Annual Budgeting Process Impacts Go to Market Strategy

The annual budget will have have tremendous impact on the go to market strategy as it should anticipate and fund the resources required to be successful in the coming year.

All too often the annual planning and corresponding annual budgeting process sneaks up at the last moment. And then the sprint begins for the organization to prepare operational plans that will either facilitate or resist delivering value for a year. Here’s some advice on how to resist the temptation to:

  • Plan on doing the same thing or less next year
  • Add 10% to last year’s plan and call it a day
  • Wait for your numbers and direction to be handed down from above

It’s important to remember that the definition of insanity is to do the same thing and expecting different results.  With this in mind, start from a vision, set objectives and then develop the strategy, structure and staff to be successful.

Go to Market Strategy: SMART Objectives

In order to be effective, strategy must be developed in the context of objectives, and those objectives need to be SMART.  Specifically,

  • Go-to-Market Strategy - SMART ObjectivesSpecific: exactly, what will be done?
  • Measurable: what will the specific impact be (in quantifiable terms)?
  • Attainable: why would a team member want to be assigned to this objective and how do they succeed?
  • Realistic or Relevant: what business goals will the budget impact and how do those goals cascade down within a specific business area?
  • Time bound: within what timeframe will an impact on the objectives be achieved?

The center of attention for strategy is the outcome – i.e. not a bunch of tasks that show how busy someone is each day. It is important to see exactly how the needle was moved and how that directly correlates to positively impacting the business.  Often it is best to begin with a mind map of the objective and explore various options for how to achieve the desired outcome.  Next, create a prioritized list of constraints, contingencies or parameters that provide boundaries for execution.  In order to determine the most effective strategy, evaluate each option from the mind map to understand the pros and cons, cost, impact, timing and whatever criteria are relevant for a particular situation.

Go to Market Strategy: Organizational Structure

Go-to-Market Strategy - Organizational StructureA good rule of thumb is that the organization structure needs to be modified or overhauled once a year and the annual plan is probably a good driving point.  Why?  Unless the business conditions, competitive landscape and financial requirements for the business remain exactly the same as the year before (and I would still argue there is a need for change in this environment), then there is a need to redefine and realign to a new set of corporate objectives and the annual budget is a good driving force.  Once objectives are in line, then the strategy (to document how objectives will be achieved) can be addressed.  From here, it is necessary to think about an organization structure that makes business sense in the context of the business objectives and the strategies to be pursued.  In the most effective organizations, there are clear lines of authority, ownership, empowerment and resources for flawless execution.

One exercise that can serve as a strategy litmus test is to draw the proposed organization chart and pose three to five workflows that will be required to fulfill objectives.  If there are not clear lines to efficiently and effectively accomplish tasks to produce the desired outcomes, then the organization structure is most likely not optimized.  One red-flag is when an executive has a “go to” person to “figure it out” the organization and make things happen.  Another quick and dirty test is to assemble one’s entire organization and ask which groups or people would be involved to accomplish a task.  If the responses are not quick, crisp and unanimous, then there is probably some organizational disharmony.

Technology or product, domain expertise, operations, geography, etc. all need to be considered when determining an organizational structure.  At the end of the day, the goal is to create an organization that understands the day to day needs of the business, is aligned with the strategic vision and has an uncanny ability to execute. It is in this way that the organization can execute and adapt swiftly.

Go to Market Strategy: Staffing

In short, there are really only two questions that need to be addressed when determining whether an employee or candidate fits into the organization structure: 1) is the person competent and 2) is there chemistry.  It’s relatively easy to get along during growth times but there will be challenging times as well.  It is during these times that tensions will run high and conflict will result —hopefully healthy conflict.  Ideally, a strong relationship will allow issues or conflict to remain business-oriented, tension to be overcome and the relationship to remain healthy.

Of course, there will always be legacy issues, politics, paybacks and ineffective recruiting to muddy the waters and create fundamental issues that retard an organization’s ability to execute.  Time has to be invested in creating compelling position descriptions (not cut and pastes from Indeed or CraigsList), and the interview process must be objective, quantitative and modular. This means no redundant questions where each interviewer asks, “Tell me about yourself.” Behavioral questions about skillset and personal characteristics that are relevant for success in the organization need to be formulated and asked. In addition, on-boarding and a professional development plan should be created and executed to provide an employee the opportunity to replenish their skillset each quarter. Finally, a proactive retention program should be in place to keep employees whole.

Go-to-Market Strategy - Organizational Structure - Weakest LinkIt’s true that staffing is where many big companies often fall down and set themselves up for failure. For example, some compensation structures focus on span of control, size of budget, etc. so there is a tendency for managers not to “lose” anything as it might impact title, base pay, bonus or equity.  Today, a replacement headcount is not guaranteed so there is some reluctance to move out even the bottom performers for fear that headcount will be lost.  Or, to hire an available body today because you can get them and not lose the req ,with the idea of top-grading down the road.

Another situation that often arises is that certain employees may have been contributors at one point in time and may be seen by a manager as having “paid their dues.” The problem is that in some circles this entitles the individual to “employment for life”, regardless of their contribution to the organization.  Or, a business issue may have developed where an employee had to take an undesirable position or a position in a remote location, and now the employee needs to be “paid back” by being placed in a position not well-suited to their background.

Part of the problem in recruiting is that it is extremely difficult to find the right person at the right time, in the right geography, at the right point in their life with the right compensation package and with good chemistry between the employee and the manager.  The only hiring method that is almost guaranteed is to hire familiar former employees with great track records — but there can be repercussions with this tactic too.

A fresh approach is to start each year with a clean sheet of paper and develop a workforce plan to support the annual budgeting process.  The key is to create a high-level position description for each role: what are the primary deliverables, skill-sets and personal characteristics required to be successful in each role.  Next, look at each employee to determine if there is a fit or not.   A rule of thumb is that 16% will no longer fit, 16% may be up and comers and will need roles a little broader and or deeper than their current skillset, and two thirds will have a skillset that the organization requires.  Within those two-thirds, half of the people will be well-versed in blocking and tackling and the other half will need to be in roles that require some new learning.

For those employees that do not try to R&D themselves out of a job each year (it’s not sufficient to do things faster, better and cheaper — employees need to automate, delegate and innovate) and do not append and refresh their skillsets, there may not be a role for them in the new organization and they need to be moved out, not placed off to the side or given roles that they are not qualified to fulfil so that the tough discussion does not have to happen..

Go to Market Strategy: Final Thoughts

In short, spend some time thinking about what is going right, what is going wrong, what is missing and how to jump to the next plateau rather than riding along the existing path.  Start without constraints, barriers and the “this is the way it has always been done” mindset in order to create an annual plan and corresponding operating budget to be successful.  Innovate.  The definition of insanity is to do the same thing and expect different results.  Break bad habits, think differently.  If you went left, what about going right next year?  If you tried going over, what about going under?  The ground work for the year is being laid in the annual plan and corresponding annual budget, so don’t start the year behind the eight-ball.  Set yourself and your organization up to make a difference.


  1. How to Nail the Annual Planning Process : Four Quadrant - August 22, 2013

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