Understanding cause-and-effect logic is essential to building a strategy that works as a system, not a collection of isolated objectives.
A clear cause-and-effect structure links strategic goals and clarifies how objectives depend on each other.
Understanding Cause-And-Effect in Strategic Planning
Cause-and-effect logic plays a critical role in transforming strategy from a set of goals into a structured system. A well-designed strategy doesn’t just define what should be achieved — it also explains how different objectives influence each other.
A cause-and-effect structure helps organizations move from isolated objectives to a strategic system with clear logical connections.
Cause-and-effect thinking can be found in several established methodologies such as the Balanced Scorecard, OKR, Results-Based Management, Hoshin-Kanri, Play-to-Win framework, Bowtie risk assessment methodology, and scenario planning. You can find an overview of these approaches in the ecosystem of strategic planning frameworks.
How Balanced Scorecard Captures Cause-And-Effect
In the Balanced Scorecard, this idea of causality is implemented, in my view, in one of the best and most logical ways. The methodology makes cause-and-effect visible at multiple levels.
How causality is structured in the Balanced Scorecard:
- Indicator Level: Focuses on how leading and lagging metrics are connected across objectives. Lagging metrics from one objective can become leading metrics for another.
- Perspective Level: Explains how driver perspectives (Learning and Growth, Internal Processes) influence outcome perspectives (Customer, Financial), making causality explicit at a higher level.
- Linking Scorecards Across Levels: Shows how outputs of one scorecard serve as inputs for another.
Examples of cause-and-effect in practice:
- Indicator Level Example: In an online marketing goal, the marketing budget acts as a leading indicator, while the number of qualified leads is a lagging indicator. Those leads then become an input for the increased revenue goal, showing how one objective supports another.
- Perspective Level Example: Investing in IT infrastructure and closing capability gaps within the driver perspectives indirectly contributes to improving customer experience in the outcome perspective.
- Linking Scorecards Example: A Global Sales scorecard depends on the results of local sales office scorecards in Madrid, Dubai, and Mexico, demonstrating how local performance drives global strategic outcomes.
The Balanced Scorecard formalizes cause-and-effect relationships, making them traceable and measurable.
An example of cause-and-effect: a goal from the Learning Perspective contributes as a leading indicator to a goal in the Internal Perspective.
Beyond Causality: Contextual Relationships
Not all strategic connections are strictly causal. In some cases, relationships reflect context rather than a direct cause-and-effect chain. For example, external driving forces can shape strategy, but strategy also influences how an organization perceives and responds to those forces. Because of this mutual influence, the relationship is not one-way but dynamic.
Respectively, we cannot talk about a strict cause-and-effect logic in such cases but rather about a contextual connection, where one item relates to another without a clear directional dependency.
The Cause-And-Effect Logic in These Frameworks
Cause-and-effect logic is not exclusive to the Balanced Scorecard. Other frameworks rely on structured relationships between actions and outcomes:
- Results-Based Management: Describes a flow from immediate results to long-term outcomes, showing how each stage leads to the next.
- OKR: Links Key Results to Objectives, creating a structured relationship between levels of the strategy.
- Hoshin-Kanri: Aligns long-term objectives with operational objectives, supported by clear action plans and performance metrics.
- Play-to-Win Framework: Shows how integrated choices (the cause-and-effect logic is implied) create competitive advantages and outcomes.
- Bowtie Risk Assessment: Maps the relationship between causes and consequences and is often used in risk analysis.
- Scenario Planning: Explores causal relationships between external drivers and potential future outcomes to inform strategic decisions.
Visualizing Cause-And-Effect
Traditional tools like spreadsheets make it difficult to reflect cause-and-effect logic in a structured way. Modern strategy automation tools now make these connections clearer. For example, BSC Designer can be used to:
- Visualize relationships between objectives on a strategy map.
- Show how one scorecard contributes to another on a global map.
- Link initiatives to indicate whether they contribute to and depend on others, showing how specific activities support strategic objectives.
These visualizations reveal how elements of the strategy interact, supporting more coherent planning and execution.
Conclusion
When you clearly define how one objective leads to another, align indicators accordingly, and visualize dependencies, you turn strategy into a structured, executable system that drives long-term success.
For your next strategy implementation, consider cause-and-effect both at the level of objectives and across scorecards.
Alexis Savkin is a Senior Strategy Consultant and the CEO of BSC Designer, a Strategy Architecture & Execution Platform. He has more than 20 years of experience in the field, with a background in applied mathematics and information technology. Alexis is the author of the “Strategy Implementation System”. He has published over 100 articles on strategy and performance measurement, regularly speaks at industry events, and his work is frequently cited in academic research.