry definition, mapped to XYZ Corp.’s business model, is non-existent. Managed Service, or Outsourcing, is used in many business models. To communicate and gain understanding within the strategy, the executives need to clarify, “If Managed Services is synonymous with Outsourcing”? They have concluded that in some applications the answer is, YES. As an example, if an organization can take repeatable tasks, like cold calling or receivables collection, in order to reduce operational activities and expenses by contracting an “Outsourcing Company” to manage these activities, then one could assume they are synonymous. However, for XYZ Corp. the executives realize that Managed Services, as it relates to an industry like technology and networking, is more than a resource model focused on operational activities. It is supported by Service Level Agreements (SLA), account managers, and a provisioning of 24x7 Network Operational Centers (NOC), with highly skilled technical resources, certified and trained in these technologies. They also understand that a Managed Service is about providing the over arching solutions that can bring a Managed Services provider’s (MSP) added value to the implementation and deployment of those solutions, for customers not possessing the core skills and knowledge to accomplish them independently.

The Industry Opportunity Executives at XYZ Corp. required an additional understanding of a Managed Services framework, before imbedding this into the corporate strategy. A confirmation of the industry research indicating that the Managed Services business would grow from $2B to $12B USD over the next few years was critical for executives at XYZ Corp. To include the Managed Services model within their strategic plan, a review of growth and operational approaches in existing technology and networking organizations, like XYZ Corp., would confirm the need to increase the strategic focus on Managed Services. Industry news releases indicated a rapid growth and opportunity in these economic times of controlled expenses, reduced travel, and increased collaboration and teaming requirements. Yet many organizations where perceived not have the skills or solutions in house to accomplish the implementation of the required solutions. Nemertes Research9, a research-advisory firm that specializes in assessing the business value of emerging technologies, like Managed Services, studied the “Thirst for Bandwidth Increases across Branch, Internet, and Data Center”, and published the

9 www.nemertes.com - http://www.nemertes.com/press_releases/press_release_thirst_bandwidth_increases_across_branch_internet_and_data_center


following results from a study in May 2008. They surmised that continued demand generated by remote workforces, collaboration needs, and centralized business applications would be on a dramatic increase over the next few years. In direct correlation to this they discovered that Managed Service, at a branch level of an organization, was increasing on a similar scale and being provided by the traditional carriers of network-based service and/or using a hybrid model utilizing resellers and systems integrator solutions. The explosion, driven partly by the current economic realities in 2009, and the advancements in technology, developed some additional key findings that support the projected growth in Managed Services:

• Video linkage of Teams (Desktop, Room based and TelePresence10) to minimize travel and control costs

• Collaborative Applications via the Worldwide Web (Internet) and corporate Intranets for document and knowledge management

• Management Monitoring and 24x7 Up-Time • Effective utilization of infrastructure bandwidth using performance monitoring

tools Other industry developments, found at MSPMentor11, confirmed the need for XYZ Corp. to focus on the opportunities at hand. Examples, such as, the 2008 announcement by Marriot International12, who looked towards the Managed Service Partner (MSP) and Reseller community to fulfill the need for a fee-based timesharing of conference and meeting video facilities within the Marriott strategic plan of supporting their customers. In a Managed Services partnership, with an XYZ Corp competitor, and using a leading industry solution in enhanced video, Marriot International was embracing the Managed Services model to implement and deploy a service for enterprises hosting private strategic meetings, which resulted in a new and alternate revenue stream outside of their core competencies. The Managed Service definition, as outlined by Dr. G. Macioce, of transferring day-to-day management of strategic methods to improve efficiencies and effectiveness for Marriott’s customer and stakeholder base, was providing the competitor of XYZ Corp. with an advantage and growth opportunity in the hospitality and event industry. In this case Marriot had recognized the need was outside their core focus area and beyond a simple outsource model. They knew that provisioning of the 24x7 Network Operational Center (NOC), with highly skilled technical resources, certified and trained in these technologies, was required for this offering to be a value added solution.

10 http://www.cisco.com/en/US/netsol/ns669/networking_solutions_solution_segment_home.html 11 http://www.mspmentor.net/2008/03/18/upscale-hotels-embrace-managed-telepresence-services/ 12 http://www.marriott.com/corporateinfo/default.mi

The "Strategy Map" -- ezvan-APRJ-699-a2 14 Literature Review Considerations

Kaplan and Norton (2001)13 preface their current views of their 1992 realization on “focus” and “alignment”, driven by Strategy Mapping, as the realization of a new organizational form of a “Strategy-Focused Organization”. The basic Balance Scorecard had evolved, from expected past performance measures to a focus of management processes on strategy and vision, flowing from the top-down. This was further supported by additional knowledge and operational implementation, which aligned the processes from the bottom-up, within organizations, by adopting the Kaplan and Norton realization of “focus” and “alignment”. They summarized that the whole truly had became much more than the sum of its parts. In Chapter 1 of the “Strategy-Focused Organization”, Kaplan and Norton (2001) focus on the execution of the strategy to be as important as, if not more important than, the strategy itself. They discuss that tools and methodologies for implementing and formulating strategies are few and what has developed has not kept pace with the need and evolution in strategic approaches. They continue with an introduction indicating that intangible assets are a major source of the competitive advantage, and for organizational performance, a company must become more than the sum of its parts by having the strategy linked and aligned. Strategy Maps, as an outcome of a “Strategy-Focused Organization”, are reviewed in more detail throughout this document, however, for XYZ Corp., the authors provide an industry specific reference in networking and technology. Kaplan and Norton (2001) refer to AT&T Canada14 indicating that the company’s view of how “focus” and “alignment”, from the top-down and bottom-up, guided AT&T Canada to success during a period of economic uncertainty in prices and ultimate revenue opportunities. This appears to reinforce and support a portion of the hypothesis of this paper, focused around the assumptions Kaplan and Norton (1996) outlined, that every element of a chain in the Balanced Scorecard communicates the meaning of the business unit strategy to the organization.

Managed Services Speyer, M. (2008) “A Managed Services Taxonomy”; Forrester Research as taken from

the worldwide web at http://www.forrester.com/Research/Document/Excerpt/0,7211,45091,00.html

13 Kaplan, R.S., Norton D.P (2001). The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment (A Summary). Soundview Executive Book Summaries © 2000 Citation 14 Kaplan, R.S., Norton D.P (2001). The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston, Massachusetts: Harvard Business School Press (Chap.1)


The Executive Summary presented by Speyer, M. positions the dilemma of defining, focusing, and aligning the term “Managed Services”. Speyer summarizes that the term is so broadly used in the industry by both vendors and buyers alike that it has become difficult to distinguish these services from others, such as “Outsourcing”. The outline of the article presents the term “Managed Services” in the context of its meaning to various people, such as, the one-to-many delivery model. It reviews how Managed Services providers, in a crowded market space, use their Taxonomy to fine-tune the market place. If this document’s assumption, on Kaplan and Norton (1992) are correct in the realization of “focus” and “alignment” related to Taxonomy, then the strategy map’s core elements would bring a more holistic definition to the industry. The relationship and definition variance, between Managed Services and Outsourcing, in terms of the method used to focus and align business initiatives, would be a key component of the research required for XYZ Corp. These are two definitions that overlap and raise the question; does outsourcing encompass managed services? Further, would Taxonomy, as discussed by Speyer, allow for a definition of the managed service in terms of breadth, flexibility, scalability and cost, or does it need to focus more on interrelationships within the Strategy Map core elements to be understood?

