0800 LEADERPsst - want to know how your peers do annual planning?
01 Dec 2014
This post is the first in a series I'll write on the annual planning cycle
Over the course of this series I'll endeavour to answer or facilitate answers to the questions many CEOs have:- How do other CEOs approach this?
- Is annual planning even worth doing?
- How can I plan and prepare for a good planning cycle?
- How do I get real value out of it?
- How do I keep the organisation on track with the plan through the year?
I'd like this series to become a conversation among CEOs. So please do comment via return email as you feel moved.
First up: how do other CEOs approach annual planning?
There is no norm. I see a variety of annual planning methods through our work on the coalface with CEOs and leadership teams from SME to enterprise around New Zealand and beyond. There is no evidence of commonly used models or systems beyond ad hoc, in-house methods being the most typical.
Here's my summary of what's going on including a few insights and observations:
- The smaller the organisation the less likely there is to be any annual planning cycle at all. Some small organisations run a more tactical quarterly exercise.
- Most small-to-medium organisations rely on the owner manager or CEO to run plans and strategy in their head and direct their teams | organisations on an day-to-day basis.
- Where there is a board in place, there is always some form of annual planning exercise.
- Annual planning up to medium enterprise level often consists of the CEO producing a short document or presentation articulating key financial targets and activities for the year ahead. Though this practice is alive and well in larger organisations too - I've seen it for a 1,000 person US listed enterprise.
- Surprisingly even enterprise (>$1 billion revenue) often manages strategy on bits of paper and spreadsheets.
Most CEOs we deal with, have a strong feel for their industries and are able to move their organisations ahead year on year. The relative immaturity of strategic planning feels more like a lost opportunity than an absolute failure.
Most of their managers don't really know or understand the purpose and strategy of their organisations. In preparation for a sales pitch to the CEO of an 800-person technology business, I interviewed one of his senior marketing managers and called the business call centre in search of their compelling value proposition. Neither was able to give a concise, resonant answer despite the organisation running regular TV advertising with a clear and distinct proposition.
A minority of CEOs conduct some form of collaborative planning exercise with their senior leadership team. It's usually self-organised around the CEO's favourite strategic framework. A minority of planning exercises are externally facilitated.
External facilitators are typically business coaches and consultants who bring some form of strategic framework to the table.
So is Annual Planning worth doing?
We see a correlation between the best performing organisations and those that engage in strategic thinking and annual planning in a disciplined, collaborative way.
International research* has confirmed 'collaborative strategic direction' as a pillar of business excellence and high performance for over a decade.
What can you do?
There are variety of tools that can help you get the most of your annual planning exercises. Leaderkit is one such tool to help executives deliver their strategy by enabling them to balance long term initiatives with short term goals and ensure they get the right things done.
Contact us to learn more.
=========*Chuan and Soon "A detailed trends analysis of national quality awards world-wide" Total Quality Management, V11, No.8, 2000, p.1065-1080