If you take the words of a former General Electrics (GE) employee to define strategy, William E. Rothschild said, “What do you want to achieve or avoid? The answers to this question are objectives. How will you go about achieving your desired results? The answer to this you can call strategy.”
This statement not only highlights the need for strategy but also the need to bring strategy to fruition. Companies should not only devise strategy but also successfully clarify and execute their strategies. This means that a company has to be able to measure its strategic success.
Unfortunately, company strategy is not always transparent or understood in the same way by a company’s key players. Sun Tzu, a Chinese military strategist who wrote the military treatise The Art of War, praised this aspect for strategies in war as follows: “All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved”.
The Strategy Map created by Kaplan and Norton is to facilitate corporate strategy development and execution providing a missing link between strategy formulation and strategy implementation by identifying the key internal processes that drive strategic success and by aligning investment in people, technology and organizational capital for the greatest impact.
The first part of the assignment describes in detail the theoretical framework of Strategy Maps. The second part uses the theory to describe and visualize the Strategy Map of General Electric Medical Systems (GEMS) – the world’s leading manufacturer of diagnostic imaging equipment. This practical approach is based on the publication of Tarun Khanna about GEMS in the Harvard Business School Press in February 2003. In conclusion, there is a brief up-to-date situation on GEMS after 2002 and some statements to the authors’ experience in creating the GEMS Strategy Map.
Table of Contents
1 Introduction
2 Strategy Maps – Theoretical Framework
2.1 The Idea Behind Strategy Maps
2.2 Principles of Strategy Maps
2.3 Creating a Strategy Map
2.3.1 Financial Perspective
2.3.2 Customer Perspective
2.3.3 Internal Process Perspective
2.3.4 Learning and Growth Perspective
3 Strategy Map for General Electric Medical Systems (GEMS), 2002
3.1 Background – The GEMS Business Concept
3.2 The Situation – Market Developments
3.3 Current Strategy Map
3.3.1 Financial Perspective
3.3.2 Customer Perspective
3.3.3 Internal Process Perspective
3.3.4 Learning & Growth Perspective
4 Conclusion
Research Objectives and Themes
The primary objective of this assignment is to explore the theoretical framework of Strategy Maps as a tool for bridging the gap between strategy formulation and execution, and to apply this model to the specific case of General Electric Medical Systems (GEMS) in 2002.
- Principles of the Balanced Scorecard and Strategy Maps
- Cause-and-effect relationships in corporate strategy
- Market developments in the global healthcare industry
- Strategic application within GEMS business modalities
- Alignment of intangible assets (human, information, and organization capital)
Excerpt from the Book
2.1 The Idea Behind Strategy Maps
According to Kaplan and Norton “an organization’s strategy describes how it intends to create value for its shareholders, customers and citizens”. To create sustained value, organizations must leverage their tangible physical and financial assets (e.g. machinery, buildings, bank balance) and their intangible assets (e.g. people, information, culture). More than 75 % of the average organization’s market value is derived from intangible assets that traditional financial metrics do not capture. Therefore, improvements in intangible assets affect financial outcomes not direct, but through cause-and-effect relationships. These relationships define the chain of logic by which intangible assets will be transformed to tangible value.
In 1992, Robert S. Kaplan and David P. Norton introduced the concept of the Balanced Scorecard, based on the principle “You can’t manage what you can’t measure”. The Balanced Scorecard (BSC) is a performance measurement system that enables companies to quantify critical intangible assets. The BSC groups four general categories (perspectives):
Financial perspective: describes the tangible outcomes of the strategy in traditional financial terms (e. g. revenue growth, profitability)
Customer perspective: defines the value proposition for targeted customers
Internal process perspective: defines the processes that will transform intangible assets into customer and financial outcomes
Learning & growth perspective: defines the intangible assets that must be aligned and integrated to create the value.
Summary of Chapters
1 Introduction: This chapter defines the necessity of strategy and introduces the Strategy Map as a vital tool to align strategic objectives with operational execution.
2 Strategy Maps – Theoretical Framework: This chapter details the foundational principles of strategy mapping, explaining the cause-and-effect relationships across the four core perspectives of the Balanced Scorecard.
3 Strategy Map for General Electric Medical Systems (GEMS), 2002: This chapter provides a detailed case study of GEMS, analyzing its business concept, market environment, and the specific application of the strategy map model to its operations.
4 Conclusion: This chapter summarizes the effectiveness of strategy maps as a communication and management tool and provides an outlook on the successful evolution of GEMS into GE Healthcare.
Keywords
Strategy Map, Balanced Scorecard, General Electric Medical Systems, GEMS, Strategy Execution, Intangible Assets, Cause-and-Effect, Corporate Strategy, Financial Perspective, Customer Perspective, Internal Process, Learning and Growth, Healthcare Industry, Value Creation, Performance Measurement
Frequently Asked Questions
What is the core focus of this research paper?
The paper examines how Strategy Maps serve as a critical instrument for organizations to define, communicate, and implement their corporate strategies effectively.
What are the primary thematic areas covered?
The research covers the theoretical pillars of the Balanced Scorecard, the mechanics of building a strategy map, and a practical application within the global medical technology sector.
What is the central research question?
The work investigates how the "missing link" between strategy formulation and strategy implementation can be bridged by visualizing strategic objectives and aligning intangible organizational assets.
Which scientific methodology is applied?
The assignment employs a descriptive case study approach, utilizing secondary research from management literature and business case analysis to evaluate the GEMS strategy in 2002.
What does the main body of the work address?
The main body is divided into a theoretical section explaining the Strategy Map framework and an empirical section applying these concepts to the operational realities of General Electric Medical Systems.
Which keywords define the work?
Key terms include Strategy Map, Balanced Scorecard, GEMS, Strategy Execution, Intangible Assets, and Value Creation.
How did GEMS leverage the "Global Product Company" concept?
GEMS concentrated manufacturing in designated Centers of Excellence (COE) in low-cost countries, ensuring products met GE standards while remaining cost-effective for the global market.
Why are cause-and-effect relationships essential in a strategy map?
These relationships are essential because they visualize how intangible assets, such as employee knowledge or training, eventually lead to tangible financial outcomes through improved processes and customer satisfaction.
- Citar trabajo
- Nadine Pahl (Autor), 2008, The Strategy Map for General Electric Medical Systems, 2002, Múnich, GRIN Verlag, https://www.grin.com/document/124548
