Annual planning often fails because departments plan in isolation. Start with a small set of company-wide priorities aligned to strategy, assign clear ownership, and build cross-functional action plans. Alignment first, execution second.

The annual operating plan is a necessary evil that many executives participate in only through various levels of coercion. Like a flu shot, it’s supposed to be good for you but you’re never really convinced it will make a difference.

The problem isn’t the plan itself but rather the process we go through to make the plan. Too often, annual operating plans are built department by department, in relative isolation. What brings together those departmental plans into a coherent set of cross-functional initiatives that will make a difference to business success?

 

Start with Company-Wide Priorities

The trick is to start at the top by identifying 5 or 6 key company-wide priorities that are aligned to the organization’s strategic plan.

These priorities won’t always align neatly with functional structures, so each initiative should have a clear executive owner. This executive works with her colleagues to develop a concrete set of actions (with primes, deliverables and timelines) that will be executed during the year to achieve the objectives. These actions can then be incorporated into the relevant annual departmental plans, ensuring alignment rather than fragmentation.

Sounds easy, right? But it usually doesn’t happen this way. First, it’s hard to get the entire executive team together in a room to hash out the key company-wide priorities. Second, since these priorities are supposed to be consistent with your strategy, you actually need to start with a documented strategic plan.  Third, assuming you have that strategic plan, the entire executive team must agree on its priorities.

That’s why when I facilitate a corporate operating plan, I first summarize the strategic plan then test the level of alignment through stakeholder interviews. Invariably I discover lingering disagreement on strategic direction that must be resolved prior to settling on the priorities that are the foundation of the operating plan.

 

A Practical Approach to Better Planning

This year, if you want a more satisfying and effective annual planning process, try the following steps:

  1. Dust off the strategic plan and summarize it. Develop a draft set of 5-6 key strategic initiatives
  2. Test alignment with leadership. Review initiatives and priorities with the executive team
  3. Resolve key differences. Hold a meeting to achieve provisional consensus on areas of disagreement
  4. Assign ownership. Designate each strategic initiative to an executive who will then prepare a draft action plan for the year
  5. Run a cross-functional off-site planning session. This is where action plans and deliverables are debated and elaborated upon (IMPORTANT: the offsite meeting isn’t to debate strategy it is to settle on specific actions!)
  6. Cascade into departmental plans. Communicate the resulting action plans to department heads for incorporation into their annual departmental plans

From Patchwork Plans to Aligned Execution

This is more work than simply tasking each department to prepare an annual plan. But instead of a patchwork of unconnected initiatives, you’ll get a set of key annual operating initiatives supported by aligned departmental plans.

It may take more coordination upfront, but it significantly reduces confusion, duplication, and missed opportunities throughout the year.

Like a well-timed flu shot, it may not be the most comfortable process, but it’s the most effective way to inoculate your business from nasty surprises during the coming year.

 

Strong plans start with alignment, not just activity.

Stratford supports leadership teams in translating strategy into clear priorities, aligned execution plans, and measurable outcomes. From strategic planning and CEO advisory to leadership development, we help organizations move from planning to performance with confidence.

Connect with our team to build a plan that drives real results.

 

This article was published more than 1 year ago. Some information may no longer be current.
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