5 Tips For Better Annual Planning Results

Each year, I find myself in the middle of several strategic planning efforts, amazed at the frequency of common mistakes and inadvertent behaviors that lead to sub-optimal growth plans.?This is a shame because your year is at a disadvantage before it even begins when you have a shaky plan.?Here are five snafus that I see often, and how to avoid them. I'd love to hear yours.

1) EXPECTATIONS ARE POORLY -OR NOT- COMMUNICATED UPFRONT

Common mistake:?Senior leadership feigns empowerment and allows direct reports to get started on the strategic planning.?While well-intended, senior leadership typically has a few specific goals in mind: revenue growth, EBIT, EPS, share, etc.…?And instead of starting with it, they wait until after they received initial plans to share their in-going expectations.?

Why this is bad:?While you want to empower your leaders to create and own their plans (that's what you're paying them for), you also don't want them wasting valuable time (because you're paying them a lot).?Furthermore, nobody likes to play guessing games or be surprised. I'm pretty sure every executive has drafted a plan to share with their senior leaders that quote one set of numbers, only told that they need to be higher.?Strat planning should not be an exercise of internal negotiations.?It creates an us-versus-them mindset before the year even starts.

How to avoid:?Senior leadership should communicate their initial goals for the upcoming cycle.?This might not become the final set of goals, but it allows for an early debate around the goals and gets the entire leadership team to own the goal versus being assigned it.?In addition, it reduces wasted time when it comes to creating plans.?

2) ?GOALS AND OBJECTIVES ARE DIFFERENT THINGS

Common mistake:?Goals are commonly associated with measurable outcomes.?10% revenue growth is a goal.?A 10-point increase in share is a goal.?Objectives are the actions you take to obtain a goal.?Reducing customer attrition is an objective.?Improving win rates is an objective. Establish new business in Latin America is an objective.

Why this is bad:?Every business has financial goals.?Revenue, EBIT, EPS, etc.?That shouldn't be new news to anyone, so putting a specific number to common financial goals isn't adding much guidance. It's like giving a halftime pep talk that consists of just, "let's go win the game!" Strat planning should provide clarity and direction and how to unlock those finances.?

How to avoid:?Objectives are easier to determine than most think.?You essentially grow a business in three ways:?Getting more customers (or reducing lost ones), getting existing customers to buy more frequently, or getting customers to buy more per transaction.?That is not worded precisely right for every industry, but it’ll directionally work for most. If you are to win new customers, where are they coming from??New to category??New geography/market??Share stealing??Then go another level down, and repeat.?Warning: It's not about doing it all.?Prioritize.?

3) WORK SESSIONS ARE PART OF -NOT THE ENTIRE- STRAT PLANNING PROCESS

Common mistake:?Leadership takes a day or two to do an offsite, focused on workshopping the business needs, aligning on goals, and determining next steps and investments.? And that's it. Two days of effort to impact 365 days of output.

Why this is bad:?The workshops and/or offsites aren't bad in and of themselves. It's when it is viewed as the entire planning process is when it gets into trouble.?This is because a leadership team can burn a lot of time just aligning on the issues and setting the goals.?You can often burn one or two days just getting clarity on goals and never get around to planning.?

How to avoid:?Use work sessions as a centerpiece, use time in advance to get alignment and clarity on topics before the session, and earmark time after the work session to regroup and review the plans themselves.??

4) RECOGNIZE AND EMBRACE DIVERSITY

Common mistake: Your leadership team should now recognize that the more diverse your group is, the better it performs.?Or, at the bare minimum, you have felt pressure to improve your organization's diversity, stemming from a variety of social justice efforts in the world today.?Recognizing it is the easy part.?Embracing and using it requires another level of effort.

Why this is bad:?Having a diverse team - ethnicity, race, gender, expertise, style, personality, etc.- is important. It's no good if the loudest and/or most senior voice always prevails in conversation.?While most businesses are not democracies, it still doesn't do an organization any good if you hire and promote diversity without listening to them and/or empowering them.

How to avoid: ?There are countless resources to help here, from DEI-focused consultancies to online learning modules, to personality tests such as Myers Briggs and DISC.?Regardless of the approach or tools, take a good portion of time to recognize, understand, and embrace the individual styles of your leadership team.?It will help with listening, debate, and pushing ideas forward.?

5) ADAPT AGILE STRAT PLANNING

Common mistake:?People need to hear the phrase "new normal" like they need a hole in their head, but the truth is that 2020 helped get organizations thinking beyond once-a-year strat planning and take on a more nimble mindset.?It doesn't mean you should change your annual goals each month, but it does mean that you don't have to lock into an annual plan and run blindly towards it for twelve months.???

Why this is bad:?Too many companies have leaders that lock into their plan, and within five months know it's not working as well as it should, but keep at it, "Because it's in the strat plan and their bonus is tied to it." If a leader knows there's a better way, allow her/him to make an adjustment and reward them for making the right decision for the business versus their annual fixed bonus metrics.?

How to avoid:?Move strat planning from an annual cycle to a quarterly or monthly one.?It doesn't need to be as intense, and it should be more than updates and processes towards the annual target.?It should be shaped around; What's working? What's not??What should we do more of??What should we do less of??What should we change???It also helps alleviate the pressure of intense annual planning cycles.?

These are my top five. What are yours?....