CIO:Give me an example of a company that has made good use of the strategy map.

Kaplan: Let's use Mobil [a Balanced Scorecard client] as an example. At the highest level, they have their mission statement: To offer the number-one buying experience for consumers when they purchase petrol. The next level would be the vision: To become the most profitable integrated oil and gas refining marketing company. The specifics when you get in the financial perspective are: We will grow revenue 2 per cent faster than the industry average. Second, we will get an increasing share of our revenue from non-petrol products and services. Now you're getting very specific.

The customer piece is, We will be the number-one station of choice for customers in these three targeted segments who value a great buying experience. And that's already a choice because it says, in effect, We're going to charge higher prices, and we're not going to appeal to the price-sensitive customer because we're going to offer the best buying experience for those segments of the population who value not just the purchase of the petrol but also quick service, quick purchase and a quick payment. Then you get to measures, which pick up on how well you are delivering.

CIO:At what point in this strategy map did Mobil bring in IT?

Kaplan: Part of getting that fast, friendly buying experience at Mobil is that every gasoline pump at a Mobil station has to have technology at the pump - a credit card reader. Then someone got the idea that you could do better than a credit card. You could have a Speedpass embedded in a key chain that the customer waves at the pump. That was using IT for competitive advantage. That differentiated the buying experience.

They have another objective, which is to have the lowest refinery operating costs in the industry. So they have technology related to process improvement, the best monitoring systems in refineries and also feedback for people as they improve their processes to lower the cost. They were actually able to work out how technology will help them implement their strategy.

So it's possible to map IT to your business strategy. Let's say a company is trying to compete by being low cost, like a Wal-Mart or Costco. There the information technology resource should be offering customers easy ways of buying, it should offer the company easy ways of connecting with suppliers to lower their cost of acquisition, and the company should also offer ways for employees to improve processes and strive for Six Sigma process improvements - all of which support a low total-cost strategy. [For a look at how Telstra is implementing Six Sigma process improvements, see "Right Answers to Dumb Questions", CIO November. - Ed]

If you're working for a pharmaceutical company trying to become a product leader by coming up with new treatments and new drugs, then the IT that's most valuable for that would be virtual prototyping. Or if you're an automobile company, it would be simulation crash tests.

Those are three very different strategies, and because of that, the demands on the IT resource are completely different. It gets back to Dave's point about the strategy map. The strategy map enables you to work down from the kinds of value proposition that you're offering your customers to the critical investments in IT and human resources that will best support your ability to position yourself in the marketplace.

CIO:How do you keep the IT and business strategies from developing in isolation from each other?

Norton:You have to redefine the management system so that it ties to the strategy. One part of the management system is the budgeting process. The IT budgeting process should be integrated with the strategy of the business. In our research, we found that only one-third of IT organisations link their own planning and budgeting to the strategy of the business. So you have to change the process.

Kaplan: Ideally we like to have the company formulate its strategy first and then the IT group can determine how it can add value. It doesn't always happen that way. Sometimes the IT group is ahead in using our approach, but then we encourage the IT group to go to the business and ask them what their strategy is.

Norton: This is exactly how it happened at GM of Europe. They started building the strategy map within the IT organisation. The IT organisation became, in effect, like consultants who went out to the business unit managers and built these little strategy maps that defined the priorities of the business unit.