Strategic Planning: Where Should It Be Centered?
By Tom von Gunden
As an organization grows, so does its need to consider making strategic planning a more intentional and formalized activity. The fundamental reason for doing so is simply to corral all the organization’s thinking about its varied and expanding avenues to mission or market success.
Making strategic planning more intentional and formalized typically involves assigning a department or function primary responsibility, if not ultimate accountability, for any planning processes or plan deliverables. The impulse to do so usually reflects a growing sense that views into the business would be more complete under centralized planning.
But where should primary ownership for strategic planning reside? Each of the common functional candidates – Sales, Marketing, Product, or Strategy – present differing kinds of feasibility and attractiveness.
Here’s how I think about it
Sales
Why It Might Make Sense
In many small to mid-sized organizations – particularly those in which the founding entrepreneur(s) still set the go-to-market strategies – planning remains sales territory planning. Because the number of key strategies is small and the strategic direction clear, planning is primarily about budgeting and execution around the known universe of offerings and/or market segments. The involvement of other departments – Marketing and Services, most notably – is usually downstream from Sales strategy-setting and, therefore, mostly tactical in orientation. In continued scenarios such as those – limited range of offerings, limited range of markets – it may be feasible to continue having planning be sales planning, at least for the time being.
Why It Might Not
After years (or decades) of success, organizations often reach a market saturation or mission realization point with their current offerings. In that moment comes the need for accelerated identification of new growth avenues and additional value differentiation. Along with that imperative comes a shift in focus for planning from territory or segment execution to higher level strategy road mapping. At that point, the players involved in helping to map the growing number of go-to-market strategies necessarily must expand so that no potentially viable pathway remains unexplored. To reduce the chances for that kind of omission to occur, a broad-based set of departmental perspectives is required. Given the short-term nature of incentives and focus areas for Sales, it starts to make less sense for the primary oversight role for planning to reside there.
Marketing
Why It Might Make Sense
The considerations for having strategic planning housed within Marketing are simple: If Marketing sees itself as strategic and other departments agree, then it is a candidate for overseeing strategic planning. If not, then not. Key indicators that Marketing is a strategy-determining function include the following:
It plays a substantial, if not the leading, role in business case development for new markets and growth avenues
It is the primary source of market and competitive research, insight, and recommendations for pursuit
It regularly positions and promotes the company’s strategies with external evaluators – particularly industry analyst firms and media outlets
Related: It is the primary “thought leadership” voice not simply because it is externally facing (along with Sales and Services) but because it played a heavy role in shaping the strategies
Why It Might Not
If, on the other hand, Marketing is seen as and/or sees itself as being primarily tactical or operational – i.e., downstream from strategic decisions made by others – then it is much less feasible as the home for strategic planning. One key sign of this is if the primary measures of Marketing’s effectiveness are tactical metrics around demand generation activities.
Product Development / Product Management
Why It Might Make Sense
In some organizations, the product development function devotes considerable time and resources to vetting the need for the offerings it builds, enhances, and delivers. There may even be resources within the department or function devoted to conducting product-side research into markets, competitors, or the customer base. In fact, if the organization is highly dependent upon or reactive to customer feedback, then having strategic planning reside on the product side is worth considering. This is especially true for traditional manufacturing companies, as well as for providers of software and related hardware technologies. It also makes sense if the organization has a formal Product Management function, which it charges not only with overseeing and mapping product development but also with external research and business case development.
Why It Might Not
Even in product-centric organizations, including technology companies, the product development arm may remain strongly directed by Sales and heavily influenced by short- or near-term opportunities and revenue goals, rather than by longer term growth innovation. In those scenarios, product development is more akin to a factory shop floor than an architectural design center. Because of its positioning downstream from much of the decision-making around market pursuits, the product side is less well-positioned to be the primary residence for strategic planning.
Strategy
Why It Might Make Sense
Granted, not all organizations have evolved or will evolve to the point at which standing up a Strategy function is necessary, feasible, or affordable. In those scenarios, considering Strategy as a departmental overseer for strategic planning is literally off the table, at least for the time being. However, if an organization has a formally established Strategy function or department, then it makes sense to consider it as the home for strategic planning. A centralized Strategy function offers enhanced opportunities to corral, monitor, guide and drive the entirety of the go-to-market landscape for the organization. A centralized Strategy function’s higher level vantage point makes it particularly well-positioned to tee up “pivot versus persevere” and “trade-off” decisions for the board and executive team. It also offers enhanced opportunities for tracking performance against plan across all market pursuits, again from its unique oversight position.
Why It Might Not
Given that the function is named Strategy (or something similar), it seems an easy decision to give it the primary role in all activities related to strategy, including planning. However, this choice is dependent on the extent to which the organization defines strategic planning as field-level planning around market-specific strategies versus corporate-level planning around the broader landscape of strategies (e.g., cross-industry, cross-product, cross-team). If well-coordinated, a division of accountability and activity for planning could be established, with Strategy taking on only the corporate-level component. In such a division, corporate level planning overseen and guided by the Strategy function would primarily focus on informing and influencing the executive suite. Meanwhile, field-level planning could remain where it occurred before the establishment of a Strategy function – that is, back in one or more of the other departmental candidates, Sales, Marketing, or Product. In that scenario, the primary focuses for field-level planning would be budget alignment, resource allocation, and plan execution management. I do not typically recommend such a division, but it can be workable and effective – again, if well-coordinated between the two levels, corporate and field.
Finally, there are other key departments/functions that, while not ideal candidates for the primary role in strategic planning oversight, should be embedded into the collaborative fabric of planning. At the corporate level, most notable is Finance (or Financial Planning). At the field level, most notable is Professional Services. The former is critical for alignment of strategic planning with the longer-term financial goals of the organization. The latter for alignment with customer-facing execution on plan, as well as for input into the ground-level feasibility of certain strategic pursuits.