Strategy Mapping and the Learning and Growth Perspective (Essay Sample)

Strategy Mapping and the Learning and Growth Perspective
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Strategy Mapping and the Learning and Growth Perspective
Strategy maps enable companies to describe and communicate their strategies concisely to close the gap between creation of strategy and its successful implementation. Strategy mapping conceptualized by David Norton and Robert Kaplan is a powerful and effective initiative that could help in keeping an organization at its competitive peak (MacKay, 2004). This essay exhaustively discusses the process of strategy mapping and how this process is related to performance management and establishing value propositions. The Glacier Inn case study is used.
The Glacier Inn hotel in Northern Minnesota is made entirely of ice, and its closing and opening dates were largely dictated by nature. The process of strategy mapping involves 6 steps: (i) stating an overriding objective; (ii) choosing the value proposition; (iii) choosing the fiscal strategies; (iv) choosing the customer strategies; (v) executing through the internal perspective strategies; and (vi) planning the learning and growth strategies (Armitage & Scholey, 2006).
First step: state an overriding objective
This first step must make a distinction between what the company really understands as its overriding objective, and the strategies the company is planning to execute. The overriding objective has to be the foremost element of the strategy map and must contain a monetary target as well as a time dimension (National Institute of Standards & Technology [NIST], 2012). For instance, the overriding objective can be to: increase the profit margin from 5 percent to 9 percent and net cash flow from $320,400 to $650,000 in a period of 4 years, or increase return on capital employed by 5% within 2 years. Glacier Inn’s owners have a vision for their business and they acknowledge that their vision can only be realized if there is actually a financial return that is enough to satisfy the initial investors, and a sufficient cash flow that is adequate to support operations and well as loan covenants. Basing on market and investor expectations as well as their anticipated revenue and cost model from operations, Glacier Inn’s owners chose cash flow and profitability as their overriding objective (Armitage & Scholey, 2006).
Second step: select the value proposition
In this second step, the organization’s management chooses the value proposition that would assist the company to win the market. The 3 value propositions present a good framework for competing in the current markets: (i) operational excellence/best total cost; (ii) customer intimacy/customer solutions; and (iii) product leadership. The concept behind the value proposition approach is to select a single overriding value proposition and then offer breakthrough customer value in it (Armitage & Scholey, 2006).
Table 1: Value Propositions that an organization can select
Image drivers
Operational excellence
Customer intimacy
Product leadership
1
Price
Image: best deal
Main focus: very low prices
High end of pricing
High end of pricing
2
Unique attributes
Low end of threshold standards
Meets threshold standards
Image: best service/product
Main focus: very unique attributes
3
Relationship level
Low end of threshold standards
Main focus: very high customer intimacy
Image: best friend
Meets threshold standards

Three images which could make a company stand out are shown in the table above. Knowing one’s value proposition is vital to the creation of the customer, financial, learning and growth, and internal business process perspectives on the strategy map (Murby & Gould, 2005). The owners of Glacier Inn hotel believe that the hotel is designed to draw guests whose main reason for coming is neither comfort not cost. Instead, it is adventure; an exceptional experience in an exceptional hotel. Without a doubt, this is a product leadership value proposition (Armitage & Scholey, 2006).
Third step: select the fiscal strategies
After an organization has determined the value proposition, it then formalizes its strategies and plans around costs and revenues. Fiscal strategies could be classified into 3 main areas: asset use; productivity; and revenue growth. (i) Revenue growth strategies: the selected value proposition would dictate the way a company will grow its revenues. For instance, organizations that pursue operational excellence will seek to grow their revenue by way of reducing prices and increasing turnover and volume (MacKay, 2004). (ii) Productivity strategies: a productivity strategy basically likens to optimizing the variable cost structure of the company. (iii) Asset utilization strategies: this strategy likens to optimizing the fixed cost structure of the company. The specific financial strategies that owners of Glacier Inn chose are revenue growth strategy and productivity strategy (Murby & Gould, 2005). With regard to revenue growth strategy, the Glacier Inn hotel’s owners sought to add more hotel capacity; introduce new sources of non-hotel revenue through new, unique services; and add more unique, in-hotel features in order to increase customer profitability. With regard to productivity strategy, Glacier Inn’s owners sought to increase employee and hotel operating efficiencies; and capitalize on proficiency in ice management and mobilization and conservation (Armitage & Scholey, 2006).
Fourth step: select the customer strategies
Customer strategies are classified into 3 main areas: maintaining and increasing customers; reducing per customer cost; and increasing revenue per customer. The company’s value proposition determines where the organization would focus its effort and activity. For instance, companies that follow operational excellence would utilize competitive prices in retaining and adding customers (Armitage & Scholey, 2006). Glacier Inn’s product leadership value proposition helps to determine where the hotel would focus its efforts. The hotel has to compete for guests through the use of its uniqueness theme. Therefore, Glacier Inn has to follow customer strategies which include exclusive, uncommon, special, matchlessness, and adventure, which are actually the features of a service/product leader. These core strategies at Glacier Inn hotel include different meals, unique design, uncommon experiences, adventure, and back to nature (Armitage & Scholey, 2006). In essence, Glacier Inn’s customer strategies are closely tied to the company’s values proposition. It is an unfailing story of developing vital strategies around the central proposition thereby resulting in revenue growth as well as attainment of the principal objective.
Fifth step: implement through the internal perspective strategies
In this step, the organization has to implement the story which has been developed and disclosed in steps 1, 2, 3, and 4. The internal perspective is basically about selecting and implementing the correct business processes to accomplish the desired financial and customer strategies that the company’s management thinks would result in the attainment of the overriding, principal objective. Therefore, companies need to always select internal business processes which connect directly to the previous steps (MacKay, 2004). Glacier Inn’s value proposition is important in this step. Glacier Inn’s owners have to strongly market the hotel’s theme of uniqueness, and at the same time, they should also constantly develop (i) the unique features which it prides itself on; and (ii) the hiring as well as training programs that it requires for it to excel in this market space. These 2 are the main internal processes and if the hotel does not develop them, it would not succeed in the marketplace (Armitage & Scholey, 2006). If the value proposition is effectual in drawing guests, each effort has to be made to keep Glacier Inn open as long as possible every year. This implies attaining efficienc...