Outsourcing Greaver, M. F. (1999). Strategic Outsourcing: A Structured Approach to Outsourcing

Decisions and Initiative. New York, AMACOM Books Operationally, the various functions of a company usually have different and specific assumptions about approaches for the Go-To-Market models and the measures of success. Some of the vertical groups in a company focus only on the key performance indicators (KPI) that measure the teams and not an alignment with the overall strategic plan. Greaver, M.F. (1999)15, states that a project champion may have an assumption of senior management’s wishes. In reviewing the need for a clear strategic communication and understanding in this document, one could suggest in today economic climate that “having an assumption of senior management’s wishes” is not an acceptable alignment. Confusion, as Greaver, M.F. (1999) goes on to state, around performance, and the underlying assumptions of the business plans, may result in incorrect actions on risk taken. He suggests that the frameworks to determine the risks, such as, scope, governance, and execution can be very challenging. Much of the information and ideation, presented by Greaver, M.F. (1999), is related to the retail and IT industries. However, he does bring forward many suggestions on

15 Greaver, M. F. (1999). Strategic Outsourcing: A Structured Approach to Outsourcing Decisions and Initiative.. New York, AMACOM Books (p. 149)


innovation and vision that may help employees understand change, which may suggest a relationship towards a strategy mapping methodology. When reviewing core competencies, he discusses employee frustration around potential outsourcing and downsizing. Greaver, M.F. (1999)16 goes on to say, when an organization is customer focused and process driven, the employees are focused on how to best meet the customer needs and not maintain the status quo. The Kaplan and Norton realization around the strategy mapping initiative, like Managed Services or even Outsourcing, can provide the clarity and understanding to reduce frustration and risk regarding resources. This appears to be supported in Greaver’s observations, that the investigation of Outsourcing, as an alternative to Managed Services, will assist XYZ Corp. in evaluating possible competitive desired outcomes of the Strategy Map.

Strategy Mapping and Balanced Scorecards Kaplan, R.S., Norton D.P (1996). The Balanced Scorecard: Translating Strategy into

Action. Boston, Massachusetts: Harvard Business School Press Can Strategy Mapping drive focus, alignment, and understanding to a business growth initiative? Are the two key Strategy Map success factors, of “focus” and “alignment”, originally brought forward by Kaplan and Norton (1992) when reviewing the Balanced Scorecard effectiveness, correct? In the publication, “The Balanced Scorecard” (1996), Kaplan and Norton17 investigate the Balanced Scorecard and analyze its ability to direct current and future performance. They draw conclusions that, business initiatives supported by this framework are meeting customer and stakeholder objectives. However, there continues to be a lack of focus and alignment. They present information that demonstrates a strategic or more holistic view, of cross-business initiatives, and provide a focused set of strategic objectives. Kaplan and Norton (1996) align and associate key performance drivers with targeted initiatives and link core objectives with desired outcomes. In formulating their conclusions, Kaplan and Norton ask some specific questions about driving competitive advantage, such as:

How do staff groups apply the scorecard to competitive advantages? As one of the five core elements of the strategy map, can building and providing competitive relationships, as Kaplan and Norton suggest, demonstrate another foundation for success of a business initiative? Kaplan and Norton (1996) review an example of a major international telecommunications company, a regulated monopoly, where the preclusion of external outsourcing drove high internal growth rates in the Info Support (IS) organization. The

16 Greaver, M. F. (1999). Strategic Outsourcing: A Structured Approach to Outsourcing Decisions and Initiative.. New York, AMACOM Books (p. 79) 17 Kaplan, R.S., Norton D.P (1996). The Balanced Scorecard: Translating Strategy into Action. Boston, Massachusetts: Harvard Business School Pres (p. 174) (p. 176-179)


stakeholder and customers in this case, however, did not have high satisfaction levels from the distinct lack of customer focus in IS. In not correcting the relationship and alignment of the capabilities, the IS function ignored the desired outcomes of the customer and competitive marketplace, sending the IS group and the company on a path to failure. This example illustrates the Kaplan and Norton (1996) realization for “focus” and “alignment” between the 5 core elements of the strategy map. The assumption, from this and other examples, is that Kaplan and Norton (1996) were looking beyond the Balanced Scorecard approach as they developed insight between 1992 and 1996. The question of the strategy maps ability to provide success, by focusing and aligning five core elements, will define support for, or against Kaplan and Norton‘s (1992) realization, and will attempt to confirm the value proposition of their framework around Strategy Maps.

Innovation - Ideation Mapping Rubinfield, A., Hemingway C. (2005); Built for Growth: Expanding Your Business

Around the Corner or Across the Globe. Upper Saddle River, NJ; Pearson Education, Inc

Rubinfield, A. and Hemingway, C. (2005)18 look at “values”, and discuss, in chapter 1, “Ideation” as the definition of core values. Rubinfield and Hemingway summarize, in chapter 1, that ideation initially centers on ways to differentiate concepts from one another. They continue to define the framework needed to tackle a topic and the need for a holistic approach to ideate, create, and execute. Kaplan and Norton (1996)19 look at innovation (ideation) as the competitive advantage in the current generation of an initiative. Their approach to reviewing innovation and competitive advantages will become a departure from the basic Balance Scorecard, by suggesting that it is necessary to incorporate innovation into the internal business processes, and to support long-term value creation. In this applied project, the concepts set forth will allow for an investigation of whether strategy mapping supports ideation, or does it need ideation and innovation as its foundation to be successful? Does this concept, of ideation and innovation as a foundation, support the Kaplan and Norton objective of a balanced scorecard, and ultimately a Strategy Map to clarify and communicate vision to mobilize and focus an organization?

18 Rubinfield, A., Hemingway C. (2005); Built for Growth: Expanding Your Business Around the Corner or Across the Globe. Upper Saddle River, NJ; Pearson Education, Inc (p. 28) 19 Kaplan, R.S., Norton D.P (1996). The Balanced Scorecard: Translating Strategy into Action. Boston, Massachusetts: Harvard Business School Press (p. 5-30)

The "Strategy Map" -- ezvan-APRJ-699-a2 18 Best Practices

Kerzner, H.(2001). “Project Management; A Systems Approach to Planning, Scheduling

and Controlling”. New York, John Wiley & Sons, Inc Initiating, Planning, Implementation, and Closing are the four core components of driving a project model. However, are the results, using these methods and tools, linked to the overall strategic plan? Are these steps just processes and tools that address items in the required business capabilities, plans, and outcomes? Can the independent implementation of these steps have a positive or negative impact on the strategic plan and overall success? Many companies today are project based and follow the tried and true best practices. Kerzner, H.20 notes that, in the 1980’s and 1990’s, the focus was on measuring effectiveness and success by focusing on resources, scheduling, and tracking of tasks. He goes on to state that new tools and procedures are required to deal with the growing complexities of the projects. However, are these new tools, positioned by Kerzner, H. (2001), holistic enough to drive focus and alignment, or just new methods to manage tasks? Regrettably it is possible that he may have focused too much on the use of documentation of processes for greater insight, and missed the more holistic view of the link between the strategic planning model and core metrics of success. Kerzner, H. (2001) compares the best practices of project management versus taking an advanced project management approach, using a strategy map, to present the gaps, strengths, and weaknesses. Ideally, the two approaches should complement each other, specifically in the area of Business Capabilities and Customer Outcomes. Assumptions for the document, based on readings from Krezner, H. (2001), are that best practices built around PMBOK21 tools and approaches would have a negative effect on the long-term success and growth. Industry perceptions seem to indicate that, the project management approach does not go far enough in providing a corporation with “focus” and “alignment” to key business initiatives, resulting in uncertainty and cost. Kerzner, H. (2004)22, unlike in early texts, attempts to address this chasm with in one method, Risk Management, as a mathematical approach to success. Alternatively, one might assume the chasm is being created because of disconnects within the strategic plan, and is a result of the organizations lack of understanding of the customer and competitive desired outcomes.

