19th International Conference on Production Research

A SIMPLE TOOL FOR THE DESIGN OF STRATEGIC MAPS

Luis E. Quezada, Felisa M. Cordova, Pedro Palominos,

Katherine Godoy, Jocelyn Ross
Department of Industrial Engineering, University of Santiago, USACH
Avenida Ecuador 3769
Santiago, Chile

Abstract
This paper describes a simple tool for the design of strategic maps, based on the Balanced Scorecard, to
be used in organizations to establish performance indicators. To design the tool a number of companies
who implemented the balanced scorecard were analyzed, with the purpose of obtaining the way their
strategic maps were created. Three types of methods were found. They are different in the way the
strategic objectives are defined. Studying the benefits and drawbacks of the three methods a simple
method was derived. This paper also makes an analysis of the type of indicators that the studied
companies use.
Keywords:
Performance indicators, balanced scorecard, strategic maps.

1 INTRODUCTION
The subject of performance measurement has attracted a
lot of attention in the literature of business strategy. Neely
[1] states that only between 1994 and 1996, around 3615
articles on the subject were published. He argues that
there are four basic questions that research in business
performance seeks to address: (1) What are the
determinants of business performance?, (2) How can
business performance be measured?, (3) How to decide
which performance measures to adopt? and (4) How can
the performance measurement system be managed?.
As cited by Neeley et al. [2] "when you can measure what
you are speaking about, and express it in numbers, you
know something about it....(Lord Kelvin,1824-1907)". They
also state that "Performance measurement is a topic
which is often discussed but rarely defined" They analyse
performance measures in manufacture related to cost,
quality, flexibility and time. However, the purpose of this
literature review is not actually to present specific
measures of performance, but to give some guides to the
process of designing a measurement system. What is
surprising is that for managers it is easy to decide what
should be measured. What is difficult for them is to
reduce the number of measures to a set that is
manageable and useful. It is very easy to decide which
measures of performance to use, but this does not means
that they are the right measures. One relevant aspect for
this project is that these authors emphasise the need to
do more research in the case of small of small and
medium
sized
companies,
where
performance
measurement system are considered as a luxury. A large
number of studies, such as those undertaken by
Blenkinsop and Burns [3], Dummond [4] and Evans [5]
attempt to relate external and internal variables with the
management control system, but they do not study the
generation of performance indices in manufacturing.
In spite of the importance to given to the measurement of
the performance of companies, Melnyck et al. [6] declare
that performance measurement continues being a
challenge both for practitioners and academia.

This proposal combines two areas of knowledge, which

are multicriteria analysis and performance measurement
systems.
A number of approaches have been developed to
measure performance and to improve it [7]. Some of them
are the Strategic Measurement Analysis and Reporting
Technique, developed by Wang Laboratories (Lynch and
Cross) [8] , the Performance Measurement Questionnaire
(PMQ), [9], the Integrated Dynamic Performance
Measurement System [10], [11] and the Balanced
Scorecard developed by Kaplan and Norton [12], [13],
[14], [15], [16]). Among them, the most popular is the
Balanced Scorecard (BSC). During the last decade, the
BSC has been applied in many companies and has been
matter of discussion in the academia. It was created as an
alternative to the traditional way of measuring the value of
companies in terms of their assets and market shares
[15], [16].
The main contribution of the BSC is that it does not use
only financial information as measurement indicators.
Kaplan and Norton propose a management control
system that identifies four perspectives (a) Financial, (b)
Internal Processes, (c ) Clients and (d) innovation and
Learning. This approach helps to identify indicators that
are aligned with the vision, mission and strategies of the
firm. The importance of this alignment has been studied
by other authors such as Millar and Roth [17], Noble ([18]
and Kathuria [19]. The BSC establishes cause-effect
relationships among strategic objectives, even though
they do not state the way to establish and quantify those
relationships. The relationships are represented in what
the authors called Strategic Map, which is the main
subject of this work.
There has been a debate, from those who state that it is
the most innovative strategic tool in the recent years [20]
to those who argue that it is an inflexible tool to face the
changes in the environment and the challenges of the
behaviour of the individuals within an organization [21]. In
their literature review, Gomes et a.l [22] have found that
the BSC appears to be the most cited performance
measurement system and that perhaps this is an
indication of the BSC wide acceptability among scholars
and practitioners. While the BSC is the most cited in the

