Planning for a Plan

by: Doug Michaelides

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?

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.  Although these priorities probably won’t line up nicely with the functional structure of the organization, one executive must lead each initiative.   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.

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.

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. Review these initiatives with the executive team to test alignment
  3. Hold a meeting to achieve provisional consensus on areas of disagreement
  4. Assign 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 during which the action plans are debated and elaborated upon (IMPORTANT:  the offsite meeting isn’t to debate strategy it is to settle on specific actions!)
  6. Communicate the resulting action plans to department heads for incorporation into their annual departmental plans

This is more work than simply tasking each department to prepare an annual plan.  But instead of a patchwork of unconnected plans, you’ll get a set of key annual operating initiatives supported by aligned departmental plans.  This approach may be inconvenient and even sting a little but, like a corporate flu shot, it’s a most effective way to inoculate your business from nasty surprises during the coming year.

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