20 Kerzner, H.(2001). “Project Management; A Systems Approach to Planning, Scheduling and Controlling”. New York, John Wiley & Sons, Inc (p.45) 21 Project management Institute, Inc.(2004). A guide to the Project Management Body of Knowledge (PMBOK), Third Edition. Newtown Square, PA 19073-3299 USA: Project management Institute, Inc 22 Kerzner, H. (2004) Advanced Project Management: Best Practices on Implementation. http://books.google.com/books?id=Zdqwz3B0AZEC&pg=PA136&lpg=PA136&dq=%22Virtual+Projects+Best+Practices%22&source=web&ots=1WzBord2wt&sig=WmZ0zxzhGc3TO9Xhmm2FE5CPjok&hl=en#PPA133,M1


Finally, when looking at “Best Practices” for focus and alignment, is a cultural gap introduced when using a strategy mapping method? Kerzner, H. (2001)23 discusses the management of cultural differences as part of a systems approach to planning. He states that multinational cultural differences will have an impact on each of the key parts of the project management body of knowledge (PMBOK). He goes on to state that intra-country differences, caused by legislation, would be an example of the impact on an initiative or project. In terms of a project, Kerzner, H., surmises that understanding the customer’s requirements will be awkward for a foreign project manager, and that customer satisfaction is related to each country’s disciplines. The author’s cultural realization, for “Best Practices” that create focus and alignment, would appear to support the Strategy Mapping of the Business Capabilities related to executing on existing and required processes, projects and/or programs, to facilitate the desired outcomes of the Customers and Company.

Cultural Impacts Thomas D.C. and Inkson K. (2003). People Skills for Global Business: Cultural

Intelligence. San Francisco CA Berrett-Koehler Publishers, Inc Culture is a source of great innovation and ideation. However, it can also provide a situation where stakeholder and customer relationships are strained to a point of failure in a given initiative or project. The Strategy Map elements, for Stakeholder and Customer Identification and Outcomes, should be examined to determine if culture and cultural approaches can be addressed using the Kaplan and Norton (1996) framework. Could the cultural gap occur when using a strategy mapping method? Thomas & Inkson24 discuss and investigate the “CQ” (Components of Cultural Intelligence) of Knowledge, Mindfulness and Behavioral Skills. The elements of CQ are critical in dealing with global initiatives and stakeholders. However, is the CQ addressed by the methodology of the strategy map? Involvement, identification, and focus on the individual needs, should provide a constant exercise of CQ. The collective characteristics of some cultures and the individualism of others may be better served by another management tool. By investigating the stakeholder / customer identification section of the Strategy Map using components of culture “CQ”, an insight into the cultural risks of the Kaplan and Norton (1992) realization should be achieved.

23 Kerzner, H.(2001). “Project Management; A Systems Approach to Planning, Scheduling and Controlling”. New York, John Wiley & Sons, Inc (chap.19,p.987-996) 24 Thomas D.C. and Inkson K.( 2003). People Skills for Global Business: Cultural Intelligence. San Francisco CA Berrett-Koehler Publishers, Inc (p.16) (p.165)

The "Strategy Map" -- ezvan-APRJ-699-a2 20 The Strategy Map Framework

Kaplan, R.S., Norton D.P (2001). The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston, Massachusetts: Harvard Business School Press

The reference points to convey “focus” and “alignment”, driven by a Strategy Mapping methodology, are the five principles that Kaplan and Norton defined within The Strategy-Focused Organization (2001)25. They are:

1. Translate the strategy into operational terms. 2. Align the organization to the strategy. 3. Make strategy everyone’s everyday job. 4. Make strategy a continual process. 5. Mobilize change through executive leadership.

Starting with the historical views they had developed, and integrating the customer / corporate innovation around the Balance Scorecard approach, Kaplan and Norton (2001) outlined a new approach to managing (Figure 2) where organizations move beyond financial performance measures, and becoming organizations focused on their market place outcomes, and the desired outcomes of their customers. This holistic view is the linkage within an organization, to connect the vision to plan, with a communication direction, and by assimilating the past learning of success and failure.

Figure 2: Kaplan and Norton (2001) – A New Approach to Managing

25 Kaplan, R.S., Norton D.P (2001). The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston, Massachusetts: Harvard Business School Press


In commencing with the building of a Strategy Map Kaplan, R.S., Norton D.P (2001), begin by looking at the Customer Perspective, or as later stated in this document, the desired “Stakeholder / Customer Outcome”. In the footnotes of Chapter 2, Kaplan and Norton reference Porter, M., “What Is Strategy?” Harvard Business Review (November– December 1996)26, as an example of a failed Continental Airlines strategy that attempted to offer two different levels of service for business travelers and price-sensitive leisure travelers. The article, from the Harvard Business School Online27, summarized the operational effectiveness that could provide numerous advantages to companies, and noted that the common gains are well known, and will also be implemented by the competitors in the industry. It reviewed why strategic positioning and competitive convergence makes one company distinguishable (differentiates) from another. In the example of Continental Airlines, the approach was to provide a “Lite” version of service to try to gain a competitive advantage over Southwest Airlines; however, the approach did not include an alignment of the whole interlocking systems. The required focus and communication with the employees about how they differentiate the company from other companies was not clear, and the required linkages were not provided in forthright communications and strategy, or in the future operational direction, with clarity. Once clarity of the Customer Perspective is gained, a Competitive Outcome analysis is formulated. The authors, in the 2001 iteration of the framework for Strategy Mapping, described focus and alignment within an organization in relationship to the customer and competitive outcomes, as the method to develop a competitive position linked to intangible assets for value creation. After ten plus years of mapping their balanced approach to the customers and stakeholders desired outcomes and competitive needs, Kaplan and Norton (2001) apply the concepts of Customer Perspective and Competitive Outcome, in a logical architecture that builds the Strategy Mapping foundation. It begins to specify the relationships among customers, processes, and competencies. To provide the foundation for a resolution of their hypothesis, Strategy Mapping is at the core of the methodology to the determination of “focus” and “alignment” for Operational Excellence. The authors conclude that in the construction of a Strategy Map, with the embedded chain of cause and effect logic, the connection of the desired outcomes to strategic plan, help define the Core Objectives and Business Capabilities. They continue to support the early realization of 1992 and 1996, that the Strategy Map framework communicates the measures of the Balanced Scorecard, and how it is related to key cause and effect logic, which is vital to providing the executive with a method of describing and managing strategy in a visual and connected approach.

