Is annual planning a truly effective tool for your business?

I’ve just received my 2023 diary and wall planner that coincided with receiving an email regarding 2023 budgets. I’ve been planning several events and activities for 2023 for a long time already. It did however get me thinking about our obsession with annual planning. Over the next few weeks, many organisations will be busy putting their finishing touches to next year’s plans and finalising their budgets. They’ll then spend eight months, or so, working to achieve those plans before next Autumn. They will review where the plan differs from what has happened and begin to draw up a brand-new, grand plan for 2023.

definition of planning process

It’s all too rigid. Traditional January-to-December-layout diaries don’t work for the academic sector. In the same vein, annual planning doesn’t suit many businesses either. Yes, companies have their own financial years and there’s a fixed tax year too. However employees, projects, products and markets have cycles that often don’t coincide with when these years begin or end. Despite this, the annual plan thrives and it drives a culture for many businesses where activity tails off as we get towards the back end of the year.


A year is both too long and too short

Of course, planning is important. But if I were to blinker myself by thinking in discrete 12-month blocks, I’d always be on the back foot, and I’d miss many opportunities. Business planning should be flexible. It should be long term and pro-active, driving the direction of the business. It should also be short term and reactive, agile enough to take advantage of opportunities as they arise. Complementary short, medium and long-term plans are more appropriate than annual ones. At any time, I’m working with all of these time-frames in mind and importantly, keeping an open-mind, ready to make changes as necessary. If something is in a medium-term plan and an event happens which makes part of that plan redundant or ineffective, I’m not going to continue blindly-on just because it’s something I can tick off my list.

danger sign showing that you're heading the wrong way

Imagine you’re given an objective in a yearly appraisal. You can achieve it by the agreed date, but there’s a bigger and better development which arises. It will take longer but be more beneficial overall to the business. What are you going to do? Meet an inferior or irrelevant target or modify the plan? Sadly, some organisations foster the culture where the original goal will still be pursued. In particular this is apparent where personal annual targets have associated financial incentives. It’s box-ticking, and the business has become a slave to the plan, not its master.

Annual planning can also cause organisations to develop bad habits. Take, for example, the annual customer satisfaction survey. What’s that all about? Does customer satisfaction only matter once a year? Ideas like this are legacies from the days when instant feedback wasn’t a possibility. If they are unhappy, most customers will have taken their business elsewhere, long before they get asked for their opinion, but still, the survey gets popped into the plan.

Your plan, my plan and the overall plan

Then, there is the problem of plans that don’t support each other. One part of the business has a target that conflicts with another department’s objectives. Or – and this is verging on inexcusable – plans aren’t adequately communicated or shared. In the past, I’ve been called upon to rescue a situation where the sales team in an organisation expected ongoing instant support from a marketing department who were already overstretched preparing for the roll-out of a refreshed brand. With the best will in the world, it takes time to design and print literature, create web resources and generate advertising.

Even though I’m not a big fan of rigid planning, I have fixed ideas about one aspect. A marketing plan is essential, and it should always underpin the long term business plan.

Not finalising your annual plan could be very good news

Don’t be alarmed about the speed at which January 1, 2023 is approaching. If you’re worrying about the deadlines that have passed and fretting about your unfinished plans, pause for a moment and consider this. Annual planning can force a business to follow a sub-optimal path. It is, however, never too late to start building and working with flexible planning. These short term plans can adapt and evolve to meet your changing business environment. The results are often a more energetic, dynamic and faster growing business – now isn’t that what we all want?

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