Business planning always involves an element of both science and instinct. You set a vision and core business goals and then plan how you will achieve those objectives, through clearly defined initiatives and determining which areas must have investment. Do you have the right people in the right places who are able to execute in line with the company’s strategic plan? There will be an element of scenario planning to ensure that the level of upside and downside risk and impact is fully modeled. Business plans, however, are normally based on market predictions – broader economic conditions as well as likely demand for your product or service based on previous years. For those business leaders now turning their attention to the plan for 2021 and beyond, the ‘playbook’ looks empty. How do you plan when the ongoing COVID-19 pandemic and potential knock-on effect has created a brand new economic, social and political environment?
Regardless of the changing context, you must have a clear vision for the business. What are you trying to do and why? A simple vision is the ‘north star’ and should be understood by every member of the team. The plan to deliver that vision can stay relatively agile, particularly in these unique circumstances. A clear vision is the backbone to your business which will allow you to easily sense check all your decisions. Will investing in this product or hiring this person allow us to move closer to realizing that vision or not?
Over the last decade, fast-growth technology businesses and their venture investors have been less concerned with cash flow and profit and more interested in the rate of business growth. This pandemic has certainly brought about a rebalancing and I think we are unlikely to see ‘growth at any cost’ in software businesses again. But you cannot batten down the hatches and wait for the storm to pass.
Investment in research and development will still be critical – you have to protect and maximize the future value of the business. Stalling this progress now will mean you have a less relevant product in years to come. Instead, the investment in innovation and product development will need to be matched forensically to customer needs and the value derived to the customer, to ensure minimal shelfware and higher rates of ROI – which will be fundamental in the delivery of a strong ongoing cash runway.
This forensic analysis and deep understanding of what our ideal customer profile looks like, what we are “doing” and “why”, should also be rolled out across the business when you are planning in an unstable environment (and ideally a stable one). Challenge your pipeline. When you win new customers why do they choose you? Who do you displace in the market? What is the real value you bring to them? When you lose customers, why is that? In times of pressure, good leadership teams become laser-focused. Limited resources and/or market uncertainty means there is little room for error and gathering the right data from across the business to make better decisions should be a priority.
With a cash flow preservation mandate, some business leaders might think that withdrawing investment in the team makes sense. They couldn’t be more wrong. The next few years will be uncertain and will require a resilient, energized team. Working from home alone for extended periods of time and ongoing anxieties around managing their lives within the restrictions, means as business leaders we need to invest more, not less, in our teams.
Staff need to feel informed, recognized, energized and continue to learn and develop in their roles to feel a sense of progression. Guard your business culture like the treasure it is – great cultures can survive challenging times and there are mountains of research to suggest engaged teams positively impact the bottom line.
As you get out the whiteboard to start business planning for 2021, I suggest you start with vision and follow with people – a simple, shared sense of purpose driving the entire team towards a common goal will be key.
Katy Wigdahl, Speechmatics
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