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Corporate Strategy
What does Corporate Strategy have to do with Software Development?
From our
Corporate Strategy BLOG...
We code, right!? We code, and play Warcraft. Why should we know or
care about corporate strategy?
Most programmers probably don’t 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:
-
They will broadcast their corporate strategy to all employees so that everyone
can be on the same page.
-
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 accumulated 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 the majority of time on projects that are aligned
with Corporate Strategy.
Corporate Strategy 101
From our
Corporate Strategy BLOG...
What is Corporate Strategy and how do we deconstruct it? Corporate
Strategy can be broken down into two drivers: The Top-line and the
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 x 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
calculated 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 funds off 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 novel about your products or
services that set you apart from the competition. The more relevant
these are to the market appetite, and the more your customers know about
them, the faster your top-line will grow.
Successful companies understand this equation and base
strategic initiatives around maximizing these factors. Clear
corporate strategy is a necessary foundation for Software Project
Portfolio Management.
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Corporate Strategy Planning Simplified (10/30/2007)
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 [...]
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We code, right!? We code, and play Warcraft. Why should we know or care about corporate strategy?
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