Activity Map

What is it?

An activity map is a diagnostic tool to identify your organisations competitive advantage. It connects your organisation’s value proposition to the activities of your organisation that enable you to deliver this value proposition better than any competitors.

When is it useful?

Drawing the activity map is not easy. However, once you have a good one, it is a very insightful strategic tool. Use you activity map to:

  • Make incremental decisions about whether a new idea or opportunity fits the strategy. If the new opportunity does not undermine any other aspect of the activity
  • Communicate how every function and policy contributes to the organisation strategy; you can also use it to cascade KPIs down the organisation, linking with your Balanced Score Card
  • Identify mis-fits. What do you do that undermines any part of your activity map?
  • Make decisions about the boundary of the organisation. It is a strategic risk to outsource anything on your activity map since this is the core of your competitive advantage. Anything not on this map is context and can be outsourced and managed for cost effectiveness. (Geoff Moore’s Core and Context)
  • To make organisation decisions for new ventures or acquisitions. If the activity maps of the businesses are very different, combing them in the same organisation will create trade-offs, and they are better off separate, even if this increases the cost base.

An Example?

Activity Map

Southwest Airlines has a very robust strategy – one of the reasons it has been the most consistently profitable airline in the US.

It’s activity map shows great fit – everything that it does is tailored to delivering its low cost, convenience, on-time, friendly but limited customer service.

The interlinkages indicate that it is very hard for competitors to copy their strategy – a competitor would have to match them on multiple different areas at the same time.

How do you do the analysis?

1.Brainstorm a long list of unique/special aspects of your company. Include many different types of things assets, resources, policies, culture and processes. Starting with the brainstorm will help you avoid missing things.
2.Then start with the most important differentiated benefit from the Value Proposition
3.Then ask yourself “How do we deliver this?”. Draw the cause and effect tree through several layers of cause and effect
4.Do the same for each differentiated benefit from the Value Proposition. Note common causes
5.Combine the cause and effect trees to one map, linked by the common causes
6.Iterate – use Post-Its or a white board, shuffle to make links clearer. Best to do this as a team exercise, bringing in people from diverse parts of the company.
7.Sense check :
a.From your brainstorm – is there anything important missing from your map?
b.Can you explain the business logic behind every cause and effect relationship?
c. Does it fit with your intuition?

I want to know more

An explanation of Activity Maps and several more examples are given in Michael Porter’s classic article “What is Strategy?”