19th International Conference on Production Research

literature in terms of implementations, it has been

criticized on the ground of over simplicity. Brignall [23]
argues that it merely provides senior managers with a tool
to monitor performance against strategic and operational
objectives [24]. In this context, even Kaplan and Norton
agreed that it is more like as strategic management tool,
rather than a true complete performance management
system. Gomes et al. [22] also point out that perhaps
more focused on the intrinsic characteristic of each
organization, some authors tended to stress the design
and implementation aspects of a performance
measurement system, rather than the general utility of a
given performance measurement system
across
organizations, stress a case by case orientation rather
than an uniform theory driven framework approach.
Finally, Neely [25] in his analysis of the literature also
stresses the dominance of the balanced scorecard.
However, he points out that the research community must
take the research agenda forward in order not to be
trapped by solutions proposed for problems of the past.
The objective of this paper is to describe a simple tool for
building strategic maps. A strategic map is a component
of a balanced scorecard that represents the cause-effect
relationships among strategic objectives. Performance
measurements are defining for each strategic objective.
This work proposes the use of multicriteria analysis,
which has been used as a supporting tool for the
generation of performance indicators. The Analytic
Hierarchy Process (ANP) [26] and the Data Envelopment
Analysis (DEA) are appropriate for judging better a firms
performance [7]. They have been used in the literature for
various purposes. However, their use in performance
measurement has been rather limited. Valiris et al. (2005)
propose the use of the simple multi-attribute rating
technique to select performance measures from a larger
number of then. They argue that it the smart technique is
better than the analytic hierarchy process (AHP) because
of its simplicity. This may be true when selecting
indicators, but not necessarily when developing the
indices. Bititci et al. [27], propose a conceptual model for
establishing relationships in a performance measurement
system. However, their conclusions are based on a very
simple illustration,
which reduces its
possible
generalisation. Perhaps the most relevant work was
carried out by Yurdakul [7]. He proposed a model using
ANP to measure the long term performance of a
manufacturing firm.
2 THE CONCEPT OF STRATEGIC MAP
As shown above, the Balanced Scorecard (BSC) is a
strategic management control system that was proposed
by Kaplan and Norton. In the BSC strategic objectives are
derived from the vision and strategy of the organisation
and then they are classified into the following
perspectives:
- Financial
- Clients
- Internal Processes
- Learning and Growth.
The objectives are then connected according a causeeffect relationship leading to what Kaplan and Norton call
a Strategic Map [28].. Figure 1 shows an example of a
strategic map.

Financial
Clients

Internal Processes

Learning

Figure 1 : Strategic Map

Finally, performance indicators are defined for each
strategic objective, along with all their characteristics,
such as current value and target.
The literature states that the strategic map is derived form
the vision and strategy of the organization. This work
proposes a way of doing it.
The interested reader can be read the book by Kaplan and
Norton [28] to learn more about strategic maps.
3 RESEARCH METHODOLOGY
The research methodology is based on a study of 12
organizations that have implemented a balanced
scorecard according to Kaplan and Nortons methodology.
Managers and consultants in charge of the process were
asked about the way they created the strategic map. They
were also asked about the advantages and drawbacks
they found as well as recommendation they may give.
Taking into account their observations the new tool was
proposed.
The interview also included the performance indicators
that were defined as part of the process. However, the
result of the analysis of this part of the study is not
included in this paper.
4 THE COMPANIES
The companies studied belong to a variety of economic
sectors. They include both manufacturing and service
firms. They have different sizes.
A brief description of the companies is given:
Company A: It manufactures pieces and parts for a
variety of industries.
Company B: It is dedicated to the research and
development in the energy sector.
Company C: It supplies with buses and associated
services to the transportation system.
Company D: It imports and delivers a variety of meat
products.
Company E: It is a copper mining company.
Company F: It is a company in charge of the delivery of
newspapers.
Company G: It is an insurance company.
Company H: It is a company dedicated to the production
of thermal and acoustic isolation.
Company I: It is a consulting company in engineering.
Company J: It manufactures products made of copper.

