Three strategies to run a successful planning process

Three strategies to run a successful planning process

Planning is a challenging exercise for every organization. It’s arguably the most important process that finance runs. It’s a period of intense reflection - crunched into tight deadlines with spreadsheets flying everywhere. Moreover, the organization will reckon with the decisions and goals set for the year to come.

Below are three strategies to help scaling finance teams run successful planning processes.

1. Speak in probabilities.

I highly recommend reading Jeff Epstein and Bryon Deeter’s post: “Recognizing Probabilities In Budgeting And Forecasting.” Jeff was the former CFO of Oracle. Byron is one of the most recognized investors in the world. Notably:  

“We recommend that CFOs explore several budget scenarios with their CEOs — and specifically discuss probabilities of various outcomes.

At first, this may be uncomfortable, because CEOs are paid to be optimistic while CFOs are paid to be pessimistic. CEOs are likely to believe an outcome has a 70 percent probability, while CFOs will have a lower, more conservative, view.

It’s especially important to have the probability discussion with your board. You may even want to survey the board before the discussion, to determine their probability expectations for meeting revenue and cash budgets.

Don’t be surprised if you learn your board members have widely varying probability expectations. If so, it’s even more important to discuss this with your board and to reach agreement on the optimal budget probability for your company.”

Tensions throughout a planning process most frequently stem from what Jeff and Bryon discuss - the CEO, executive team, and board members all having different expectations on how much risk the organization should take. Probabilities are an explicit way to align on risk and manage expectations for the year to come.

2. Build and manage only one plan.

There’s a strong temptation to build multiple plans. It often sounds something like this. First build an aggressive plan to which you’ll hold your sales and marketing leaders accountable. Then build a moderate plan to share with the board. And finally build a conservative plan to which you manage resourcing and cash burn. Reading Jeff and Byron’s post, that’s a reasonable conclusion.

However multiple plans is a mistake for any company not imminently approaching IPO. I always fought incredibly hard to have one plan. Why?

First, it’s hard enough to get everyone clear on the assumptions behind a plan. Key metrics (e.g. MQL targets, conversion rates, hiring plans, quotas, retention targets, etc) and key initiatives must be internalized by all stakeholders and flow seamlessly across reporting for the remainder of the year. Multiple plans multiplies the number of assumptions.

More importantly though, multiple plans muddies the conversation. For example, what plan does your head of sales speak to in executive meetings? The stretch goal? The board plan? Both? If they’re behind the stretch goal does that mean the company is missing plan? No? But if sales is missing the number they’re compensated against, does the rest of the organization feel the same urgency to hit those targets? How do you handle a conversation in which sales needs a specific feature to close a customer that helps them get to their stretch plan, but that feature would require additional R&D resourcing? If you decide not to build it, does the sales leader get quota relief? These misaligned conversations creep up across the organization.

The goal of any plan is to create alignment. Building just one plan forces alignment. I’d rather change the plan 3-6 months into the year than have to manage multiple plans. The clarity you’ll gain from having one (and only one plan!) will lead to better execution.

3. Take your plan on a board roadshow.

The board meeting should not be the first time your board members see the plan. It’s also not enough to simply send the plan in advance as a pre-read. Instead, I suggest taking the plan on a mini roadshow to each board member individually. Do this at least a few weeks before the board meeting. Walk them through the plan and allow them to ask questions, give feedback, and digest.

This roadshow accomplishes several things.

It first helps board members catch up on context. Many board members are jumping from business to business, only landing in yours every few months. Give them an opportunity to ask questions that they might not otherwise ask in a broader board meeting. With more context and more time to digest, you’ll maximize their input.

Similarly, you’ll understand in advance any objections. From there you’ll either have time to incorporate that feedback or be prepared to address them in the board meeting. This will make the process of actually getting the plan approved run much smoother.

Lastly, you’ll elevate the conversation in the board meeting. The goal is to spend less time in the board meeting discussing the minutiae around conversion rates, MQL targets, and quotas. Instead, allow the board to focus on what the plan itself enables the company to accomplish over a longer term, strategic time horizon.

The truth is I wish I’d done this board roadshow more often when I was at Intercom. When we did, we had a board that felt a part of the process and aligned to our plan for the year ahead.


Best of luck to all the finance folks in the midst of planning. To any early stage finance hires out there who are looking for advice, feel free to drop me a line - I'm always happy to help.

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