If I were putting together Ikea furniture and had to choose between dealing with the printed instructions or hearing the explanation from Ray Wizbowski, I’d choose the latter. Ray Wizbowski, CMO of Entrust Datacard, is a great explainer with an ability to simplify a complex concept.
This ability allows listeners to understand why something should be done in a certain way, like a sequence of instructions that makes perfect sense.
Ray talked to us about the logical steps taken to develop a strategic plan that addresses both market opportunities and threats to his organization’s business model.
Ray drives the corporate planning process at Entrust Datacard. Through my interview I learned the responsibility for developing the organization’s strategic plan didn’t fall on Ray’s lap. Marketing sits at the core of corporate planning because of Ray’s experience and ability to create the structure needed to address long-term business objectives at the Minneapolis-based company that employs over 2,000 people in 150 countries.
Ray has led marketing planning across a variety of B2B companies and says there’s no single planning structure that can be applied to every company. He says it starts with understanding the scope of the timeline, i.e. how far into the future does each company want to plan for and the goal of the company.
He explained how he’s gone through fast cycles where strategic planning exercises take place every three months. But at more established companies like Entrust Datacard the scope is larger. Here, strategic planning happens annually and looks three to five years into the future.
In my interview I learned how a marketing leader can approach the prospect of leading corporate planning and I’m excited to share that with you.
Tell me about the planning process at Entrust Datacard.
In our organization marketing leads the corporate planning effort. It’s my job to drive the initial stages of the planning process. We answer the question: Where are we going?
We have a fiscal year from April 1 through March 31. Starting on April 1st we have a defined cadence of every 90 days where we build towards that corporate plan.
During the first 90 days we look at talent and how we are resourced. It’s almost a retrospective of what happened last year and looks forward.
We have six lines of businesses that interact, so I look at where we get synergies within our development dollars and our salesforce. We carry things forward from the previous year so we evaluate whether what happened in the past will have the same effect in the future.
Once we get past that my CEO, CFO, and sometimes CIO (because of investments in infrastructure) get involved. Then there are regular touchpoints to ensure there is alignment across the leadership team.
The next 90 days is product planning, which is led by marketing and includes demand generation activities. There’s a product portfolio review. It looks at our products, our verticals, and where we’re going. This informs us of the products and services we’ll need going into the next fiscal year.
After that we dedicate another 90 days to building an operational plan. We take the strategic views, the market sizing, the information that comes from the last 90 days, we decide what we’ll build, buy, and additional information we need to come up with an operational plan (which is also a strategic plan). We present this strategic plan at the end of the year.
The next 90 days is then focused on getting the strategic plan aligned with our budget. The budget kicks off and then we’re in the cycle again.
Where does this process come from? It’s a very deliberate and structured approach.
There are a couple elements to it. My CEO was CFO and VP of Finance at GE. This structured background when it comes to financial planning permeates throughout the organization.
Secondly, the company was bought by a private company in 1987. A German family made a strategic investment and took us private. The cadence they ask of us is “German.” There’s information they want in a certain timeframe. We bring our own discipline and run it like a publicly traded company. So it’s very much a combination of those factors that create our DNA.
How would you export your approach to planning to either another CMO’s brain or to another company?
It’s very much dependent on who is at the company. Everyone has their own nuances. It depends on the people and the leadership you’re with, and what the company is trying to achieve in the long run.
If everyone in the room is focused on short term profits, then you build something very different than if you’re with a company that is building something long term. I’ve worked for a technology company that had a three month cycle for strategic planning. It was always a quick hit, quick change.
Coming to Entrust Datacard that has a long-term view, they are willing to sacrifice short term profitability for long-term stability. I’ve built processes in a number of companies. The first essential part to building structure around planning is participation. You have to get everybody in the room, talk about the objective of the organization. You must truly understand the underlying objectives of the organization. You have to understand the DNA.
Are you building a company, building for exit, building for the long term? What are you trying to do? Once you level-set on that, you can start the framework process to better understand how to reach those objectives.
Are you building a solution and a structure that allows you to quickly respond to customers and drive a gain in business? Or are we taking a portfolio approach and building integrations with multiple parties in the ecosystem?
Once you outline what you want to be and where you want to go, then you can initiate a structured planning process.
