Like most of you, I had a busy end to 2021 and updating this substack got de-prioritized. I will try to have roughly a monthly cadence this year while fitting in the occasional podcast or fireside chat in between. Let’s see. In the meantime, below a passage from One to Ten on strategic planning. Don’t forget the Not to Do List. This brings clarity as to what’s off strategy to everyone and should reduce the noise and churn as the year goes on.
Good luck and Happy New Year!
ALIGN YOUR VECTORS
Do we “play offense” and attack the US or defend our home turf in Europe? What about Asia and Latin America where we have some customers and pipeline? Should we invest in the nascent but growing opportunity in programmatic video? Or do we go horizontal in adtech and add capabilities such as display and mobile ads? Or should we go up the video stack into linear TV?
Videoplaza faced these strategic questions in 2014 with a set of initiatives behind each one. Each strategy on its own made great sense. Put them together with the consequent set of activities, however, and we were spinning. We had AEs chasing leads in Latin America, BD execs negotiating partnerships for program- matic advertising, and product managers scoping out banner ads to add to our platform. Our vectors weren’t aligned.
Founder and CTO of HubSpot, Dharmesh Shah, wrote a mem- orable blog post, “What Elon Musk Taught Me about Growing a Business.”64 He relates how he attended an intimate dinner during which he asked Elon for his advice on growing a business. Elon’s response: “Every person in your company is a vector. Your progress is determined by the sum of all vectors.”
That did not make for a pretty picture at Videoplaza. We needed a strategic framework to define what we were betting on, and a vocabulary that would align the vectors. As importantly, we needed a not-to-do list to make it crystal clear what we were willing to trade off.
So, that’s what we did. We commenced a strategy planning process that served to reinforce our mission and vision and clarify the strategies to pursue these. The strategic plan naturally informed the operating plan and budget for the subsequent year. It worked so well that Ooyala, our eventual acquirer, adopted a version of it for their own use.
You will want to do the same. This may sound complicated, but it need not be. All you’re doing is connecting your mission to the key initiatives to focus on in a given time period. Ultimately, it empowers your staff, enabling them to tie their work to your company’s mission.
A FRAMEWORK FOR STRATEGIC PLANNING
There are many ways to do a strategic plan. Choose a framework that resonates for you and stick with it. Two of the best I’ve seen are Lenny Rachitsky’s and Marc Benioff ’s V2MOM framework used by Salesforce.com. You can also use a consultant to facilitate your planning, who will likely have their own framework.
Regardless of which framework you use, the output should clearly lay out your mission, an objective, and a cohesive set of strategies toward achieving this in a given time period. Create a not-to-do list explicitly articulating what you won’t do. Adapt the following simple strategy and budget planning process to your own needs:
Invite the management team and other key stakeholders, for instance chief architects, product manager, and finance. It’s important that they actively contribute to the work product so as to be invested in the outputs.
Revisit and recommit to the company’s mission and vision. As the founder, you are uniquely positioned to remind people why they’re there, why they’ve come together to do something bigger than themselves. This should be done at every all-hands meeting for that matter.
Agree on the present state comprising a SWOT analysis, market trends, and the competitive landscape. Assigning this to non-management stakeholders will force others to take stock and provide a window as to how they view the business.
Agree on what won’t change in the next ten years.
From Jeff Bezos:
I very frequently get the question: “What’s going to change in the next ten years?” And that is a very interesting question; it’s a very common one. I almost never get the question: “What’s not going to change in the next ten years?” And I submit to you that that second question is actually the more important of the two—because you can build a business strategy around the things that are stable in time. [...] In our retail business, we know that customers want low prices, and I know that’s going to be true ten years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future ten years from now where a customer comes up and says, “Jeff, I love Amazon; I just wish the prices were a little higher,” [or] “I love Amazon; I just wish you’d deliver a little more slowly.” Impossible. [...] When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.
Agree on the future state in two to three years. Sketch out paths to get to the future state. There are various ways to do this, but they all boil down to your product road map, your go-to-market, financing, and talent. Assign homework to people or teams in the form of straw-man proposals, dis- cussion documents, or business plans for each initiative that can then be discussed by the wider group. Use the following exercises to bring each initiative to life:
◦ Write the press release. Ask the team to write a press release imagining success in the endeavor.
◦ Do a premortem. Assume that you’ve failed in the future. Describe the failure and the factors that led to it.
• Determine a measurable objective for the next year that ties to the future state and reflects your mission.
• Define three major initiatives that will achieve this objective. These should be big enough to make or break your year and encompass your product, go-to-market, and geo strategies. For instance, if you are planning to launch a new product to complement your existing business, you may have 1 pillar speaking to each:
Establish product market fit for Product B as defined by:
> $X in bookings
> Y% attach rate from existing customers
Product utilization (engagement/logins) rate of Z per day
Continue responsible growth of Product A as defined by:
> $A in bookings
> B% NDR
> C% gross margins
Model what it will take to execute on these initiatives and how it impacts your financial plan. Iterate based on input from your cross-functional teams and constraints you impose in terms of burn and resources. This is where real trade-offs get made, where horse-trading is done.
Output and pressure test three scenarios with your team and your board. Understand the upside levers and downside risks to each one. Bring these scenarios to your board along with your recommendation.
Assign your functional owners to do functional plans. In fact, they should already have been doing this in parallel, having been involved in the process. For instance, if one of the major initiatives is to increase sales velocity, what are the set of initiatives for the go-to-market team to pursue and what will they need in terms of head count and budget to achieve this outcome?
Your board will weigh in and more iteration may be needed before approval. Tweak the functional plans as needed and cascade communications to the rest of your org.
STRATEGY PLANNING CADENCE
Develop a stage-appropriate cadence to your planning. Too fre- quent and you risk whipsawing the organization. Too seldom and you’ll miss trends in a dynamic market. In general, twice a year or every quarter will be where you land.
Nice read - thanks Rags!