As CEO, strategic management is a key piece of your role. This starts with accurately defining the company’s objectives. What are the goals for the entire organization? And are they achievable? Why is this important? Because if you don’t, you will miss your revenue goal. Functions inside the company will not have clear direction, and will not be successful.
SBI recently spoke with Perry Offer, the CEO of the Dialogue Group about his strategic management process. Specifically, how does he develop his corporate strategy and set the direction for the entire organization?
Determining Corporate Objectives
The objectives are clear at Dialogue. “I was formally charged with leading the company towards an exit,” explains Perry. This sets the business strategy for the entire company. They are tasked with identifying areas with growth opportunity. As CEO, Offer must grow the company so that shareholders can exit on favorable terms. In turn, this clear objective allows the functional leaders to understand how their departments can create shareholder wealth.
Determining Product Objectives
The next step Perry takes is thinking about the product strategy. What are the product objectives that must be met in order to support the corporate objectives?
At Dialogue, they start with research. Perry’s team spends sufficient time researching the needs of the decision makers, the buyers and the influencers. Because at the end of the day, new products must meet the needs of the marketplace. “If you don’t spend sufficient time up front understanding the needs of the marketplace, all else is academic and potentially a complete waste,” explains Perry. Additionally, they understand their market share and primary KPIs. This allows them to be completely aligned with the corporate strategy.
Determining Marketing Objectives
How do the company’s objectives translate into targets for the marketing team? At Dialogue, the primary metric they track is number of leads. They’ve recently invested more in marketing. Because of this, they need to be sure the pipeline is in good shape. Are they moving at a rate that will ensure they hit the company’s objective?
Essentially, Perry spends his marketing dollars wisely. And because of this is able to generate more and better leads.
Determine Sales Objectives
Another piece to the puzzle is setting sales quotas. How does the company’s objective break down for the sales team? At Dialogue, they have fairly predictable levels of revenue. This is then turned into a margin quota. Not a revenue quota, but a margin quota for each individual salesperson. It’s based on a combination of subscribers and market maturity. Why margin instead of revenue? Perry offered an old mantra that his organization lives by – “Margin is sanity, revenue is vanity.”
Determining HR’s Objectives
What type of metric does Perry hold HR accountable for? The ultimate people metric for his organization is productivity. In Dialogue’s case this translates to margin per head.
There are other metrics to consider as well. Such as how long does it take new hires to become productive? How many open jobs are there? And how long will it take to fill them? There are a series of metrics that HR can line up to meet the company’s goals.
Part of strategy management is ensuring corporate objectives trickle down throughout the organization. But when setting objectives for a company, the most common obstacle is strategic alignment. How does Perry avoid this? When he goes into any business, he asks three questions:
- What problem do we exist to solve?
- How well are we doing compared to the competition?
- What are 5 things (and only 5) we initially need to focus on to do a far better job addressing this gap?
What does this mean to you? It can be summed it up nicely with 3 words – transformation through simplification. Set clear company-wide objectives and determine a common definition of success.