Corporate Strategy Planning Simplified

What is Corporate Strategy and how do we deconstruct it?  Corporate Strategy can be simplified into two drivers:  Top-line and Bottom-line.  Top line is your gross revenue, and bottom line is what it costs you to obtain that gross revenue. Think about these as numerator and denominator drivers.  Together they make a formula that looks something like:

Yield(Investment)  x Market Opportunity x Accessibility
Cost of (Development x Support x Sales & Marketing x Admin)

So, the basic idea, for a software company, is that if you have frequent software enhancements and new products that match a ripe market opportunity, and you let your customers know about it, then you can collect a lot of top-line revenue.  The trick is to do this while spending the least amount on the bottom line. What's interesting about this process is that bottom-line cost is somewhat predictable and standardized.  Meaning, it costs your company probably the same amount of money to hire a development manager and to get a building to put people in as it does the company across the street. 

In order to shave expenses from the bottom line, you need to understand every competitive advantage your competitors have and newer industry trends in technology and implement them yourself as much as possible. The numerator factors are really what's unique about your products or services that set you apart from the competition. The more relevant these are to the existing market appetite, and the more your customers know about them, the faster your top-line will grow.

Now, wasn't that simple?

Mike J Berry

Why should Development care about Corporate Strategy?

We code, right!? We code, and play Warcraft. Why should we know or care about corporate strategy? Well, the answer is that most programmers probably don't really know what their organization's corporate strategy is. If you do, you likely have an outstanding manager who has learned that part of their responsibility as a manager is to communicate executive directives back to Development. A company that performs good 'Strategy Management' will do two things:

  1. They will broadcast their corporate strategy to all employees so that everyone can be on the same page.
  2. They will establish measurable metrics throughout the organization to determine how close everyone's efforts are to the decided strategy.

When this happens, an effective plan is for the Development department to adopt their own 'Department Strategy' that supports the Corporate Strategy. Then look for ways to measure how effective they are at pursuing that strategy.

For example, if your team has to report total hours for the week, reporting could be enhanced to include how many hours each programmer spends on each project. Then each project can be placed into separate 'strategy categories.' Then, time can be measured for each project worked on during the week, and a summary comparison can be presented to upper management showing that the Development department is 'following corporate strategic goals' by spending a proportional amount of time on projects that are aligned with various corporate strategies. If you are a manager and do this before you are asked to, you may even earn yourself a few stripes. Kapish?

Mike J Berry