Joe Longo, Co-Founder of Velosio, has over 30 years of proven success delivering revenue growth and shareholder value.
Operational success is the backbone of any thriving organization, and I believe the key to achieving it lies in effective annual planning. It’s crucial to reflect on the past and strategize for the future.
In my first company, we achieved rapid growth, driven largely by a strategic planning process we implemented. After selling that business, I helped launch a new venture focused on bringing strategic planning to mid-market companies—an underserved segment. We adapted enterprise-level strategies for these companies, and they consistently outperformed their peers in the market.
Throughout my career, including founding other companies and serving on leadership teams and boards, I’ve consistently led annual operational planning processes. I am convinced that this approach is vital to business success today. It’s concerning to see only 54% of businesses have a formal strategy execution process in place. After all, if you don’t plan where you’re going, you’ll never know if you got there. In my experience, operational planning can help with the following:
• Allow a company to set a direction for itself.
• Build a culture of accountability.
• Allow you to connect your team members with a common purpose for the company.
• Create a framework for goal setting from the highest level of the company down to each team member.
• Standardize the annual planning process, which leads to improved communication and organizational alignment.
Here are four steps I’ve found essential to ensuring operational success through annual planning.
1. Assess current operations.
Before starting your annual planning process, it’s important to gather stakeholder buy-in. Start by reaffirming your mission, vision and values at an ownership and board member level. Then, survey your customers to determine what they would like to see from you and determine your net promoter score. Also, complete an employee survey, which I’d recommend carrying out twice a year.
Review last year’s scorecard (if applicable) on performance against financial goals, client goals, operational goals and people goals. Use that information to set a new scorecard with objectives and initiatives for the upcoming year. It’s also helpful to perform a SWOT (strengths, weaknesses, opportunities and threats) analysis from the leadership level throughout the organization.
A common challenge arises when an organization lacks effective tools for measuring and analyzing its performance. You can’t improve what you can’t measure, and having robust measurement systems in place leads to better data-driven decision making. Top-performing organizations view these systems as strategic assets rather than mere expenses.
2. Set operational goals.
The next step is to set SMART (specific, measurable, achievable, relevant and time-bound) goals as an organization. Where I see companies miss the mark is when people are setting SMART goals in silos without rolling them up to the strategic plan and corporate scorecard. It’s critical to align operational goals with overall business objectives.
For example, around 2009, at Velosio, we set a goal to increase revenue. Everyone started developing their own ways to get there. The net new sales team was determined to increase direct sales and marketing efforts to ramp up new business. The existing client team said they were going to sell more to existing clients and needed to expand the client account management team. The product development team said they needed to develop more software features.
In short, everyone was looking at how to grow revenue at a functional level as opposed to the holistic approach that supported the overall growth plans. Through our planning process, we aligned all the teams for a unified path forward.
3. Develop a detailed plan.
Operational planning is about translating strategic vision into actionable steps. While strategic planning focuses on long-term goals and vision, operational planning zooms in on the day-to-day activities. Both are interdependent and crucial for the seamless functioning of an organization. Operational planning serves as the bridge between high-level strategy and ground-level execution. It’s a meticulous process that involves setting budgets and goals at the departmental level, ensuring every segment of your company is marching toward common objectives.
This idea of unity is critical as research shows that 95% of the typical workforce doesn’t understand what their company’s strategy is. The plan aligns with financial goals, operational goals, client goals and people goals. It needs to be detailed but flexible enough to allow for innovation, and it needs to have a quarterly review period where each group within the organization is measuring success against the scorecard.
4. Ensure resource allocation.
A bottom-up approach in operational planning is essential. It involves engaging department heads and team members, integrating their insights into the plan. This not only optimizes resource allocation but also fosters commitment and collaboration across the organization. Additionally, it drives alignment within an organization. I recommend teams get together every week to course-correct.
I have a pilot friend who has told me that an airplane knows where it’s going, but it’s not on course much of the time due to wind, thunderstorms or other forces of nature. Operational planning is no different—you must course-correct to meet your goals and reach your destination. The business landscape is ever-changing, and the adjustments to your operational plan must reflect that. Futureproofing involves regular reviews and updates, adapting to new trends and pivoting when necessary.
Conclusion
My best advice is to jump in and start with operational planning today. Studies show that 70% of organizations that have a formal strategy execution process in place reported superior performance. And you’re not going to get everything right. If you get 50% right from the start, you’re in a better position than you were without an annual operating plan in place. Effective annual planning is more than a set of tasks; it’s a strategic endeavor that requires insight, foresight and adaptability.
By following these guidelines, you can drive operational success and position your organization for a prosperous year ahead. Remember, the journey to operational excellence begins with a solid plan, so make it count.
Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