19th International Conference on Production Research

Company K: It manufactures steel products for piping.

Company L: This is a hospital.

Figure 3 : Method 2

Vision and Mission

5

RESULTS

5.1 The method used

The methods used by the companies were classified into
three types, which are described below.

Strategic Themes

The method 1 carries out a strategic process, including

the definition of a vision and mission, internal and external
analysis from which a SWOT analysis is undertaken. The
strategic objectives are defined from the SWOT analysis.
Figure 2

Strategic Objectives

The method 2 is similar to method 1, but the difference is

that two types of objectives are defined: global objectives
are defined directly from the vision and mission, while
specific objectives are defined from the SWOT analysis.
The method 3 identifies strategic themes from the vision
and mission of the organization which area the basis for
defining the strategic objectives.

Vision and Mission

Internal Analysis

Strategic Map

Figure 4 : Method 3
Table 1 shows the type of method used by each one of
the organisations.

Method 1

Method 2

Method 3

B
C
D
H
J
G

A
K

E
F
I
L

Companies

External Analysis

SWOT Analysis

Table 1 : Classification of companies

5.2 Discussion

Strategic Objectives

Strategic Map

Method 1
This method has the following advantages:

Figure 2 : Method 1

General
objectives

Internal Analysis

Introduction
This section makes an analysis of the advantages and
disadvantages of each of the methods. They were
obtained by asking the managers and consultants the
reason why they used the selected method.

It simplifies the diagnosis for the definition of

strategies by identifying the current position and
the response capacity of the firm.

The SWOT analysis has many benefits. It is easy

to use, it is proposition oriented and it is
integrative.

This method requires the use of information that

make it possible the definition and selection of
strategies.

Vision and Mission

External Analysis

SWOT Analysis

Specific Objectives

Strategic Map

The SWOT analysis can be used both for

generating the strategies and the strategic
objectives in a consistent way.
The main disadvantage is that the SWOT analysis may
not represent the actual strengths, weaknesses,
opportunities and threats, but the managerss concerns
[29]
Method 2
This method has an additional advantage over the method
1. It translates the vision and mission into general
objectives, helping the organisation to identify the
strategic directions within the strategic map. It has the
same disadvantage of method 1.

19th International Conference on Production Research

Method 3
The advantage of this method is that it reinforces the
declaration of vision and mission.
The main disadvantage of this method is that the
declaration of vision and mission establish the general
paths of the organisation, so they may be too vague to
achieve to a strategic map that actually lead to the
achievement of the strategy of the company.
6

THE PROPOSED TOOL

6.1 Introduction
The methods described have similarities that will be
included in the methodology proposed. It is intended to
take the advantage of the positive aspects of every one of
them.
6.2 The methodology
It is composed of the following steps:
1. Definition if Vision and Mission.
In this step the company establishes the organisational
identity (vision) and where it wants to go (mission).
2. Identification of strategic themes.
The strategic themes are derived from the vision and
mission and classified according to the 4 BSC
perspectives.
3. Identification of critical success factors.
It is necessary to identify those factor in which the
company should exceed in every perspective.
4. Definition of general objectives.
They are generated from the relationship between the
strategic themes and the critical success factors. A
method to select the most important objectives is
presented later.
5. Internal and external analysis
A strategic internal analysis and external analysis are
carried out .
6. SWOT by perspective.
From the previous study the strength, weaknesses,
opportunities and threats are identified, which are
classified into the perspectives of finances, clients,
internal processes and learning.
7. Generation of specific objectives.
Specific objectives are identified by each perspective,
which must be consistent with the organisational strategy
and the general objectives derived from the vision and
mission.
8. Generation of strategic map.
The strategic map is generating by establishing the
cause-effect relationship among general and specific
objectives.
9. Generation of performance indicators.
Performance indicators are obtained for each strategic
objective.
The process is depicted in Figure 5

Vision and Mission

Strategic themes

External
and
Internal Analysis

Critical
factors

SWOT Analysis /
Perspective

General
objectives

success

Specific Objectives

Strategic Map

Performance
Indicators

Figure 5: Generation of Strategic Map.

