It is March, and back in my GE days that meant we were starting on our annual strategic planning process, Session I in GE terms. Starting in March or April we would create templates, update roadmaps, complete top-down and bottoms-up budgets, and then start building the deck. Right out of business school, getting a chance to use all of my MBA skills, being on the Market Research and Analysis team, supporting the Product organizations and the Strategic Planning team was a thrill. My job was to research and identify opportunities, share what I found, and provide recommendations. Even a few times, slides I created based on this research worked its way up to GE’s CEO (Jack Welch at the time). Boy was that a thrill.
Over the past 20 years I have participated in annual planning processes for large, medium and small companies as an individual contributor, executive and consultant. Some of these experiences have gone well (I don’t think I have ever seen a great one), some have been bad, and some have been downright ugly.
As I look back on the good versus the bad and the ugly, I see some key trends.
Separate Long-Term and Short-Term Planning
What made the good better than the bad and ultimately the ugly was the fact that they separated out long-range/strategic planning from short-term/operating planning and budgeting. When you try to combine long-range and short-term planning into the same exercise you often get the worst of both. You do not get strategic enough to identify where trends are emerging nor evaluate opportunities you should be working on for the future. On the short-range side, you are not detailed and specific enough around budgets or action plans, and you get “warm tea”, not “hot tea” (which 50% prefer) or cold tea (which the rest prefer). In essence your efforts are lukewarm. GE actually broke it into long-term/3-years (Session I), medium-term/18 months (Session II) and short-term/12 months (Op Plan).
So even if they end up in the same deck, go through the processes separately. Optimize each section for its singular objective. Then set your focus on the long-term, think of things strategically an often you will identify opportunities you need to start building a path to that might have been lost if you combined all of this planning together.
Include a Focus on Growth and Markets
With that said, the major thing that made an annual planning process Ugly, and even some that broke out long-term and short-term, is the lack of focus on market-based facts and growth. If in a group thinking environment, the lemming law or status quo mentality, can often cause companies to get into a groove resulting in them becoming stuck. When this occurs you can see repetitive thinking when comparing a long-range plan built in the 2017 cycle with a long-range built in 2016, and so on. What you find is the 3-year revenue target becomes the same every year. The product plans look the same with minor iterations, and there are not many (if any) new growth opportunities that have been born from and vetted with the market.
Now, if you are the market leader in your segment and you are growing and hitting targets, your product plans may look the same with minor iterations, but if that is the case you need to make sure you are identifying new growth opportunities.
Therefore, when you begin the planning process, make sure you are not just doing a search and replace on previous years (Search 2017, Replace 2018). Make sure your strategy and product teams are engaging with the market, analyzing trends and translating this insight into product roadmaps that will drive growth in their existing products. Make sure your identifying new opportunities for growth outside of the current product-market segment your products are in.
Consistency and Objectivity
Regardless of Good, Bad or Ugly, another hard thing to deal with in the annual planning process for larger companies with multiple markets and product lines is how to you evaluate opportunities across apples and oranges (different markets and product lines). Often each market manager or product manager is defining their own approach, their own analysis, and interpreting things is left to the leaderships' subjectivity. This is especially prevalent in companies that do not have dedicated strategic planning teams that can create the consistency. Even within companies whose teams are getting objectivity in decisions, budgets and resource allocations can be a struggle.
So regardless of if you have a strategic planning team, or if it is being led by you (CEO, CFO, VP of Product or Strategy, etc.) make sure you create a template to be used by all of your market and product teams. Make sure it identifies the specific information you require of them to provide. Also, start leveraging market engagement. I discussed this early sharing thoughts on the “Focus on Growth and Markets” potion. Lastly, get some validated market data to use for numbers – and hold all teams accountable to this.
When you insert validated market data in place of opinions and assumptions, it is amazing how much more objective you can be. And with this objective data you can start using opportunity scoring methods that can help both your long-term and short-term plans.
If these ideas sound interesting and you want to talk more with me, please reach out.
I would also suggest that a facilitated planning session, like our Growth Strategy Action Workshop (https://www.inventisstrategies.com/gsaw.html) and add-on Portfolio Strategy Workshop could be great tools to help you Separate Long-Term and Short-Term Planning, Include a Focus on Growth and Markets, and drive consistency and objectivity.
If you want to talk about the good, bad and ugly of annual planning processes, or want to talk about how Inventis Strategies can help make your 2018 planning cycle the best you have had, please e-mail me at email@example.com. I love these conversations and would love the chance to help you and your company.
Insights into building great products and choosing the right markets to grow.