Planning For Next Year
For the past few weeks I have been going from Board Meeting to Board Meeting reviewing, discussing, debating, and, ideally, approving the 2017 plans for the companies that I work with.
Here are some thoughts and observations about the year end planning process:
1) Companies should start the annual planning process early. I think September is a good time. It should start with a wide open data gathering process which involves as much of the organization as is possible.
2) The planning process must be grounded in the strategy which should be set in advance of the planning process. If a strategy adjustment is required, that needs to happen before the plan can come together.
3) The senior team needs to do the plan as a group. That can involve offsites, a set of regular (weekly?) meetings, or something else. But planning is a team effort and a plan can’t be handed down from on high like the ten commandments.
4) My number one feedback on annual plans is that they should have less focus areas. I think three big bets is good for most venture backed companies. Five is an absolute max. The more you try to do the less you get done.
5) The numbers should fall out of the strategy and plan, not the other way around. If you don’t have enough money to do everything, change your strategy. Don’t plan by numbers. Plan by developing a set of priorities that come from the long term strategy, and informed by the inputs of the organization.
6) Don’t drop your plan for next year on your Board the day before a year end Board meeting. The good news is that none of the companies I work with did this. I am very happy about that. It is best to give the Board a preview (ideally multiple previews) of the plan as it is coming tother so that you can get feedback and buy-in well in advance of the final approval process.
I am a big fan of the annual planning process. I realize that all plans end up evolving during the year and things change and companies adapt. But a good plan gets everyone (including the Board) on the same page, working on the same things, and driving to get to the same place. And that alignment is incredibly valuable.
“Don’t drop your plan for next year on the board…”Someone described this to me one day as “avoid the big reveal.” I think they were laughing about how that happened so often when unveiling a concept on Mad Men. It’s great advice.Seems like the primary reason for doing so is that it’s not done yet, but I find that subconsciously some folks don’t want feedback (which they might call meddling) and giving a board no time to provide it is a certain way. But from a human standpoint, we’re all so much more collaborative if we feel part of the process. The pushback a board might give may not be related to the issues themselves, but rather a statement of resentment that there were simple viewed as rubber stamps.
and giving a board no time to provide it is a certain wayAs a generality, and not specific to this topic, giving people no time to think is a form of pressure intended (and it doesn’t matter why) and increases the odds of getting certain types of people to agree by making them feel that the deal points are non-negotiable.  So realizing this early on in my first business, when buying anything of significant cost, I always asked for and got a blank or pro forma contract prior to making a decision or even negotiating further. And at a point when it’s much harder to pull out of something that in a sense you’ve already telegraphed agreement to.
“I always asked for and got a blank or pro forma contract prior to making a decision or even negotiating further.”Great tip
Love this. It drives me crazy how many firms do any real annual planning at all. Great list and I totally stole it for my notebook 🙂
Great post. I’m going to see if I can squeeze in a 2017 planning meeting before Christmas.
These are great tips, and parallel to the planning is the on-going execution and how it gets managed, because in some cases planning could be well done, but companies falter in managing the implementation of the plan.That alignment needs to be driven down for the implementation.
Absolutely. A good plan is viable and actionable. I think people often overlook the preparation, getting ready stage, selecting the proper tools and methods in advance. It makes implementation much smoother.
Reminder that if you execute monthly and quarterly planning sessions it makes annual planning a lot easier and your team will thank you for it.
4 and 5 are the ones I see people struggle with.7) Your outside BOD members are great sanity checks.
September seems like a long time in advance… At what point do the costs of planning (taking away your focus from executing on the current Qtr) outweigh the benefits? I guess in a large organization, alignment is more valuable than a very small company.
Cinderella and the stroke of midnight. today felt like it might be the end of a winning streak, but the sky won’t fall in.So as an investor with a seat on the board what happens if you don’t approve of a plan?
I’m interviewing for a GM to COO position. How do I craft a first 90 day plan when I don’t the year long objectives?
You don’t – instead you talk about how you plan, how you think, how you act…what core beliefs drive you and what sort of details vs. big picture things you focus on.When you don’t know the objectives, your initial plan should be all about figuring out those objectives (using your experiences and personal belief systems) 😉
Good advice. The company may want to see some demonstration of “vision” so it’s a fine line to walk.
Is the company asking you for a 90 day plan or are you volunteering this?
I was asked by the lead investor to be ready to talk through a 90 day plan with the Founder. I used points from our first conversation and the job description here https://angel.co/tech-edven….This was my final product after a bit of googling https://docs.google.com/doc…
Famous quote“If you fail to plan, you are planning to fail.”Maybe Benjamin Franklin
Fred–as you look across your portfolio, do many of them have fund raising on their next years plans and market proof points as part of the objective to make that goal more possible?
