By August 22, 2013 2 Comments

How to Nail the Annual Planning Process

The annual planning process gives the organization an opportunity to create an operating plan and guidance for the budget process for the year and will significantly impact the organization’s go-to-market strategy. It is a huge mistake to not dedicate enough time and attention to this exercise because the downside is enormous—lack of direction and a framework from which to make decisions! A recent research study noted that underperforming companies share several characteristics: they are typically unclear on priorities and strategies, strategic decisions are reactive and easily swayed by external events or competitors’ actions, and key shifts in the industry are missed. Best-in-class companies, however, typically have a clearly articulated strategy that is well-differentiated from competitors. In addition, these companies’ capabilities were distinctive and drove clear competitive advantage through a strong annual planning process.

Spending eight years, one month and 17 days at HP (but who’s counting . . .) provided a great deal of exposure to structure, process and methodology. The time spent also highlighted that task forces, cross functional teams, binders and a linear mentality is enough to kill any idea from its own weight. This backdrop is of particular value when approaching the annual planning process. Here are a few things to avoid when trying to use a streamlined process to develop an actionable annual plan that will move the business forward.

Annual Planning Process: Plan First, Budget Second

Budgeting typically means spreadsheet, and the focus is on making numbers fit outside of business context. Planning is about vision, innovation and strategy. Both are important, but one stifles the other if they are addressed simultaneously. And, by all means, do not start with the budget unless the goal is to try to grind out a profit in a deteriorating market with an inferior product. Fiscal irresponsibility is not being promoted here. Removing blinders and constraints to create new revenue streams that allow budget increases or reallocations is being touted. The annual budget process tends to focus on the short term and, by nature, tends to retard growth and innovation. As a result, it promotes extrapolations of the past that is diametrically opposed to innovation.

Marketing is uniquely positioned to focus the organization on the longer term and the marketing plan is a great tool for this task. Decisions about which markets to enter and retreat, technology to adopt, product lines to expand or contract and customers to retain or retire are all issues that must be proactively managed. The annual planning process is a great time to make these crucial decisions and an annual plan template will focus the organization on the relevant facts and issues for analysis and action.

Annual Planning Process: Fact Based, Quantitative Based or Quantification of Qualitative Information

A building is only as strong as the foundation on which it is built, and the same can be said of the annual plan and corresponding annual budget. The information required to build a relevant and actionable annual plan cannot simply be cut and pasted from a library of quantitative information. However, many analyst reports, plus a wealth of images, blog posts and original content exist on the web that can be leveraged. In addition, there will be a portion – maybe even a significant portion- of information that will be based on qualitative inputs. Also, do not fall into the trap of “he who talks loudest, the most or is the most popular” wins. Establish criteria for evaluating and a relative weighting to balance the importance of each quantitative and qualitative input.

Annual Plan Process TemplateAnnual Planning Process: Does the Organization Promote a “Cooperate and Graduate” Mentality?

Often the issues with the annual planning process are the pre-planning required which is placed on the shoulders of a management team already strapped for time. The net result is that the analysis is thin and frequently the “planning process” degrades into “tweaking” last year’s plan. This is a complacent approach that keeps an organization riding along an existing curve but does not allow an organization to up its game and jump to a higher plateau or curve. In larger organizations, typically one cavalier manager will buck the trend by playing the game to obtain resources and, seeing this as the only way to work within the “mother ship”, deploy those resources in a stealth mode to accomplish things that would have not otherwise been approved.

Annual Planning Process: An Integrated Plan, Not a Collection of Disparate Parts

All too often, the annual planning process results in each functional area preparing a plan that independently seems appropriate, but doesn’t fit well within the organization as a whole. There is power in integration. The wrong approach is to try and assemble individual plans to become one. The best practice approach is to start with a set of corporate objectives and to cascade those objectives down to each functional area, and then to the various departments within each functional area. Because cross-functional teams should already be in place, it is these relationships that need to be leveraged to identify the strategies, structure, staff, systems and processes required to drive the business forward.

The annual plan is of utmost importance as it not only sets the tone and direction for the new year, it greatly impacts the go-to-market strategy. An Annual Plan Template need not be an exhaustive process that requires many binders of information in order to be documented. In fact, a simple one page document can facilitate the annual planning process and drive the annual budget.

Annual Planning Process: Checklist

It’s important not to be caught off guard when building the annual plan with a short timeframe or falling into the analysis/paralysis trap of trying to over-engineer the process. Instead, focus on the core issues that are relevant and go deep enough to understand the impact on planning and execution. A one page planning template will streamline the process and allow one to focus on the right issues to create an actionable plan. Specifically, the key areas to cover are:
• The Market – describe the market and the changes in the market over the past year.
• The Value – what are the prevailing business problems, what do customers believe are the relevant use cases and what is the best technological solution for those business problems?
• Strengths – determine the characteristics of the business or project that give it an advantage over others.
• Weaknesses – are there characteristics that place the team at a disadvantage relative to others?
• Opportunities – what, that has not already been accounted for, has a moderate to high probability to positively impact the business?
• Threats – what, that has not already been accounted for, has a moderate to high probability to negatively impact the business?
• Key Assumptions – define the quantitative and qualitative factors that the plan is built upon.
• Systems, Process & People – what are the systems, processes and/or people that need to be addressed to drive growth?
• Objectives – document SMART objectives – specific, measurable, attainable, realistic, time bound.
• Strategies – define how the objectives will be achieved.
• Drivers of Incremental Growth – what are the shifts in demand, technological changes, changes in the go-to-market strategy, etc. that will drive the incremental growth demanded?
• Critical Success Factors – list any issues that might hinder the success of the redesign efforts.
• KPIs & Metrics – document the KPIs and metrics that can be tracked, monitored and managed to achieve objectives.


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VP Marketing on Demand

About the Author:

Peter is a strategic and visionary marketing executive and brand champion who has leveraged his unique combination of classical training and entrepreneurial experience at start-ups and F500 companies to transform technology innovations into multimillion-dollar revenue streams. His experience spans all areas of marketing, including go-to-market strategy and execution; brand identity and brand positioning; product development; sales and marketing leadership; customer acquisition and retention; and influencer and analyst relations. Peter consults with c-level executives, teaches at USF’s EMBA program and serves as an advisor to start-ups.

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