Hospitals, integrated delivery systems, and physician groups do their best work when they know where they are going and have a clear path for getting there.

Operational and strategic plans are essential to framing the long-term vision - but plans by themselves are never enough to keep busy executives, board members, and employees focused and engaged. When vital business strategies are written down, jargon and excess verbiage too often cloud the desired endpoint, making it difficult for leaders to keep their organizations focused on the things that really matter. And then there’s the crisis du jour, the predictably unpredictable problem that crops up to create yet another management distraction.

Successful organizations do more than plan; they chart a course that translates their business vision into action. One increasingly popular tool for accomplishing this is the strategy map.

What is a strategy map?

A strategy map is a navigational tool that helps an organization see its strategies and the important linkages between them. It provides a visual representation of a business’s core strategies in the form of an easy-to-use cause-and-effect diagram. (For more detailed information, see Strategy Maps: Converting Intangible Assets into Tangible Outcomes, by Robert S. Kaplan and David P. Norton.)

By displaying core strategies in a simple, one-page strategy map, an organization can help maintain its strategic business path and the critical business processes necessary to be a high-performance organization.

The diagram below shows what a strategy map might look like for a hospital seeking recognition for high-quality care and accessibility. By using the “Balanced Scorecard” format that encompasses the four traditional strategy-mapping perspectives (financial, customer, internal, and learning/growth), the map shows how the organization’s core strategies relate to each other and illustrates the linkages between them.

Why create a strategy map?

Strategy mapping is a necessary first step in Balanced Scorecard development, but it can be a useful tool for any organization that has a strategic plan.

Anyone who has worked on a strategy document knows that a high-quality plan is not only difficult to develop - it’s also difficult to communicate and execute. Strategy execution often suffers because it’s hard to make the plan jump off of the page and become institutionalized in the minds of the key stakeholders.

Strategy failure predictors

Kaplan and Norton found that 90 percent of organizational strategies fail due to one or more of the following four factors.

1. Organizational vision is not clear. In a typical organization, Kaplan and Norton found that only 5 percent of staff understands the strategy.
   
   
2. Performance is not tied to strategic success. Only 25 percent of managers have incentives linked to strategy.
   
   
3. Management focuses on operations, not strategies. Kaplan and Norton found that 85 percent of executive teams spend one hour or less per month on strategy.
   
   
4. Resources and infrastructure do not reinforce strategies. In 60 percent of the organizations studied, there was no link between budgets and strategies.

What are the benefits of strategy maps?

Strategy maps have grown in popularity partly because they provide a critical test of the integrity, sophistication, and relationships of the core strategies contained in an organization’s strategic plan.

• Well-constructed strategy maps make strategies more dynamic. With linkages clearly displayed, strategic plans and scorecards can take on a life of their own. Organizational goals and directions are captured, and a bias for action is created.
  
  
• They create greater focus and alignment. When strategies are arrayed in cause-and-effect relationships, the organization gains insights on whether specific strategies contribute to synergy or detract from overall business objectives.
  
  
• They tell the organization’s story. Must organizations have (or should have) stories to tell and visions to pursue, but text-heavy strategy documents can make it difficult to see how their successful execution will lead to desired outcomes. Strategy mapping is powerful way of communicating a health care organization’s story and improving the probability that execution will be successful.
  
  
• They provide a powerful tool for communicating strategies internally. Having a story to tell and effectively telling it are two different matters. When only 5 percent of staff understands a strategy, a strategy map can vastly improve the odds of successfully driving the message down to the operational level.
  
  
• They propel the organization through unexpected challenges. Even with meticulous planning, the unexpected crisis will always occur. Market dynamics can change overnight due to the actions of competitors, and operational issues are always lurking in the margins. The ability to stay on course, visualize the strategic business path, and make midcourse corrections is enhanced by a clear strategy map that points the organization to its “north star.”
  
  
• They show the unique thumbprint of the organization. Strategy maps are as unique and varied as the organizations that create them. One organization may have strategies that are largely molded by market forces, while another’s strategies might be dictated primarily by internal operational circumstances. Because strategy maps are organization-specific, they capture the unique nuances of markets, utilization, and internal characteristics.
  
  
• They provide a “dashboard” to measure strategic performance. Business dashboards are a popular way of presenting useful data to gauge operational success and providing a foundation for external benchmarking. (For a free copy of Wipfli Guide to Performance Measurment: Benchmarking, e-mail sweise@wipfli.com with your mailing address). However, most dashboards are designed to measure operational performance regardless of the business strategies used; they seldom shed light on strategic performance. Accomplishing the latter requires a more sophisticated tool such as the Balanced Scorecard, which in turn requires a strategy map as the essential first step. Measurements become more significant when they are linked to strategies and the strategies are linked to each other.

How does the strategy mapping process work?

Strategy mapping starts with the creation of a “high-level” map, like the example shown below. The purpose of the high-level map is to capture the core corporate or organizational strategies. This creates a useful tool for visual communication and also serves as a way for senior management and the governing board to confirm whether or not the strategies will lead the organization down a logical and sustainable business path.

The next step for most organizations is a process called “cascading,” which involves translating or “stepping down” the high-level, organization-wide strategy map and scorecard to the business-unit level. Cascading typically entails the creation of a strategy map for specific departments or business service lines that are crucial to organizational strategies.

The example below shows a cascaded strategy map for an outpatient department. In this case, the department has the goal of improving patient service by focusing on strategies that decrease waiting times. The cascaded map allows the department to show how it will support the organization-level strategies by crafting its own strategies with more of an operational focus.

In this example, the cascaded map shows that in order to improve waiting times, the department must focus on process redesign, which entails staff training and new patient care delivery processes. The map paints the visual strategic story for performance improvement. With investment in new processes, the department can achieve faster turnaround times in radiology and lab services, which will result in new operational efficiencies and more timely service. The map also shows that shorter wait times will improve patient volumes, thereby supporting the organizational goal of increased profitability. 

Critical tools for sustaining strategic execution

For health care organizations that are truly committed to high performance, strategy maps can be versatile tools for mapping critical strategic business paths and sustaining strategic execution. Strategy maps also reveal how individual strategies relate to each other, and they serve as critical first steps in the development of an organization-wide performance improvement systems. By applying statistics and benchmark metrics to specific strategies, health care organizations can monitor, measure, and continuously improve their strategic performance.

David Hoffman, Ph.D. is a partner in the Wipfli health care practice. He can be reached at 608.270.2968 or dhoffman@wipfli.com.

Robert Parrish, M.A., CPA is a partner in the Wipfli health care practice. He can be reached at 715.858.6626 or rparrish@wipfli.com.