Corporate Strategy Planning Simplified

Posted by mikeberry | Agile Executives,Strategy & Portfolio Management | Tuesday 30 October 2007 2:50 pm

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
www.RedRockResearch.com

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