In North America at least, the coming months represent that magical season when budgets are set for the following year. For virtually all of our clients (and by extension, the consultants we work with), October and November are crucial for determining timing, resource allocation and yes, planned investment in programs like Actionable Conversations. For all large companies, there’s a time of year (even if it’s not October and November) when annual planning takes place for the following 12 – 14 months.
Annual planning. It’s such an entrenched part of the business cycle that I think many of us do it automatically. And hey, if we happen to head up well established, reasonably stable multi-nationals, annual planning makes a lot of sense. In those cases, we can say with a reasonable degree of certainty that things are going to look largely the same around here in 12 months time. It works for the big guys. But what about the rest of us?
In a planning session earlier this week, one of the senior leaders on our team asked me what our headcount was projected to be at in June of next year. Reasonable question. And yes, I have a hiring road map that I was able to pull up and give the answer (42). But as we talked through a couple scenarios, we realized that number could be closer to 30. Or 50. There’s an almost 100% differential between two equally likely scenarios. The truth is, we have very little idea as to the specifics of what the organization is going to look like even nine months from now, let alone fourteen. Not due to lack of strategy. Not due to a lack of smart people forecasting as accurately as possible. The discrepancy is simply due to speed. We’re growing so fast (roughly 400% this year) that it’s next to impossible to plan with any level of specificity what things will look like that far out.
Think of it this way—if you’re driving a car in a certain direction for an hour, you’re going to be in a different place than where you are now. Let’s assume you pick a direction—due North—and drive “straight,” planning to look at your compass again in an hour’s time. If you’re doing ten miles an hour and realize your direction was a little off after that hour of driving, it’s not a huge deal to course correct. You haven’t travelled that far, so you’re not that far off from your target direction. If you were driving 100 miles an hour and you’re heading was a little off at the beginning, you’re now going to be 10x further off your path than you would have been in the ten mile an hour car. The solution? Check your heading far more frequently.
I think the same is true in business.
When you’re going through bursts of growth, it’s important to set the heading (vision), and then schedule “annual planning” sessions for a more frequent schedule.
In our case, we try for three times per calendar year. We build a four month plan as a team, set clear objectives for that time frame, and then go. The distinction between this approach and the standard “twelve month plan with quarterly reviews” is that we’re not trying to kid ourselves that we actually know what the numbers in the twelve month plan look like.
I can’t take credit for the concept of “shortening the year”—I first picked this up from Verne Harnish in Scaling Up (though when I read it, it was called The Rockefeller Habits). If you’re looking for more on how to compress your year review (and what to do during the “annual” planning sessions), I definitely recommend picking up a copy.
I should clarify that some things—major product releases, geographic expansions, etc. absolutely benefit from longer term planning. Same goes for three year targets; the “BHAGs” of your business. But, for me at least, the timing of anything between six and thirty-six months can’t be planned too specifically with any degree of accuracy when you’re growing fast.