26 M. Porter, “What Is Strategy?” Harvard Business Review (November– December 1996) (p.61–78) 27 http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/viewFileNavBean.jhtml?_requestid=29056

The "Strategy Map" -- ezvan-APRJ-699-a2 22 The Approach for XYZ Corp

Once XYZ Corp.’s executive team gains an understanding of Managed Services and its opportunity for growth, they needed to find a methodology to provide the clarity and understanding within the organization. Historically, the various functions of the company usually had different and specific assumptions about approaches for the Go-To-Market models and the measures of success. The executive team needed to avoid frustration and risk regarding resources, by reviewing how to focus and align their teams away from a basic outsourcing model to a strategically mapped model of Managed Services. There was a clear need to evaluate and find “focus” and “alignment” toward:

Stakeholder Identification (Customers and Cultures) Customer Outcomes – Expected Results from the Business Initiative Competitive Outcomes – Positioning the Competitive Advantages Core Objective – The Key Performance (Metrics) Indicators - DMAIC Business Capabilities – Existing and required, to facilitate the desired outcomes

The Goal >>> to gain a competitive position in the industry and capture some of the projected Managed Service growth.

There was a requirement to determine what outcomes, both tactical and behavioral, they wanted and required from employees and partners, for a competitive advantage. The senior leadership team of XYZ Corp. also needed to analyze how they could focus the company’s activities, measure leading / lagging indicators, and communicate direction for success and therefore succeed in achieving their long-term strategic plan. The Kaplan and Norton (1992) realization, of Strategy Mapping, driving “focus” and “alignment”, appeared to be a fit for an initiative, like Managed Services, to provide the clarity and understanding in the drive for Operational Excellence at XYZ Corp.

XYZ Corp. - Managed Services Assumptions

1. The definitions, of Macioce, G. Dr.28 for Managed Services, will be used to discuss the opportunity for XYZ Corp. in the Networking and Technology industry.

2. The competitive offering, as one of the many solutions being implemented at Marriot International, will be used as a solutions example for the Strategy Map.

28 Gerard E. Macioce, D.Sc. as taken February 2009 from the worldwide web - http://dic.academic.ru/dic.nsf/enwiki/505265


3. Variations of the solution of Managed Service need to be discussed including Resale, Outsourcing (i.e.; the Marriot offer), and other Hosted models.

4. Existing and required Business Capabilities should be a subset of a fully functional organization to manage the breadth of the analysis in building a Strategy Map.

5. The Kaplan and Norton (2001) - Strategy Mapping Illustration found in Figure 1 should be the base structure to be used for the XYZ Corp. Strategy Map.

6. No Quantitative costs or efficiency numbers could be included in the core objectives and metrics analysis.

7. The derived Vision and Mission statements (below), related to the industry opportunity of this document could be used to begin the mapping process.

Vision – Aspire to be the world leader and valued inter-company provider of enhanced video and the network services. Mission – To provide a solution that is innovative and turnkey, which integrates security, rapid turn-up, ease of use and a satisfying customer experience.

Research Question

Can Strategy Mapping Managed Services provide the opportunity to achieve “focus” and “alignment” of an emerging business growth initiative?

Building a framework of the Strategy Map for Managed Services, articulating the cause and effect of each major category of the map, and researching the following secondary questions in each of those categories, will assist in evaluating the effectiveness of this mapping technique and focus the answer to the research question.

Stakeholder / Customer Identification o Will the characteristics of each sponsor for the initiative be identified? Does

this part of a strategic plan, surrounding Managed Services, require additional project management tools to create a focus on desired outcomes?

Stakeholder / Customer Desired Outcomes o What quantitative tools are required in building this part of the Strategy Map,

and could these tools be just as effectively used in a standalone activity for scope and key requirement definition?

Competitive Desired Outcomes o Does the Strategy Map method develop and confirm competitive actions?


Core Objectives (Metrics) of Success o Can a “Cause and Effect” metrics model be developed to support the

identification of the leading and lagging indicators of success? Business Capability Identification

o Can Business Capability identification be used as a project portfolio and priority project listing?

The Managed Service Strategy Map The purpose of the framework, shown in Figure 3 is to assist in reviewing whether Strategy Maps can guide, align, and achieve an understanding of Managed Services as a business growth initiative for XYZ Corp. Kaplan and Norton (2001) often quote Porter, M.E. throughout their text, and referenced his differentiation concepts in arriving at the choice of activities, and how they are performed as the essence of strategy. Porter’s view29 is to focus on choosing the right activities to perform distinctly from the competitors, providing a unique value proposition and creating the foundation for a sustainable strategic position. This is achieved by creating a system of activities, measures and capabilities that reinforce each other within that strategy.

Figure 3: The Strategy Mapping Focus Areas

In addition, the mapping of leading and lagging indicators of success, as shown in Figure 4, to the Core Objective layer of the Strategy Map, provides the measures of the Balanced Scorecard, relating to key cause and effect logic. This is vital to providing the

29 M. Porter, “What Is Strategy?” Harvard Business Review (November– December 1996): (p.62)


executives with a method of describing and managing the strategy, in a visual and connected approach.

Figure 4: Managed Service Metric Mapping

Analysis and Conclusions

Developed as a preliminary assumption for this paper, and taken from generic worldwide web information, the following statements represent the opening Vision and Mission statements to begin building a Strategy Map, and to determine the validity of the hypothesis for this paper. Vision – Aspire to be the world leader and valued inter-company provider of enhanced video and the network services. Mission – To provide a solution that is innovative and turnkey, which integrates security, rapid turn-up, ease of use and a satisfying customer experience.

Knowing the Stakeholder / Customer Audience

Stakeholder Identification The PMI (Project Management Institute) engagement, of an initiative or project with customers, comes primarily at the end of the project on the delivery of the final result, as referenced in the PMBOK30 summary of the processes that interact. Although there could be an argument in favor of using professional services organizations in project

30 Project management Institute, Inc.(2004). A guide to the Project Management Body of Knowledge (PMBOK), Third Edition. Newtown Square, PA 19073-3299 USA: Project management Institute, Inc (p.42)


management, or projects based identification tools for the building of stakeholder / customer identification models, there is an assumption that these methods do not produce the linking of the outcomes and objectives to a strategic vision and mission. Solutions developed in a project tool model, based on the understanding of historical interactions between the customers and sponsors, could inadvertently be driving a company towards building unique business solutions, capable of solving today’s immediate business requirements. However, these solutions may have little, if any, strategic merit for long-term success. One could suggest that many executives and customers interpret failures as a result of the initiation and development of these independent solutions, without the correct and appropriate linkage of the outcomes and objectives to the strategic vision and mission. The sponsors or initiators within the company embark on these activities with an improper knowledge of the customer / stakeholder groups desires and still expect to receive the benefit of the initiatives. Are they successful?; Sometimes, YES, and many times, the initiatives bring value to the stakeholders and the company as at large; maybe even a short-term focus or alignment of the strategic direction. However, unlike a typical project approach, deciding the business need to focus on, and knowing the customer desires, Kaplan and Norton (2001) look at the customer perspective as the heart of the strategy. Kaplan and Norton (2001) suggest a clear definition of the “Customer Value Proposition” as the single and most important step in development of a strategy map. The authors provide an example for a generic strategy map customer value proposition in Figure 3-15 of “The Strategy-Focused Organization”.31 (A portion of Figure 3-15 is shown in Figure 5 below)

Figure 5: Kaplan and Norton (2001) – Generic Customer Value Proposition Items

Kaplan and Norton focus on the desired outcome of the Stakeholders / Customers as core to mapping a strategic path to deliver the defined Vision and Mission. At XYZ Corp., the executive team should beginning to question the lack of a holistic view of the stakeholders and whether their needs will be fully understood. Will they, as a company,

31 Kaplan, R.S., Norton D.P (2001). The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston, Massachusetts: Harvard Business School Press (Chap.3)


have a complete identification of the stakeholders and the unique characteristics of each group fully defined? Will the knowledge gains from the past interactions, and the project approach to building towards their corporate vision be correct, and at the same time meet the desired Customer Outcomes? XYZ Corp could begin to ask and look for answers or frameworks to support the following core questions around Stakeholder / Customer Identification:

1. Will the characteristics of each sponsor be identified?

2. Does this part of a strategic plan, surrounding Managed Services, require additional project management tools to create a focus on desired outcomes?