6.3 Selection of strategic objectives
According to the previous tool, once the strategic themes
by perspective are defined, critical success factors are
established in order to select those themes that are more
important. The critical success factors are organized
according to their importance, so that when they are
related to strategic themes it is possible to identify easily
which are the general objectives to be considered. It is
necessary to have a reduced number of strategic themes
to reduce the chance of losing the focus that it is pursued
by the company.
A simple technique to reduce the number of strategic
objectives is the multi-attribute rating technique
(SMART) proposed by Valiris et al. [30] .In this case, the
alternatives are the strategic themes and the criteria are
the critical success factors. Alternatively, the Saatys
Analytic Hierarchical Process (AHP) could be used [31]
SMART can be also used to select performance indicators
as suggested by Valiris et al. [30]
6.4 SWOT / Perspective analysis
It is suggested that once the strengths, opportunities,
weaknesses and threats are identified they should be
related to the four perspectives of the balanced scorecard
in order to obtain a SWOT / Perspective matrix that helps
to define the specific strategic objectives.
The BSC perspectives are represented in the SWOT
analysis with the following symbols:
F: financial
C: clients
P: processes
L. learning and growth

Strengths

19th International Conference on Production Research

Weaknesses

F
C
P

Opportunities

Threats

F
C
P
L

Figure 6 : SWOT / Perspective Classification

This matrix of the Figure 6 is used to classify the the
strengths, opportunities, weaknesses and threats into the
four perspectives of the balanced scorecard.
In the same way the traditional SWOT matrix used to
generate strategies can be divided into the perspectives of
the balanced scorecard, as shown in Figure 7.
Strengths
Opportunities
Threats

Weaknesses

Figure 7 : Modified SWOT matrix

Normally the entries of the SWOT matrix correspond to
the strategies of the organization. In this case, the entries
of the modified SWOT analysis are the strategic
objectives.
7 CONCLUSIONS
The importance of measuring the performance from a
strategic perspective has motivated the need of improving
the process of implementing a balanced scorecard. The
significance of this work is that it proposes a simple tool
that helps to create a strategic map.
The tool was created by studying the process used by 12
companies to implement a balanced scorecard. Three
types of methods were found. The tool was considering
the advantages and disadvantages of the methods.
The tool starts with the ddefinition if the vision and
mission of the organisation. Then it continues with the
identification of strategic themes and the critical success
factors. Finally, general objectives are defined. On the
other hand an Internal and external analysis are carried
out in order to arrive to a SWOT analysis. The strength,
weaknesses, opportunities and threats are identified and
classified into the four perspectives of the balanced
scorecard. Through the use a modified SWOT matrix,
specific objectives are defined. Then, a strategic map is
generating by establishing the cause-effect relationship
among general and specific objectives. Finally,
performance indicators are defined for each objective.
8 ACKNOWLEDGMENTS
This work was supported by the University of Santiago of
Chile (Project DICYT N 060517QLL).
9 REFERENCES
[1] Neeley, A., (1999), The performance measurement
revolution: why now and what next, International

