In my last post "Is Strategy black and white?", I talked about Vision, Objectives and Numbers as the key ingredients for a portfolio strategy planning exercise. I visualize the vision and numbers as the two farthest ends of the strategy plan. Remember the exhilarating bond movie sequence I equated strategy planning to in my previous post, this post is all about the plot that goes in to the planning.
Assumptions - What makes you think you will be able to make that money?
Assumptions and Risks are two faces of the same coin and so I am bringing them together. Strategy to me is looking at the business problem using multiple lenses and if the assumptions are not stated and the risks are not mitigated, the entire discussion can go south and put the company on the path where it would be hard to retract back. Each function builds their view on the financial projections based on certain assumptions about the business or the trends in the market. There are several dependencies, constraints involved. These assumptions could be related to revenue, cost, state of the industry and competition. Most of the time assumptions don't get called out and instead people spend their time arguing over the numbers instead of debating the assumptions. Everyone believes that their assumptions are universal truth but clearly that is not the case. They should be advised to empty their pockets and put those assumptions on the table. Each function should challenge these assumptions and vigorously debate it. Now you have truly used the wisdom of crowds to test the validity of the assumptions and only the ones that are still in the trawl can be used to rework the numbers.
Assumptions and Risks are two faces of the same coin and so I am bringing them together. Strategy to me is looking at the business problem using multiple lenses and if the assumptions are not stated and the risks are not mitigated, the entire discussion can go south and put the company on the path where it would be hard to retract back. Each function builds their view on the financial projections based on certain assumptions about the business or the trends in the market. There are several dependencies, constraints involved. These assumptions could be related to revenue, cost, state of the industry and competition. Most of the time assumptions don't get called out and instead people spend their time arguing over the numbers instead of debating the assumptions. Everyone believes that their assumptions are universal truth but clearly that is not the case. They should be advised to empty their pockets and put those assumptions on the table. Each function should challenge these assumptions and vigorously debate it. Now you have truly used the wisdom of crowds to test the validity of the assumptions and only the ones that are still in the trawl can be used to rework the numbers.
Risks - What will keep you up at night?
The crystal ball of each function shows the glimpses of the challenges that lies ahead. There is always something that will keep them up at night. These risks could be related to internal operations, state of the industry and competition. Some of them are bold enough to confront it and plan it ahead of time with a mitigation strategy while some of them try to hide it in their closet. Perceiving risks as tactical problems is a big mistake because the impact may be broader than you may think and equally so a mitigation plan may require support of other function. Interestingly enough there are multiple ways to handle risks, for instance what seemed like a product problem can be handled by fine tuning the messaging. By calling them out, now you can agree on a mitigation strategy that is well-thought and optimized. So always call out the risks, offload that burden, agree on a plan and try to get that sleep.
The crystal ball of each function shows the glimpses of the challenges that lies ahead. There is always something that will keep them up at night. These risks could be related to internal operations, state of the industry and competition. Some of them are bold enough to confront it and plan it ahead of time with a mitigation strategy while some of them try to hide it in their closet. Perceiving risks as tactical problems is a big mistake because the impact may be broader than you may think and equally so a mitigation plan may require support of other function. Interestingly enough there are multiple ways to handle risks, for instance what seemed like a product problem can be handled by fine tuning the messaging. By calling them out, now you can agree on a mitigation strategy that is well-thought and optimized. So always call out the risks, offload that burden, agree on a plan and try to get that sleep.
Actions - How will you make it happen?
Congratulations! You are almost there. By now, you have a realistic assessment of the numbers that is aligned with the vision for the portfolio. All the assumptions and risks have been vetted and you feel great about not leaving any stone unturned. This is the "how" part where you are going to tell everyone how are you going to make it happen? How are you going to defend those numbers, support those assumptions and mitigate those risks? These should include actions at the product level listing the new planned capabilities and the channel enabling activities. You can organize the data in the form of a matrix for existing products and new products. Also the key thing is to tie in the action with the value it is going to bring to your customers and the market. You can read more about the actions in my next post "3 questions on building an action plan for your teams".
Congratulations! You are almost there. By now, you have a realistic assessment of the numbers that is aligned with the vision for the portfolio. All the assumptions and risks have been vetted and you feel great about not leaving any stone unturned. This is the "how" part where you are going to tell everyone how are you going to make it happen? How are you going to defend those numbers, support those assumptions and mitigate those risks? These should include actions at the product level listing the new planned capabilities and the channel enabling activities. You can organize the data in the form of a matrix for existing products and new products. Also the key thing is to tie in the action with the value it is going to bring to your customers and the market. You can read more about the actions in my next post "3 questions on building an action plan for your teams".
Assumptions, Risks and Actions are the underlying principles that constitute the makeup of the numbers. This is probably the most challenging sometimes even intimidating and painful part of the process. But once it is done, all the functions have the clarity to remain aligned and remain consistent on their actions going forward.