Revenue Goals are Not Company Strategies

Rich Mironov
6 min readDec 5, 2023
random pile of Euro notes

We’re in the Silly Season: companies of all sizes are doing annual planning — intending to lock down 12 months of iron-clad commitments, non-negotiable delivery dates, major organizational changes, and accurate predictions of revenue. In my experience, this is mostly ineffective if it’s done only once a year — especially if focused on money we need to make, rather than how we’re going to make it.

I’m not against planning. But next year’s revenue is an outcome of the many things that we do as a company, and that each department does in support of those company-wide things. (For fun, let’s call those things strategies.)

Here’s a (slightly anonymized) example lifted from a CPO coaching session last week:

Over the next two years, we need to:
* Hit €40M+ in annual revenue, which is 35%+ YOY growth
* With margin >55%
* With a business and products that are easy to understand and explain
* With crystal-clear differentiation, making us best-in-our-business
* Needing less than €15M incremental investment

That’s a goal, but not a strategy. We could conceivably do this by raising prices; opening new geographic markets; expanding the current product line; building and launching a new e-commerce business alongside our enterprise CRM business; getting the ticket concession for Taylor Swift’s next tour; or inventing cold fusion to save the planet.

Pure revenue may be helpful for the Sales organization, since they probably need to hire 35% more account teams each year. And possibly helpful to Finance, responding to investors’ demands for a hypothetical 2-year cash flow forecast. But it’s of zero help to Product, Engineering, Marketing, or other organizations that need to make choices about the few critical things we’ll do next year. (And the 9000 things we won’t do.) Once-a-year planning lives at the intersection of “we can accurately predict the future in spite of all evidence” and “we’re an agile organization, so we can adapt to daily changes in our market even though we committed a detailed plan to the Board.”

And this is usually wrapped around an organizational ownership fistfight about who “owns” company-level strategy. (See omphaloskepsis)

Often the various departments are deadlocked, waiting for each other to make tough decisions. “Once Sales tells us which segments they will target, Marketing can design the right campaigns.” “Once product/engineering give us hard dates tied to exact feature definitions and use cases and Ideal Customer Profiles, Sales can form the right account-based selling teams.” “Once Finance tells us how many developers we can hire next year, Engineering can assign teams to possible roadmap items.”

I’m constantly talking with product leaders who have to build a next-year product plan without anything to hang it on. Effectively, “build whatever you think will make us enough money to hit quota.”

What To Do?

This might be a mix of poor C-level process (confusion about what a strategy is), unjustified optimism (“it can’t be that hard to add AI and create market excitement”), blame-shifting (“Product said we’d sell €10M this year, so it’s their fault we missed”) and other dysfunctions.

But someone has to push things forward. That might be the CPO/Head of Product, who has the smallest staff but often excellent understanding of the end-to-end business.

Let’s assume the product/engineering/design leadership has done a bunch of homework in preparation for annual planning: picking a few not-entirely-unreasonable product scenarios and with some very rough count-the-digits guessimates at outcomes. (See Business Cases Are Stories About Money) And that we’re willing to step forward, knowing that none of these scenarios is perfect or complete — political consequences be damned. The Head of Product might kick off the C-suite discussion this way:

The Set-Up

“Product doesn’t own company strategy, and the CEO/whole exec team makes decisions. So please jump in with corrections and alternatives and suggestions, but here’s how I see the situation:

  • Our current product set brought in €22M this year and is growing at 10% YOY. So that’s about €26–28M in two years, at least €12M short of goal. To keep our current product line competitive and continue to grow revenue at the current rate, we need to keep almost all of our current R&D staff on core products. There aren’t any idle teams waiting for new initiatives or huge efficiencies to be found. (rephrase and repeat 5x: there’s no excess capacity in Engineering. No magic bullets. No cheap way to build great products dramatically faster.)
  • There are a couple of aging products that we could end-of-life, sacrificing €1M revenue next year but freeing up a team for something more valuable. That requires an unwavering commitment from the entire exec team and sales organization that we won’t ever sell even one more license of those, otherwise that team stays on maintenance forever…
  • We’ve pulled together three rough product ideas with order-of-magnitude revenue guesses. None of these are perfect, but might be a good way to generate some cross-functional thinking. How about if I sketch those out, and let everyone throw some tomatoes?

[pause. If another executive claims company strategy as their bailiwick, we gracefully back off and let them drive.]

Some Scenarios

  • First, there’s been lots of conversation about opening up the North American market in addition to our core European market. Our wild revenue guess suggests €1–3M in the first year, maybe €3–5M the next year. That fills about half the likely revenue hole. Product/Engineering has some work to do — revised regulatory reports, new date formats, US/Canadian hosting, language toggles — but most of the effort is probably in Sales & Marketing. New campaigns, more competitors, sales teams in key cities, expanded support hours, American-style PR, North American banking relationships, etc. So that needs company-wide planning and staffing and commitments and budgets.
    First-pass guess is that if we immediately end-of-life X and Y, we could re-assign most of that team to the NorthAM technical requirements. Otherwise, add €1M+ to next year’s R&D budget.
  • Second, lots of recent conversations about AI-supercharging our reporting engine to auto-generate insights for customers. This would make a big marketing splash, but IMO will be very expensive and carries high technical risk. The press makes it sound easy… but we don’t have any AI scientists or data engineers who’ve built these before. Or clean training data or LLM tools. So this means spinning up a whole new team of very rare/expensive technical folks — who the FAANG/MAMAA companies are offering 6-to-7-figure packages for.
    Thumbnail estimate is that it would take a full year to hire the team and get a working prototype to market. So €2M+ cost next year with no revenue, but break-even or better a year later. It would excite our Board, though, and give Sales/Marketing something to say when asked. Takeaway: a
    strategic bet that doesn’t fill the near-term revenue hole.
  • Last… we could build an SMB-ready product alongside our current enterprise offering. Industry analysis think that could double our potential market. But it means rebuilding almost everything we do. Product/engineering/design would need to create a self-serve product and zero-touch onboarding so we could add thousands of small customers without any handholding.
    Marketing might need a separate group for SMB lead gen/drip campaigns, events, social media, etc. Sales would have to take a hands-off approach for SMB, since we can’t afford to make
    any sales calls for €2k/year licenses. Support would need automation, self-service, how-to videos. We’d take credit cards rather than purchase orders. Renewals would have to be fully automated.
    The measure of success is
    revenue velocity — how fast we can add another hundred paying customers — instead of individual deal size. So my SWAG is €3–5M increased costs next year, but break-even by end of Year Two and a hockey stick in Year Three.

Or whatever. Notice that we’re talking mostly about wild guesses about future revenue and company-wide implications. The technical stuff hangs off the broader business concepts. We shouldn’t put 20 person-months into detailed architectural planning for things we are unlikely to build. Or sign up for new products without our teams thinking through the implications.

And it isn’t so important that the company picks any of our three. We’ve demonstrated essential company-level strategic thinking; offered a few concrete examples; and framed the problem in OR terms rather than AND terms (i.e. have to make tough choices). Great if someone else around the executive table has better or smarter ideas with a similar amount of thinking/detail. A good corporate strategy, wherever it comes from, is necessary for a good product strategy.

Sound Byte

Purely financial goals leave much of the company adrift. Corporate and product strategies have to both exist, align, and support from every department.

Plans are worthless, but planning is everything. — Dwight Eisenhower

Originally published at on December 5, 2023.



Rich Mironov

Tech start-up veteran, smokejumper CPO/product management VP, writer, coach for product leaders, analogy wrangler, product camp founder.