It’s December. Countless large organizations have been in the midst of planning meetings, data analysis, and presentations to boards. However, so many employees see annual planning as just a dog-and-pony show with little impact on their work the following year. At the same time, there are many companies that let the year pass without taking the time to reflect on their performance or strategize for the coming twelve months. Both of these approaches set companies off to the wrong start in the new year and are a disservice to management and staff alike.
High-performance organizations recognize that when done well, annual strategic planning is an invaluable tool – giving leadership and teams the opportunity to learn from past performance, aligning them around a strategic vision, setting a clear path forward for each team member, and perhaps most importantly, building contagious energy for what is to come.
There are many excellent annual planning frameworks, and most include three elements: 1) conducting a prior-year business review or operations assessment, 2) setting goals for the new year and 3) developing plans to achieve them. I worked at a large multinational company where we broke these three elements into eight components and 28 subcomponents, and needless to say we spent three months in formal planning each year. It was exhausting, yes, but extremely worthwhile in deepening the team’s understanding of the customer and drivers of value in the business.
Small, early-stage enterprises don’t have time for such a formal process, nor do most have the complexity to require it. It may be daunting to begin a planning process for the first time, especially for brand new ventures, and it’s easy to put off and attend to more urgent matters. But the importance of a strategic plan cannot be underestimated. For one thing, it will help you discern if those matters really are urgent.
Here’s a 5-step approach and simple framework for the first-time planner or team with little time to plan. It might only take half a day to accomplish once the data is in hand, and fit on one sheet of paper when finished.
- Gather up all the data you can for the ending year. At a minimum look at revenue, expenses and unit volume. A unit might be cases sold, active donors, contracts won, projects funded etc. Now you can measure revenue/unit and margin/unit (margin = revenue – expenses). For extra credit, conduct a SWOT analysis for your enterprise – not critical but will help you uncover new ideas and choose your priorities.
- Set a goal for the enterprise. Step 3 is more interesting if you set a big goal. You might start by asking “What would it take for us to get to break even?” or “How could we double or triple our sales?” or “How could we improve unit margin by 50%?” or “How could we serve twice the stakeholders without doubling our costs?”
- Determine one or more scenarios that will get you to your goal, such as increasing unit volume, increasing or decreasing revenue/unit and/or reducing expenses. For each scenario consider what would have to change to achieve the goal. This might include reaching new customers, changing your pricing structure or streamlining internal processes.
- Decide how much of this you can accomplish in the next year and use that to set your annual business or operating goals.
- For each staff person or functional area in the organization, fill in this simple chart that states what to STOP, START and CONTINUE doing to achieve your annual goals.
You might argue that this is overly simplified, but we believe that anything is better than nothing. When it comes to strategic planning, in our experience (and to paraphrase Peter Drucker) knowing what not to do can be as powerful as knowing what to do. That urgent matter? Unless it’s in the START or CONTINUE columns, drop it…right in the STOP column.
We hope this inspires you to step back however briefly as the year comes to a close and the new year opens up new opportunities and urgencies. If you have not yet started a strategic plan for the upcoming year, let that be the first thing you START in January!