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Q&A with Robert Kaplan And David Norton on Strategy Maps and IT's Link to Corporate Strategy

By Christopher Koch

November 01, 2003 — CIO — Strategy is all talk, no action. Every company is certain it has a rock-solid strategy (see, it’s right there in the company newsletter!). But going from paper to execution is where most companies fail—nine out of 10, to be exact, according to Robert Kaplan and David Norton, who in 1990 developed the Balanced Scorecard concept—a set of measures to track customers, internal processes, learning and growth. Kaplan and Norton started with metrics, but they have been gradually working their way up toward the ethereal realm of strategy. They’ve made the trip slowly and deliberately, using the cultlike group of followers and customers (Kaplan and Norton are happy to help you with your strategy) that has coalesced around the Balanced Scorecard.

There is very little that is new in Kaplan and Norton’s ideas—you hear the competitive advantage themes developed by strategy guru Michael Porter in the ’80s and the value disciplines pushed by Michael Treacy and Fred Wiersema in the ’90s. But the good news about Kaplan and Norton is that they have created a continuum from the lowest-level measures of the Balanced Scorecard to the highest precepts of business strategy. They call this top-to-bottom approach the strategy map and have outlined it in their third book, Strategy Maps, which is due out in February 2004. Executive Editor Christopher Koch sat down with Kaplan, Harvard Business School professor and chairman of the Balanced Scorecard Collaborative (BSC), and Norton, president of BSC, to discuss strategy and its link to IT.


CIO: Some CIO readers are skeptical of strategy. Give me an example of a company whose business strategy wasn’t, "We are going to be number one in our market."
Robert Kaplan: That’s not a strategy; that’s a prayer. [Laughs.] Strategy is really about positioning yourself and differentiating yourself—what is going to make you different from or better than competitors. Just a vague statement about being number one is not a strategy. It’s not saying what’s the strategic value proposition you are offering your customers.


Well, GE is lauded for its strategy, but its strategy boils down to "We will be number one or two in our markets, or we will get out."
David Norton: Being number one or number two in a market is an objective; it’s not a strategy. Strategy is how you intend to do those things. I think that most organizations have strategies. Skeptics say, "We don’t have a strategy," but what they’re really saying is, "I don’t understand the strategy. It hasn’t been communicated to me in a way that I can understand."

 

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