Harvard Business Review Press
February 2, 2004
More than 75 percent of the average firm’s market value is derived from intangible assets that traditional financial metrics don’t capture. Arguing that firms can’t manage what they can’t measure, Robert S. Kaplan and David P. Norton introduced a revolutionary performance measurement system called the Balanced Scorecard to enable companies to quantify critical intangibles such as people, information, and culture.
Now, more than a decade later, thousands of companies around the world have adopted the Balanced Scorecard not just as a management system, but as a strategic management system – with remarkable results. While 70 to 90 percent of strategic initiatives fail, Balanced Scorecard companies consistently execute their strategies quickly and successfully. How do they do it?
Based on their work with more than 300 organizations spanning over a dozen years, Kaplan and Norton have created a new tool that has turned out to be as important an innovation as the Balanced Scorecard itself: strategy maps. Just as you can’t manage what you can’t measure, say Kaplan and Norton, you can’t measure what you can’t describe.
Using dozens of vivid company examples, Kaplan and Norton show how to create customized strategy maps that allow organizations to:
- Clarify their strategies and communicate them to all employees
- Identify the key internal processes that drive strategic success
- Align investments in people, technology, and organizational capital for the greatest impact
- Explore gaps in the strategies and take early corrective action
Providing the missing link between strategy formulation and implementation, Strategy Maps is a blueprint for describing, measuring, and aligning intangible assets for superior performance.
Robert S. Kaplan is Marvin Bower Professor of Leadership Development at Harvard Business School and Chairman of the Balanced Scorecard Collaborative.
David P. Norton is Co-Founder and President of the Balanced Scorecard Collaborative. Kaplan and Norton are co-authors of The Balanced Scorecard (1996) and The Strategy-Focused Organization (2000), both published by Harvard Business School Press.