Journal of Operations & Production Management,

1999, 19 (2), 205-228.
[2] Neeley, A., Gregory, M. and Platts, K., (1995),
"Performance measurement design: a literature
review and research agenda", 1995, 15 (4), 80-116.
[3] Blenkinsop, S. and Burns, N., (1992), "Performance
measurement revisited", International Journal of
Operations & Production Management, 1992, 12
(10), 16-25.
[4] Dumond, E. J., Making best use of performance
measures and information", International Journal of
Operations & Production Management, 1994, 14 (9),
16-31.
[5] Evans, R.E., An exploratory study of performance
measurement systems and relationships with
performance results, Journal of Operations
Management, 2004, 22, 219-232.
[6] Melnyck, S.A., Stewart, D.M and Swink, M., (2004),
Metrics and performance measurement in
operations management: dealing with the metrics
maze, Journal of Operations Management, 2004,
22, 209-217.
[7] Yurdakul, M., Measuring long term performance of a
manufacturing firm using the analytic network
process (ANP) approach, International Journal of
Production Research, 003, 41(11), 2501-2529.
[8] Lynch, R. L. and Cross, K. F., 1991, Measure Up
The Essential Guide to Measuring Business
Performance, Mandarin: London.
[9] Dixon, J., Nanni, A. and Vollmann, T., 1990, The New
Performance Challenge, Business One Irwin, Burr
Ridge, IL.
[10] Bititci, U.S., Carrie, A.S. and McDevitt, L. (1997),
Integrated performance measurement systems: a
development guide, International Journal of
Operations & Production Management, 1997, 17 (5),
522-34.
[11] Ghalayini, A.M., Noble, J.S. and Crowe, T.J. (1997),
An integrated dynamic performance measurement
system
for
improving
manufacturing
competitiveness, International Journal of Production
Economics, 1997, 48 (3), 207-25.
[12] Kaplan, R.S. and Norton, D.P., The Balanced
Scorecard - measures that drive performance,
Harvard Business Review, Jan.-Feb 1992, 71-79.
[13] Kaplan, R.S. and Norton, D.P., 1996; The balanced
scorecard, Harvard Business School Press, Boston,
MA, USA.
[14] Kaplan, R. y Norton, D. Linking the Balanced
Scorecard to strategy. California Management
Review., 1996, 39 (1).
[15] Kaplan, R. y Norton, D. Transforming the Balanced
Scorecard from performance measurement to
strategic management: Part I. American Accounting
Association, 2001, 15. N 1.
[16] Kaplan, R. y Norton, D., Transforming the Balanced
Scorecard from performance measurement to
strategic management: Part II. American Accounting
Association, 2001, 15. N 2.
[17] Miller, J.G.and Roth, A.V, "A taxonomy of
manufacturing strategies", Management Science,
1994, 40 (3), 285-304.
[18] Noble, M.A., (1995), Manufacturing strategy: testing
the cumulative model in a multiple country context,
Decision Sciences, 1995, 6 (5), 693-721.

19th International Conference on Production Research

[19] Kathuria, R., Competitive priorities and managerial

performance: a taxonomy of small manufacturers.
Journal of Operations Management, 2000, 18 (6),
627-641.
[20] Calabro, Lori, CFO: On Balance. Interview with
Kaplan and Norton.. February 2001, pp. 73.
[21] Arap, Jess, 1999, Uses and abuses of the Balance
Scorecard in Strategic Management, Strategos,
Vision Consulting.
[22] Gomes, C. F., Yasin, M. M. and Lisboa, J.V., (2004),
Literature review of manufacturing performance
measures and measurement in an organizational
context: a framework and direction for future
research, Journal of Technology Management,
2004, 15 (6), 511-530.
[23] Brignall, S. Performance measurement systems as
change agents: a case for further research,
Warwick Business School Research Papers, No. 72,
1991, December.
[24] Sinclair, D. and Zairi, M. (1995a), Effective process
management through performance measurement.
Part I: applications of total quality-based
performance measurement, Business Process Reengineering & Management Journal, 1995, 1(1), 7588.
[25] Neely, A. (2005), The evolution of performance
measurement research: developments in the last
decade and a research agenda for the next,
International Journal on of Operations & Production
Management, 2006, 25 (12), 1264-1277.
[26] Saaty, T.L., 2001, Decision making with dependence
and feedback: the Analytic Network Process, 2nd
Edition. RWS Publications, Pittsburgh, PA.
[27] Bititci, U.S., Suwingjo, P. and Carrie, A.S., Strategy
management through quantitative modelling of
performance measurement systems, International
Journal on Production Economics, 2001, 69, 15-22.
[28] Kaplan and Norton, 2004, Strategic Maps, Harvard
Business School Press.
[29] Stevenson, H., Defining Corporate Strengths and
Weaknesses,
in
Readings
in
Strategic
Management, Edited by David Asch and Cliff
Bowman, Mac Millan, 1995, 162-176.
[30] Valiris, George; Chytas, Panagiotis y Glykas,
Michael, Making decisions using the balanced
scorecard and the simple multi-attribute rating
technique. Performance Measurement and Metrics,
2005, 6 (3), 159 171.
[31] Saaty, T.L., 1994,
"Fundamentals of Decision
Making and Priority Theory with the Analytical
Hierarchy Process", RWS Publications, Pittsburgh,
PA.