It’s Back – The Annual Planning Ritual!

If you look at the calendar, there are now less than 12 work weeks until the beginning of 2015.  If your business is similar to those that I’ve worked for, we’re now in the Annual Business Planning Cycle, where the business performance so far this year is evaluated and projected, in order to peer into the future to identify objectives and potential changes that may be required, not only for 2015, but also several years out.

In my former lives, I’ve participated in, and led, this annual ritual in different roles, from Staff Accountant to President and CEO.  However, the prescribed process and schedule was always the same;  Review and evaluate the results so far this year, consider and set objectives for the next three years, and define the changes that may be required to achieve those objectives.  Once this is done, update the current Strategic Plan, and develop the Operating Plan to match Year 1 of the “new” Strategic Plan.   In many instances, however, this process doesn’t include an objective, critical review, or discussion of the Vision for the business in the future, and how it will be achieved.  Generally, it’s just a rehash of last year’s plan, updated for new conditions and goals, with a new Year 3, and placed on the shelf until next year.

Over the years of using this process, I noticed that most businesses very rarely, if ever, get to Years 2 and 3 of the Strategic Plan.  Most of the management effort, and reviews, focus on next year (Year 1), and then on Year 3, assuming if the right things are done in Years 1 and 2, Year 3 will be the culmination of all of those efforts, and won’t it be great when we get there!  However, Year 3 never comes – it’s always pushed out another year.

This year, I’ll challenge you to develop a clear Vision, and prepare Strategic and Operating Plans that will actually be used to manage, control, and guide the direction and decision making of the business over the next three years, with the ultimate goal of achieving Year 3, with only minor adjustments.  Yes, I know it’s three years out, and conditions change.  However, if you’ve done this properly, and have the right Vision and Plans, shouldn’t you be able to get there?

I recommend the following three step process for effective, and useful planning:

1. Define the Vision  

What will the business achieve, and look like in the future, say three years out?  This step is the most critical part of the process, providing clarity about the objectives for the future, and the framework for the rest of the planning process.  The Vision should be clear, written, and communicated to all stakeholders, before proceeding further, to ensure that the entire organization understands the objectives for the future.

If the business doesn’t currently have a Vision, it should take the time to develop one as the first step.  Size doesn’t matter, every business should have a Vision of its future.  If there is already a Vision in place, is it still relevant, or should it be revised and updated?

2. Develop the Long Term Strategy and Plan 

The Strategy and related Plan will provide the course and direction that the business must follow to make the Vision a reality.  The strategy and high level plan will clearly define specific actions and programs, including resource requirements, performance goals, organizational structure, and any other actions necessary to achieve the Vision.  It will be the framework to guide decision making over this period, and keep the business moving in the right direction.

3. Prepare the Operating Plan

This will be the detailed plan to execute the Strategy for Year 1, including specific tactical actions and programs, and monthly operational targets to measure progress throughout the year.  The Operating Plan is used to manage and control the business, and guide decision making in the short term, and to allow for regular reporting, performance evaluation, and identify potential course corrections, during the year, to achieve the strategic objectives.

This process, done properly, does take a great deal of time and thought to be useful, and in my experience, is well worth the effort it.  By the end of the process, the business and organization know the course and direction, and have the “charts” necessary to control and manage the business, make the right decisions, and measure progress to achieve the Vision, and that elusive Year Three!


The winds and the waves are always on the side of the ablest navigators.” – Edward Gibbon

“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” – Jack Welch

Advertisements