I particularly like having a one year calendar [for the planning process], you don’t always have to be planning, but you can say, “At this part of the year I can focus on this part of the plan.” This gives you the opportunity to have the right data inputs along the way. You can identify those data inputs at the beginning of the process rather than midway through. For example, we need input from the finance team to understand how we do YoY, and whether we have trending analysis around revenue.
The next part we can look at is market data, and we pull in market intelligence, asking, “What are the market sizes, what are market growth rates? How are we growing against those growth rates?”
When you need to address what you’re going to do with a product, you can pull in your product team, and ask, “Where are we not growing as fast as we want to? What do we need to do to accelerate growth?”
Then you finish with your finance team, saying, “Here’s the best strategy and the things we need to pay for going forward.”
What are your thoughts around CMOs who aren’t yet driving corporate planning? If they wanted advice on how to pitch the idea of marketing driving the corporate planning process, what would be your advice?
I think it’s pretty simple, don’t be a CMO. I view myself not as a marketing leader, I view myself as a business leader who has the opportunity to guide the marketing portion of the company.
It comes down to knowing and understanding the drivers of your business, understanding the markets that you serve, knowing the customers and knowing how you’re going serve those customers.
If you know those three things and you dig into the details of the drivers of your company: who you’re building your products for and the pressures you face competitively—that can be the market, the budgetary pressures from customers, or from competitors—once you understand those things, you can go to your CEO you can start from the position of, “I understand the pressure that you’re under to deliver a bottom line number to the shareholders.”
And then you say, “In order for us to get there, the company has to be aligned along these principles.”
Start with the data, then say, for example, “Here’s what we know today. I’d like to put in a process that gets all the functional areas aligned around a strategic plan and this process will lead us to an execution plan that will allow us to address these market opportunities.”
To recap, “I understand the business and where we need to go and I’d like to lead a process that will get us to an implementation plan that will allow us to access those market opportunities.”
Besides the bottom line number you’re delivering, like revenue or order numbers, what are other KPIs that planning is driving?
It’s not so much about KPIs. I could give you NPS, customer satisfaction, brand, market share, growth against market rates. There are a lot of things we track that helps us understand the organization’s vitality. When we look at our strategic plan it’s not just about driving towards a revenue number. What we’re driving towards is long-term viability of the organization, i.e. long term growth potential of the organization. So we may sacrifice short-term EBITDA to reinvest into the business.
What we’re always answering, and we have a three-year horizon is, “What’s going to change in the next three years that we can capitalize on?”
We’ll look at what we need to sacrifice in profitability. For example if we have 10 percent in profitability do we need to take 5 percent of that and reinvest it back into the company in order to capitalize on market opportunities?
When looking at strategy it’s not just about driving towards a specific financial number. It’s about building a company that’s a great place to work, it’s about building a plan that gives the company a long term vision and plan of action. It’s about anticipating what might trip the company up in the near future.
For example, is there displacement technology? Is there something that can disrupt the business model? And if so try to invest ahead of that.
It’s one of the reasons we became Entrust Datacard [the Datacard Group become Entrust Datacard after acquiring the company, Entrust, in December 2013]. One of the key markets we serve is banks and we help them issue credit cards. There will be a day where people will use credit cards less. So we invested in a digital security play. It’s understanding the things we see today that will change in the next three years.
How do you structure the information gathering on what’s going to happen in the next three years? And does this feed into the overall planning process?
Yes it feeds into the overall planning process. It’s one of the inputs that comes from our market intelligence team. They are always looking at a three to five year window.
Every couple years we’ll do a bigger strategy exercise. It’s a BCG-like exercise looking at near adjacencies, far adjacencies, and edge. We’re always monitoring the market place, but this bigger strategy exercise is when we really get into it. If we’re dreaming big and want to build the teleporter that’s when we do it.
So it’s understanding the metrics but also understanding what’s around the corner that is an opportunity or what’s potentially damaging to the business. In the areas of the biggest concerns we have a team dedicated to looking at what’s going to happen in the next three to five years.
Is there a foundation for planning success?
There’s one thing. And this is going to sound cliché. But you have to build trust. Trust is really important when you’re going through a planning process. You have to have trust that the other parts of the organization will fulfill their responsibilities.
When you make a plan you can hold other people accountable. But unless you are able to have that connection, that trust, that relationship, it doesn’t matter how good the planning is because it will break down. Someone ends up diverting as a reaction to that lack of trust.
If you can build that relationship within a leadership team then it leads to not only better planning, but better profitability.