It’s hard to believe we are fast approaching the end of the financial year in Australia. A year like no other!
With the craziness of the last year almost in our rear-view mirror, it is time to start looking forward and how you are going to approach annual planning for the coming financial year.
As Eisenhower said, “Plans are nothing, planning is everything”.
How can we expect our people to be passionate about doing what they do and be capable of finding a way to meet business objectives consistently without a clear plan providing direction on the path forward?
Strategic annual planning is the go-to for most leaders to enable these outcomes for their employees. But how effective are your annual planning initiatives? It is great to bring everyone together once a year or to take the time out to focus on strategy and the big picture, but does this translate into a plan of action that is going to unlock the potential of your people to meet the objectives of the business?
In this and our next blog, we will unpack annual planning so you can make it an effective, results-focused process in your strategic planning cadence.
What is an annual plan?
An annual plan is a documented, workable plan defining how your business will achieve its vision, mission, and objectives for the coming year. Annual planning should be a critical part of your strategic planning and operating rhythm processes. All businesses should be adopting an annual planning process to ensure they are setting the direction for the company for the next 12 months at a minimum.
The planning process provides a top-down and bottom-up document that helps drive execution, aligning the company to achieve success in the coming year. The process is a collaborative initiative that brings together key stakeholders from all functional areas of the business.
The role of the board and executive leadership team is critical in providing a clear vision, mission, or massive transformative purpose with accompanying strategic priorities for the year.
This defines the WHY for the organisation, and without it, no annual plan is complete. A clear WHY enables cross-functional stakeholders from around the business to scope out HOW and WHAT they will deliver to be successful.
This bottom-up planning exercise highlights any gaps or issues that need resolving to execute the annual plan. These gaps could be more resources, enablement, critical product enhancements, marketing support, new systems, tools etc.
The annual plan serves as the blueprint that enables each team in the business to go deep on what they need to do throughout the year to achieve business objectives. It allows for alignment and the breaking of siloes in creating a consolidated plan across the business while highlighting hot spots, key business risks, opportunities for growth & scale.
The annual plan is used by the business to hold itself accountable throughout the year.
Most importantly, you get laser-focused on the customer experience you need to create to be successful.
“Plan your work for today and every day, then work your plan.” – Margaret Thatcher.
Why use an annual plan?
Here are just seven reasons why annual planning is a must for any business:
1. Annual plans are critical in a building performance-based culture. A well-documented annual plan can lay out expectations for leaders and individuals. The plan will provide the clarity and direction that your employees need to ensure that they are focused on doing the right things to achieve business objectives. A clear plan enables the business at all levels to be accountable for their contribution in making the business a success. It gives you the certainty that all areas are aligned, engaged, and working together to meet the needs of their customers.
“Engaged employees perform 20% better.” – Corporate Leadership Council.
2. Annual planning articulates your strategic intent. The ability for the business to collectively understand why they are doing the things they are doing empowers your employees.
Empowered leaders and individuals work together to deliver autonomously and with velocity. It allows a greater sense of accountability and creates the platform to challenge decisions that may not be in the interest of achieving the agreed objectives in the annual plan.
“Someone is sitting in the shade today because someone planted a tree a long time ago.” Warren Buffet.
3. The strategic annual planning process forces you to focus on your core customer and target markets. We are all striving for customer-centricity to provide a differentiated service that sets us apart from our competition. We know that customer expectations have shifted and changed in the last 12 months alone.
Annual planning allows us to get back to basics and refine our understanding of customers and target markets to create a customer experience that exceeds their expectations. Your annual plan will enable you to get laser-focused on what your business needs to do to amaze your customers.
“I have learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” – Maya Angelou.
4. Strategic annual planning forces you to take a conscious look externally as well as internally. Looking under the hood of your business can uncover opportunities to drive scale across the board. To maximise revenue also means becoming efficient with resources to ensure healthy, sustainable profitability.
Growth and scale can be driven by taking a continuous improvement approach to your processes, systems, tools and people. Failing fast, getting better at not just what you do, but how you do it is the hallmark of agile, high performing business.
“1% better every day = 38x better results in 1 year” – James Clear – The Art of Continuous Improvement.
5. Arguably, the most critical outcome of annual planning is boosting employee engagement. It can inspire, motivate, and engage people across the entire business. It’s incredible what happens in an organisation when employees are connected to the vision and mission, empowered with a detailed & actionable plan that clarifies how they contribute to the business’s objectives.
“Employee engagement increases productivity to the tune of 21% higher profits per year” – Employment Hero – Top 3 Key Important Employee Engagement Statistics You Need to Know.
6. Having a clear and articulate annual plan helps with your communication strategy. We all know the power of consistent, aligned communication regarding the vision and direction of the business. As leaders, we must tell a story, inspiring and motivating our people to be the best they can be.
To create a connection to the business vision, mission, values, and strategic objectives and
to keep momentum throughout the year, your business must have consistent language and regular communication regarding its purpose. Annual plans can reinforce consistent messaging to drive the direction of the business, embed the expectations of each team, and keep you on track to meet strategic outcomes.
“72% of employees don’t have a full understanding of the company’s strategy”- Smarp – 18 Leadership Communication Trends to Look for in 2021.
7. You begin to measure what matters with a clear annual plan. It’s critical to ensure that an agreed set of measures is in place with every annual plan. If not, how can you take a data-driven approach to manage your progress against your expected outcomes? How will you know when you have successfully met your strategic objectives?
Clear plans with agreed targets that are measured and reviewed as part of a regular operating cadence give you the best chance of succeeding. Measuring what matters most allows teams and individuals to stay on track and call out any hot spots requiring attention. Having agreed measures also allows executives to keep their finger on the pulse on the progress of the business.
Without reviewing the actions agreed in the annual plan, you will be flying blind. Instead of discussing opinions, you focus on data that provides the transparency you need to run the business effectively.
“What gets measured, gets managed.” Peter Drucker.
In our next blog post in the Ellivate annual planning series, we will be deep diving into “HOW” you can approach annual planning…stay tuned.
At Ellivate, we understand the importance of annual planning and its impact on your ability to Go Next Level.
Book a meeting with us to kick start your annual planning process!
About Ellivate
Ellivate is the expert partner helping organisations and their go-to-market team’s scale.
Our powerhouse team of industry experts – with a combined 60 years of experience across the fintech, corporate and technology spaces – will work alongside your business to achieve your goals.
We have a shared passion for working with businesses to achieve rapid growth and apply an authentic, human layer of expertise that addresses the real challenges and concerns at the heart of your business.
We will work alongside you as a trusted and expert partner. We get in the trenches and ensure every solution is embedded within your business.