Answering question one (1.) above requires a complete identification of the customers and for XYZ Corp., the Customer Identification process could be derived from the potential market place or a current holistic client list as follows:

o Multinational Companies with centralized core groups like Marketing or IT o Local Small and Medium Business trying to work on a larger geographic

scale o Event, Training and/or Conference providers such as hotels

The “Customer Value Proposition” for these customers could be viewed to be based on a need for technology knowledge, operational service level support, and leading edge ROI driving solutions. However, the question from the executive of XYZ Corp. may need to be focused on having a complete identification of the stakeholders. In the introduction chapter Rea, P. and Kerzner, H. (1997) Strategic Planning: A Practical Guide32 the authors discuss steps to formulating a strategy and commence with the statement: “Well-managed organizations know their customers” They continue to discuss, “… differing perceptions of reality contribute, at least in part, to conflict among decision makers.”, which support what could possibly be seen as a failure in the project approach to achieving the vision and mission as earlier stated. Rea, P. and Kerzner, H. (1997) summarize that the information, derived from the use of “perceptions and memory” by decision makers related to the stakeholder groups, inevitably will be perceived differently, by both customers and company decision makers, resulting desired outcome failures or disconnects. Kaplan, R.S. and Norton D.P (1996), “The Balanced Scorecard: Translating Strategy into Action” 33 explores existing and potential customers, and their preferences or

32 Rea, P. and Kerzner, H.(1997); Strategic Planning: A Practical Guide. New York, NY ; Toronto, ON. Van Nostrand Reinhold (p.10-11)


desired outcomes across many market segmentations. However, as they are developing their vision of the Balanced Scorecard (1996) into a Strategy Mapping framework, it could be perceived that they have yet to determine the need to also include the “Internal Customer” desires. By addressing the issues of “perceptions and memory” of decision makers, as stated by Rea, P. and Kerzner, H., could be considered as part of a complete understanding of the stakeholder and customer layer of the Strategy Map. The strategy map framework attempts to mitigate this risk of perceptions, by using both the external and internal customer perspectives, as the heart of the strategy. There maybe other customers or stakeholders that should be included in the XYZ Corp strategy for the Managed Services initiative, such as:

o Shareholders of XYZ Corp o Business Partners for XYZ Corp o XYZ Marketing and Product Development o Outsourced or Internal Network Operations Centers (NOC) of XYZ Corp

By 2001, the Kaplan and Norton exploration of existing and potential customers for the translation of strategy into action had evolved into the text, “The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment”. The authors, in Chapter 3, view the strategy as reflection of what management believes must be done to succeed. Although a more holistic view is critical to success, it could be assumed that the inclusion of these additional customers (internal, partners, etc.) would give a greater “focus” and “alignment”. Hence, a more effective and integrated understanding of desired outcomes between all parties involved in strategic success. The authors state, in chapter 3, that “the strategic themes reflect the executives’ view of what must be done internally to achieve strategic outcomes”. However, the risk is that they focus only on the value proposition items of Figure 5 above and do not include the desired outcomes of the internal customers or business partners. By inclusion of a more holistic set of stakeholders and customers, not only are the desires of the traditional customer understood, but the needs and desires of the less traditional, internal customers, become imbedded into the Strategy Map and allow for the achievement of Operational Excellence. This expanded knowledge, in support of the competitive, core, and business objectives, would enhance the Kaplan and Norton (2001) (Chap.3) process, as they begin to summarize in this chapter, if they were to expand on the internal customer needs. They describe that knowing the customer, can not only address financial needs, but could also contribute to the operational excellence experience.

33 Kaplan, R.S., Norton D.P (1996). The Balanced Scorecard: Translating Strategy into Action. Boston, Massachusetts: Harvard Business School Press (p.64-69)


In the example shown in Figure 5 of this document, Kaplan and Norton look at Customer or Stakeholder identifications in terms of intimacy, retention, and acquisition. Organizations focused on providing a service externally to customers should consider the desired Customer Outcomes when positioning the overall Customer Value Proposition in the strategic plan. Reviewing question two (2.) above, related to the audience identification, could a focus on the characteristics of the Stakeholders / Customers, and their values that differentiate them from one another, add to the holistic view? Again, by 2001, Kaplan and Norton (Chap. 3) are looking at the Customer Value Proposition and about companies realizing that strategy is about choices, and being able to focus on the right attributes at the right time. However, as in the first part of the Stakeholder Identification process of the Strategy Map framework, they may not have gone far enough.

Stakeholder Adoption Analysis Raynor M.E. in “The Strategy Paradox”34 looks at the results of right and wrong commitments around the strategy process as creating success or failure. He refers to this as “Strategic Uncertainty”. While this is not a specific input or output of the building of a Strategy Map it is important in the identification of the stakeholders and customers, and to review some core concepts about behavior and acceptance. Some existing project management concepts and frameworks like SWOT (Strengths, Weaknesses, Opportunities, and Threats) and Stakeholder Adoption Characteristics are imperative to building a complete Stakeholder / Customer Identification in the Strategy Map methodology. Individuals are focused and aligned based on their acceptance and understanding of knowledge. This can be simply represented by mapping an adoption curve of the Executive, Change and Staff influencers involved, based on knowledge gained in past and present engagements. Figure 6 analyses items that should be investigated to further enhance the Strategy Map identification of the Stakeholders / Customers. It is important to explore the views each generic group, which may have, from the top-down (Focus) and the bottom-up (Alignment), a varying acceptance or understanding in relationship to the customer risk and impact to the strategy over time.

34 Raynor, M. E. (2007) The strategy paradox: Why committing to success leads to failure (and what to do about it). New York, NY ; Toronto, ON. Doubleday (p.4, p.82-83)

The "Strategy Map" -- ezvan-APRJ-699-a2 30 Figure 6: Generic Adoption Curve 35

Building on their acceptance and understanding characteristics, then including these into the Strategy Map will enhance the “focus” and “alignment” driven by the framework. Every Stakeholder and sub-group will be at Awareness, Understanding, Buy-In, Ownership and/or Adoption levels related to desired outcomes, at different points in time, therefore creating a chasm on the “focus” and “alignment” expectations of the Strategy Map framework.

Stakeholder / Customer Outcomes

Stakeholder Outcomes A core part of the Stakeholder / Customer Identification process, in the Strategy Map, is the deep-dive into the Customer Value Proposition or Customer Perspective related to the company Vision and Mission statements. To be effective and efficient, the Strategy Map framework must review the quantitative measures that are required in building the Strategy Map. The early generic models (1992-1996) changed as Kaplan and Norton (2001) (Figure 5) moved towards more specific definitions of the framework. They show the relationships of the common outcomes to be based on needs such as Price, Quality, Timeliness and Functionality, plus Relationship, Image and Customer Satisfaction outcomes.