Yes. Most of them. It’s the reality of a startup that you are often raising money
ain’t that the truth.
Been wanting to ask you a questions as you have such a huge variety of company sizes that you participate in.Are they all startups to you as most on this blog consider most everyone a startup? I ask cause the size of a company determines its dynamics and while they may be led by entrepreneurs what Twitter or Etsy experiences is nothing like a newco.
Strategy is choice.Choice is hard.The best plans make those choices explicit.The best plans are also systems.All the many choices have to hold together in one aligned system.And the lines go everywhere:Are marketing and product development timelines lining up?Is planned org growth funded by anticipated cash flow?Do we have the right sales skill set for that new product / vertical?…A million things have to come together, and a great executive seeks out misalignment and then corrects it with a choice.Planning is absolutely a team sport. Executive team.What are the external realities of the market, of the funding environment, of competition?What are the internal capabilities of the various teams in the organization?One person can’t know all of this. But for larger orgs, you can’t sit 20 people in a room (or even 10) and effectively build a plan.Core team of maybe 3-6 in “the hub” with spokes (functions, businesses, products) that they explore and then report back.Core team wrestles with new info that comes in from the spokes, checks for misalignment, then makes choices and adjusts the plan.Core team must have execs with depth of skill in finance and HR.To Fred’s steps above, I would add:#7: Communicate.If you want the organization aligned, you have got to communicate the plan.And don’t assume once and done.You may think you’re super clear, but communication is like advertising: reach * frequency.Rule of thumb in ads is that they have to see it 9 times for it to sink in.It gets boring to do it over and over, but that’s a big part of the CEO’s job: to reference back to the “why” behind what we’re doing.I have built plans for organizations big and small, and these are some of the keys in my experience.
How much of a board meeting do you think should be about letting management talk about whatever they want to talk about, versus the company explaing WTF happened last quarter?
I am not big on beating up management
I respect your ability to stay patient and positive, that requires much more discipline than being bad cop.
Great timing – just started (re)reading Playing to Win – A. G. Lafley – thinking about getting reacquainted with strategy models and applying to healthcare innovation.Your thoughts are spot on – for large and small companies…I’d add:If unsure – plan to conduct lean experiments to test hypothesis… that can be part of your strategic plan – you don’t have to guess!
The best plans can fall apart in a startup, especially when the environment is uncertain or when product-market fit is nowhere near.In startups pre-PMF where there is still exploration, discovery, and iteration, the strategy and by extension the plan need to be more fluid with clear milestones around learning about the the customer pain and solving it better relative to other options.As Mike Tyson said, everyone has a plan until they are punched in the face. What you do then and if you had a Plan B, C to start with, or if you are deft enough to evolve a Plan D and E even when hit with the unknowable, determines if you are going to survive and grow or crash and burn.A board which thinks it has a sound grasp on the business because it approved an excellent operating plan has to also seriously consider the possibility that they are smoking dope. Thinking about the broad range of risks to the business (even if it is post PMF or looks like it) and having well-thought out contingency strategies if the risks come to fruition is very important.
Have a plan for being punched in the face too. Mine is stand a few more punches, recover balance and punch back, hard!Startups are just dreams and will at the beginning, so fragile, you have to fight for them.
Yes, dreams are made of vapor and making them real is brick-by-brick work. Some times the bricks are real; other times, you realize they were fake and you figured it out too late; some other times, they are solid, but storms may blow the initial structures away. When it eventually comes together, it is quite a feat indeed.
Regarding an annual cycle:- Can be somewhat arbitrary – unless business outcomes are very seasonalThis can be mitigated by :- Qualitative / directional objectives that correspond to vision that are often stronger more robust than timestamped quantitative milestones- Dependencies / Impediments are key to development of a companyTherefore I am a fan of a plan of a “reversed vision” type of plan :Big picture we are going to Z – this may be many years awayKey milestones in upcoming period on the path to Z are X, YKey impediments are A, BWe should therefore [key issue – a plan should espouse an argument] reduce risk by addressing A, find a way to reduce the cost of B Make X and Y more likely ,achievable by by … Doing good things !
Succinct I like it.A great plan with the wrong people is a plan in jeopardy
This is my favorite post in recent memory, and I’ve been reading every day (or six out of seven days when things are going terribly) since 2003. Planning is a beautiful thing.
Baffled that such a good post got so few comments.
I am applying number 4 for my personal annual plan 🙂