Is your annual planning process designed from the starting line or the finish line?
It is that time of year again…its fall and that means for those of us on a calendar year that it is also annual planning season, for 2022 and beyond.
There are two ways you can build your annual plan: from the present or from the future. Both can work and both are in use at companies like yours around the world. Many entrepreneurs look at where they are today and plan for the next year. Makes sense, right? Yes and no.
When you develop your annual plans from the starting line (or in other words, where your business is today), you look forward over the next year and ask realistically what you can accomplish. The problem with this type of planning is it can lack strategy, and even worse, you might be making decisions based on the glass half-full mentality. Sometimes, we simply play the numbers game and set a % growth rate based on our current capabilities. You will hear statements like:
- “We can only get so much growth because we are missing two key people from that department.”
- “We are so disorganized now, there is no way we could accomplish that goal.”
- “No way our current infrastructure will support that.”
You see, when you begin from today, the starting line, you have the potential to restrict growth based on weaknesses that currently exist. The optimist entrepreneur can actually hold back the growth of their company by focusing pessimistically on weak areas that exist in the business. There is a different approach, and it is to start with the end in mind – the finish line approach.
Key Leadership Question:
“What does success look like three years from today?”
This is a totally different approach than starting from what is currently holding you back (people, processes, infrastructure). By visualizing what a successful organization looks like three years out, you can be freed to design the future you want without the worry of what you are currently doing wrong. Try this process for your annual planning this year:
- Define 3-5 goals you want to accomplish in the next three years. These must be quantifiable and specific to be effective. Think “X to Y” improvement. In addition, they should take the three years to accomplish. If you can achieve your goals in one year, think higher! Don’t use words or phrases such as “improve” or “try harder” when setting them – get specific and quantifiable. As an example, don’t “…say we will improve customer service in three years…” say, “…we will improve the customer engagement score (and customize these so they work for your business) from 62% to 96% within 3 years.”
- Once you have set your three-year goals, focus on setting the right one-year goals. Ask yourself, “What are the annual goals that will bring me one year closer to achieving these 3-5 (three year) goals?”
By planning this way, you build the business on a success picture. If there are weaknesses in the businesses, you make it a goal to shore them up. Your weaknesses will need to become strengths to allow you to meet your future goals, for you to achieve the success picture you built, and for you to reach your organizations potential. Now that is music to any optimistic entrepreneur’s ears!