35 The “Adoption Curve” Concept is taken from past project activities I have engaged in and modified for inclusion in this paper.The original source is unknown. Zvaniga, E. (2009)


In “Contemporary Strategy Analysis” by Grant, R.M (2005)36 he outlines a “Value Curve Analysis” that could be incorporated into the Strategy Map framework as an appropriate approach to categorizing and ranking generally gathered knowledge of desired Customer Outcomes. Grant, R.M. suggests that the optimal combination of fundamental items depends on, both what the customer values, and what the competitors are offering, positioned against the Business Capabilities of the company’s offerings. The author goes on to quote work in the “Value Curve” model by Chan Kim, W. and Mauborgne, R, (1999)37, who suggest that strategies of competitors converge along the same basic dimensions, and that value innovation is built from looking across the conventionally defined boundaries of strategy in relation to competition. This documents analysis interprets this suggestion by Chan Kim, W. and Mauborgne, R, (1999) to indicate that understanding the value of a specific outcome related to the customer community, would let XYZ Corp. focus on the impacts to the desired Competitive Outcome and the Core Objective measures of leading and lagging indicators for success. The value curve of Chan Kim and Mauborgne (1999) would allow the building process of the Strategy Map to connect the tangible and intangible differences between the many desired customer outcomes brought forward in the process. Grant, R.M (2005)38 provides an example that XYZ Corp. could use to initiate the differentiation process between the value outcomes, when he identifies the disastrous failure of the introduction of “New Coke”39, which gave a strategic preference to the Customer Outcome of “taste preference” over “authenticity”. These types of examples, that define the stakeholder or customer outcome value levels against the core objective measures, provide support for the Kaplan and Norton Strategy Map framework. They help to bring “focus” and “alignment” to the strategic need for Operational Excellence, Leadership and Customer Intimacy (Figure 5). Grant, R.M. further expands on the idea of strategic preference by quoting from Tom Peters:

...business people need to listen to their customers … He is referring to applying a strategy, which would have an effective differentiation based on an understanding of what the customers want and how they play a role in the overall strategy. The Strategy Map focuses and aligns the Stakeholder / Customer Outcomes to the Identified Stakeholder / Customer layer of the map.

36 Grant, R. M. (2005). Contemporary Strategy Analysis (5th edition) Malden, MA USA 02148-5020: Blackwell Publishing. (p.280-281) 37 Chan Kim, W. and Mauborgne, R. Source: Harvard: Business Review 77.1 (Jan-Feb 1999): p83(1) 38 Grant, R. M. (2005). Contemporary Strategy Analysis (5th edition) Malden, MA USA 02148-5020: Blackwell Publishing. (p.280-281) 39 Bastedo, M. and Davis, A. “God What a Blunder”, December 17, 1993 http://members.lycos.co.uk/thomassheils/newcoke.htm Source: “Contemporary Strategy Analysis” by Grant, R.M (2005) (p.295 #16)


In Kaplan and Norton (2001) (Chap.3), the authors shed a light on these outcome understandings as a differentiation model for evaluating the wide variety of valued innovations. They continue by also introducing the concepts meant for the ability of XYZ Corp. to say “NO”. They quote Porter, M., positioning Strategy as being rendered while choices are made, related to desired outcomes for the stakeholders / customers. Companies, like XYZ Corp., may be uncomfortable with selecting the values of some customers as more important than others. However, Kaplan and Norton (2001) also need to understand that minimizing or shelving less desirable innovative outcomes in the Strategy Map process is a required familiarity within the mapping activity.

Competitive Outcomes Knowledge of the desired outcomes of the customer, and the value curve analysis to assist in setting the priority of strategic decisions, are considerations of “Knowing the Stakeholder / Customer Audience” which forms a core component of the Strategy Map framework. Just as important, in many ways, is the same knowledge about the competition and the Competitive Outcome, that XYZ Corp. should attempt to define for “focus” and “alignment”, and to answer the question, does the Strategy Map method develop and confirm competitive actions? Kaplan and Norton (2001) (Chap. 3)40 position strategy as being about a choice when they quote Porter, M., and look at the value propositions providing the differentiators that cause customers to transact with an XYZ Corp. versus and the competition. They define those customers as ones who place the highest importance on a buying decision based on the attributes of the customer value propositions recognized and offered by a company, like XYZ Corp. Referring back to Chan Kim, W. and Mauborgne, R, (1999); “Creating New Marketing Space”41, they present an illustration of the normal business process, focused on matching or beating a rival corporation. The difficulty in following this line of thought is that a differentiation of outcome will likely be overlooked as these organizations share the same values, knowledge, and understanding of the customer desires. They refer to this as a “Competitive Convergence” and compete on incremental versus innovative improvements. Utilizing the analysis of the Customer Identification and the Customer Outcome layers of the Strategy Map framework, XYZ Corp. would look to change the pattern of strategic thinking and alignment, which in turn could create a breakthrough in the value of the Managed Services offerings. In this section of the Strategy Map process, XYZ Corp. could investigate the desired outcomes to allow it to differentiate itself from the competition. With regards to Managed

40 Kaplan, R.S., Norton D.P (2001). The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston, Massachusetts: Harvard Business School Press (Chap.3) 41 Chan Kim, W. and Mauborgne, R. Source: Harvard: Business Review 77.1 (Jan-Feb 1999)


Services in relation to solutions and the value differentiation, Rubinfield, A., and Hemingway C. (2005);42 discuss the meaning of Ideation becoming a critical part of this layer of the Strategy Map. These authors believe that the “Ideation Process” directs the organization to center on differentiation concepts, and provides a framework for a holistic approach to create and execute on key value activities. Building on this idea, in 1996, as Kaplan and Norton43 looked at transforming the Balanced Scorecard into Strategy then Action, the authors viewed the concept of an “Ideation Process” as an advantage in competitive outcomes and success. They carried this notion into the “focus” and “alignment” of the strategic need for Operational Excellence, Leadership and Customer Intimacy (Figure 5), suggesting that innovations incorporated into the aligned layers of the Strategy Map supported both business process improvements internally and long-term business value creation. Kaplan and Norton (2001) (Chap.3)44 also noted that understanding how XYZ Corp could view the value propositions for the identified stakeholders and customers would become critical in their ability to follow Product (Solution) Leadership, Functionality Enablement and Overall Performance Excellence. By linking “focus” and “alignment” within the communications, to follow the three strategic differentiators (Figure 5), Kaplan and Norton had built a methodology that stressed a customer and competitive intimacy, which would facilitate completeness in the Managed Services solutions offered to customers. Furthermore, they recognized the need for another layer of the Strategy Map focused on measures of success, which not only stressed product leadership and customer outcome deliverables, but also looked to identifying the CORE Objectives (Metrics) or measures of success.

Core Objectives Mapping the leading and lagging indicators formulated the Kaplan and Norton (1996 -2001) development of the Core Objective layer within the Strategy Map. This layer provides the measures of the Balanced Scorecard, related to key “cause and effect logic”, which is vital to providing the executive with a method of describing and managing strategy in a visual and connected approach. The executive team must consider the question, can the “cause and effect” metrics models (Figure 4) be developed in support of the identification of the leading and lagging indicators of success?

42 Rubinfield, A., Hemingway C. (2005); Built for Growth: Expanding Your Business Around the Corner or Across the Globe. Upper Saddle River, NJ; Pearson Education, Inc 43 Kaplan, R.S., Norton D.P (1996). The Balanced Scorecard: Translating Strategy into Action. Boston, Massachusetts: Harvard Business School Press (p.5-30) 44 Kaplan, R.S., Norton D.P (2001). The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston, Massachusetts: Harvard Business School Press (Chap.3)


Following a generic project model, could XYZ Corp. look towards the concept of DMAIC or Six Sigma to create the appropriate measures, and understand the effects of leading and lagging indicators?; or, within the Strategy Map framework, as described by Kaplan and Norton (2001) (Chap.3), build on the customer and competitive outcomes to derive measures that are not only generic, but also focused and aligned to the identified customer value proposition. As surmised by Kaplan and Norton, these would best be described and supported by the strategic hypothesis and the desired outcomes developed to date, while at the same time supporting the “most appreciated values” of the selected customers. Selecting the key values of success, and “cause and effect” measures, for XYZ Corp., will depend on the approach taken to define these measures and methodologies. DMAIC (Six-Sigma) as used by many organizations, especially in measuring projects and formalized by GE45, is a tool to build Core Objective measures. Porter, M. (1996) outlines Six-Sigma methods in his article, “What is Strategy?”46, and provides alternative tools that can be directly related to building the Strategy Map Core Objectives. To help highlight these alternative tools, an outline of the DMAIC47 definition, driven from Six-Sigma concepts, can assist the strategy mapping process by utilizing the 5 components below:

• Define – knowing the customer, their critical issue(s) and expectations • Measure – a plan of the collection of data to determine defects and metrics • Analyze – identification of gaps to current performance to prioritize opportunities • Improve – the implementation plan to new approaches and solutions • Control – move forward, not back, with an ongoing monitoring plan

This framework can be directly related to the steps used in building the strategy map as shown below and where “M” (measure) in DMAIC terms relate to the CORE Objectives or “Cause and Effect” metrics as outlined by Kaplan and Norton (2001).

√ Stakeholder Identification = Define √ Customer Outcomes = Define √ Competitive Outcomes = Define and Analyze √ Core Objective = Define (Measure) and Control √ Business Capabilities = Improve

Kaplan and Norton (2001) take their top-down approach to defining the strategy by reviewing the key aspects of the Strategy Map building blocks. Knowing the customers and other desired outcomes, how these link with the collection of data and ongoing monitoring of metrics, to measure the success, is also the focus of a DMAIC approach.

45 From GE's DMAIC Approach, http://www.ge.com/capital/vendor/dmaic.htm 46 What Is Strategy? Porter, Michael E., Harvard Business Review, 00178012, Nov/Dec96, Vol. 74, Issue 47 DMAIC Definition located at http://www.isixsigma.com/dictionary/DMAIC-57.htms


Using the concepts of Porter, M.E. and his hypothesis found in “What is Strategy?”48 support the above link between Kaplan and Norton (2001) and DMAIC:

“… The problem is the failure to distinguish between operational effectiveness and strategy. The quest for productivity, quality, and speed has spawned a remarkable number of management tools and techniques: …. many companies have been frustrated by their inability to translate those gains into sustainable profitability. …. almost imperceptibly, management tools have taken the place of strategy. As managers push to improve on all fronts, they move farther away from viable competitive positions.”

Porter realized that only using tools and techniques for quality, timeliness, cost, and change management, would give successful results, however these tools also left ample room for the organization to loose sight of their vision, the desired customer outcomes, and the competitive positions they were trying to achieve. In attempting to successfully apply XYZ Corp.’s vision and mission to enter into the Managed Services market place, there is a need to consider the Porter, M.E. position on the commonly used tools for measures of success. This position was one that all companies were finding difficult to deliver against all of their activities and solutions, as productively as, the more focused and aligned specialists. Using many models and examples of mapping activity systems, Porter’s “What is Strategy?” article suggests that, trade-offs, and focus on what to measure, are key to the success of an organization’s strategy. He positions the management tools and techniques, used during the past decades, as an approach to create an ideal competitive position. However, he also continues to state that these tools are a non-sustainable advantage, because they look at prior benchmarks and key success factors. He concludes that, to be sustainable, uniqueness is required through clear trade-offs, and that sustainability comes from an overall embracing of the activity system and not the individual parts; in other words including a holistic approach. It could be advocated that, Operational Effectiveness is the ability to “focus” and “align” towards the desired outcomes of the customers and the competitive landscape. If the abilities of XYZ Corp. can be blended to relate key “Cause and Effect” indicators with the linkage of Outcomes and Business Capabilities, they should be able to position and communicate activities for success. Kaplan and Norton (2001) (Chap.3) appear to support this when they look at the strategic themes around increasing customer value and operational excellence related to “customer value propositions”. They view this as the ability of the Strategy Map to portray the correct “cause and effect” relationship between the strategic themes, the financial outcomes, and the business capabilities related to the Customer / Stakeholder desires.

48 What Is Strategy? Porter, Michael E., Harvard Business Review, 00178012, Nov/Dec96, Vol. 74, Issue (p.61)

The "Strategy Map" -- ezvan-APRJ-699-a2 36 Business Capabilities

Learning and Growth initiatives in XYZ Corp must be able to recognize the current business capabilities that exist, and that are critical, for the “focus” and “alignment” of the vision and mission. Kaplan and Norton (1992-2001) use the Learning and Growth component of the Balanced Scorecard to enhance the views on a company like XYZ Corp.’s ability to improve business processes. In analyzing this area of the Strategy Map, XYZ Corp., will need to determine if the listing and linking of current and the required business capabilities can be used as a project portfolio and a priority project list? Kaplan and Norton (2001)49 focus on this segment of the Strategy Map as the foundation, based on the concepts of the Balanced Scorecard Learning and Growth objective, like the roots of a tree. They believe that the capabilities or initiatives both support and drive the strategic outcomes. In support of this concept in “What is Strategy?”; Porter M. E.50 positions the choices made, of which the capabilities to focus on, and the trade-offs considered in not perusing others, by a company, as core to operational effectiveness. The correct combination or creation of a portfolio of Business Capabilities, both existing and desired can be linked to the strategy. Kaplan and Norton (2001) (Chap.3), and Porter M. E. (1996), link the need for an organization to create the ability of defining and implementing core business capabilities or activities that become identifiable. These are the underlying foundations of the “…drivers (or lead indicators) of the desired outcomes (lag indicators).” They both go on to support that the choices in the linkage of this portfolio in the Strategy Map concept. This creates the ability to provide real time adaptability, assessment of the strategic hypothesis, involving everyone in the organization, to gain focus and alignment towards understanding the desired direction. In project management, the guiding framework called the PMBOK51 defines activities related to the portfolio management as a technique to “the centralized management of one or more portfolios … to achieve specific strategic business objectives“. It further goes on to define a portfolio as being a “…collection of projects or programs and other work … to meet strategic business objectives. The projects or programs of the portfolio may not necessarily be independent or directly related.” Unfortunately the PMBOK authors are not one hundred percent clear on the make-up of the portfolio, and the phrase “direct relationship”, can be perceived to allow room for misunderstanding and then subsequently, a lack of focus in the strategic map. However, to include the phrase that “…the portfolio may not necessarily be independent or directly

49 Kaplan, R.S., Norton D.P (2001). The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston, Massachusetts: Harvard Business School Press (Chap.3) 50 What Is Strategy? Porter, Michael E., Harvard Business Review, 00178012, Nov/Dec96, Vol. 74, Issue (p61-78) 51 Project management Institute, Inc.(2004). A guide to the Project Management Body of Knowledge (PMBOK), Third Edition. Newtown Square, PA 19073-3299 USA: Project management Institute, Inc (p.367)


related…”, leaves no doubt, that the PMBOK authors actually do not execute Business Capabilities in a strategically linked framework. Kerzner, H. (2001). “Project Management; A Systems Approach to Planning, Scheduling and Controlling”52 expands upon the risks related to the Project Office (PO or PMO) and portfolio management when he states that “…not every PO has the same responsibilities. …”. If this segment of the Strategy Map is like the roots of a tree and therefore foundational to strategy, performance, and outcomes, then one is lead to believe that there must be a common definition to the Business Capabilities portfolio. It must have a clear and undisputed relationship to the communicated strategy. To take a program or project isolated approach to this foundational element of the strategy would support the lessons learned and reporting requirements. However, it would likely fail the test of the strategic hypothesis, which should involve everyone in the organization gaining a focused and aligned understanding of the desired direction. Thull, J. (2005). In “The Prime Solution”53 looks closely at the value leveraged position of an organization like XYZ Corp. and the source of customer value. Thull, J. (2005) summarizes that at a process, product, or program level, the source of value in a company, is its business capability to realize and execute to improve the customer’s engagement and their internal operations. The author goes on to state that these business capabilities are a foundational elements of a companies strategic objectives “… resulting in the creation of distinct business advantages in their market places. …”

Recommendations The outcome of building a Strategy Map and the related Metrics Map for XYZ Corp. will indicate the strategic elements of success and the overall methodology gaps for a successful value proposition and transformational business experience. Thull, J. (2005) looks at the value impact to an organization, such as XYZ Corp., in creating a focused and aligned direction to take complex solutions and hit the “Sweet Spot” of the market requirements. He states that the “customer centric” or aligned approach for strategy, is evident in knowing your Customer / Stakeholder desired Outcomes and in the selection of the correct Business Capabilities. The recommendation to XYZ Corp. is that the Thull’s comments and summarizations are a step towards achieving “focus”. To achieve the understanding and dissemination of the strategic direction for “alignment”, XYZ Corp. might consider the views of

52 Kerzner, H.(2001). Project Management; A Systems Approach to Planning, Scheduling and Controlling. New York, John Wiley & Sons, Inc.(p.941-943) 53 Thull, J. (2005). The Prime Solution. Chicago, IL 60606. Dearborn Trade Publishing, A Kaplan Professional Company (p.63) (p.66-79)


Labovitz, G. H., Rosansky, V. (1997) in the “The Power of Alignment: How great companies stay centered and accomplish extraordinary things”.54 The authors of the “The Power of Alignment” look at many methodologies and approaches, with insightful observations about the commonly utilized measures of success. Labovitz, G. H., Rosansky, V. (1997) state “…The quality approach, or TQM, is a way to continuously improve business processes. Its major flaw is that, too often, it diverts attention away from customers and important strategic issues. …”. However, they go on to summarize that “…What is needed is a new way of looking at the challenge of growth and profitability—one that brings all important elements of the business into focus. This is the essence of alignment”. To validate the hypothesis set forth by Kaplan and Norton (1992-2001), and as a primary tool to drive “focus” and “alignment” towards business growth initiatives, the development of a Strategy Map based on the analysis to date should be created.

Can Strategy Mapping Managed Services provide the opportunity to achieve “focus” and “alignment” of an emerging business growth initiative?

In building a Strategy Map for Managed Services, by articulating the cause and effect of each major category of the map, and applying the analysis, XYZ Corp. should gain an understanding of the characteristics of each customer / stakeholder group they have deemed strategic. Focused customer outcomes will provide a Business Capabilities link to the overall “Customer Value Proposition”. Further analysis on the opinions of Raynor M.E. (2007) in “The Strategy Paradox”55 reveal the risk of “living the middle ground”, faced by leadership in dealing with uncertainty, and delivering on commitments. Raynor M.E.(2007) states that these uncertainties can result in the delivery of tactical versus strategic approaches that are not necessarily linked to the customer value proposition of the Customer/ Stakeholder community. Value Curve analysis and the choice of what capabilities need to exist to meet desired outcomes, as reviewed by Porter, M.E. (1996), shows that it is fundamental for a company, like XYZ Corp., in developing a strategy, to ensure customer / stakeholder perspectives and value requirements are emphasized in the overall strategy. This reflection, of the customer value proposition, is the bottom-up connection for “alignment” found in the Kaplan and Norton (2001) “Strategy Map” framework. Equally important, for the strategy of XYZ Corp., is the Competitive Objectives, as Porter M. (1996) suggests, the necessity to understand and implement “trade-offs”. Best practice and differentiation can be achieved when trade-offs between CORE Objectives and measures (metrics), such as cost and quality, do not result in wasted efforts due to the lack of “focus”, which is in direct support of the Kaplan and Norton

54 Labovitz, G. H., Rosansky, V. (1997) The Power of Alignment: How great companies stay centered and accomplish extraordinary things. New York, NY; Toronto, ON. Wiley (Chap.2) 55 Raynor, M. E. (2007) The strategy paradox: Why committing to success leads to failure (and what to do about it). New York, NY ; Toronto, ON. Doubleday (p.224-225)


top-down connection. The ability for XYZ Corp. to blend key “cause and effect” indicators, with Customer and Competitive Outcomes, to known and required Business Capabilities, will avoid the chasm in which XYZ Corp. could find itself. Kaplan and Norton (2001) describe the evolution of the “Balanced Scorecard” towards a Strategy Map as a strategic hypothesis that is both explicit and testable in identifying lead and lag indicators of desired outcomes. At the foundation of Managed Services initiatives, XYZ Corp will need to validate the basic hypothesis of cause-and-effect relationships presented by Kaplan and Norton (1996). Alternate and more common process, project and program approaches ultimately could lead to Operational Excellence, and therefore could be an effective and efficient method of expanding the business growth initiative. Business Capabilities form the basis for an interaction with customers and a differentiation from the competition. However, having a large list of current and required needs, not being “focused” by a desired outcome, or presenting competitive advantages, will impact the ability of XYZ Corp. to gain consensus on strategy, and therefore impact alignment across the organization. The recommendation of this document is that the Strategy Map is an effective methodology or framework, based on the hypothesis of Kaplan and Norton (1992-2001) concerning cause-and-effect relationships, especially when combined with the current and essential business capabilities and core objectives of the company. The ability of XYZ Corp.’s executives to utilize this framework of Strategy Mapping to gain “focus” and create “alignment”, within the organization, thereby achieving the desired customer and competitive outcomes, appears to be “True”, and in support of the hypothesis of this document. The five key elements of the Strategy Map framework appear to provide XYZ Corp. with a meaningful approach to communicating and gaining Competitive Differentiation and Operational Excellence.

Figure 7: Proposal for a Managed Service Strategy Map

The "Strategy Map" -- ezvan-APRJ-699-a2 40 References

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Appendix - Tools for the Applied Project Planning Roadmap Figure 8: Schedule and Key Activity Planning

56

56 Produced by: Mindjet® MindManager - Pro® 7 -- The Easiest Way to Organize Ideas and Information Industry-leading Mindjet® MindManager® 6 mapping software

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