The next step in drilling down to the actual\u00a0tasks that people perform\u00a0is developing the Annual Operating Plan or AOP.\u00a0 If you have done a good job on the Long Range Plan and the remainder\u00a0of your Business Plan, you should have several solid objectives ready to be divided into more detailed short term\u00a0team and individual objectives\u00a0that can be completed in less than one year.\u00a0 Now your planning process will shift to subdividing those LRP objectives.<\/p>\n
Think of the AOP\u00a0as scaling down the LRP\u00a0into what can be accomplished in the next year.\u00a0 The LRP\u00a0was an opportunity to evaluate\u00a0the big picture and focus on risks with some attention given to what might serve as measures.\u00a0 Conversely, the AOP\u00a0is an opportunity to detail near term elements of the LRP and focus on detailed measures of performance and results with some attention given to monitoring risks.<\/p>\n
In the process of developing your AOP, you will also be developing key components of your annual capital and operating budgets.\u00a0 It is important to let your long range\u00a0and operational goals drive your budget and not let the budget drive your goals.\u00a0 Remember, money is a resource and a measure of success.\u00a0 Profit is your reward for achieving your annual and long range objectives; it is not the purpose for your organization\u2019s existence.<\/p>\n
The detailed objectives\u00a0in your AOP\u00a0may consist of sales goals, marketing plans, production goals, new buildings and equipment, revenue and expense\u00a0targets, employee counts, new and changed processes, or particular activities in your start up\u00a0process if yours is a new venture.\u00a0 They may include implementation of new processes or specific annual projects that produce results and align with your business philosophy including community relations and environmental stewardship.\u00a0 All of them should relate to a specific LRP\u00a0objective, and to the business plan components we defined earlier.\u00a0 Again, these objectives\u00a0must be SMART; Specific, Measurable, Achievable, Realistic and Time-bound, like the LRP\u00a0objectives discussed in the last post, but even more specific and short term; less than one year.<\/p>\n
All of your AOP\u00a0objectives\u00a0should include clearly defined measures both of process and results, as well as methods for reporting.\u00a0 The measures associated with these goals may be lagging measures reporting the results of your operations.\u00a0 However, as these AOP\u00a0objectives\u00a0are further clarified by enterprise, department, branch, team, and individual goals; remember that goals at this level are very process oriented and must include leading measures or indicators.\u00a0 Without integrating leading measures within processes you will not have advance warning\u00a0of processes drifting off target that could end in failure to achieve the desired results.<\/p>\n
When you have worked through all of the\u00a0objectives\u00a0in the LRP\u00a0and committed them to your AOP, you still have to address\u00a0the ongoing activities that keep your business running.\u00a0 There are always things your organization does every year that must be done to keep the doors open and the customers served.\u00a0 Those activities may not have been directly addressed this year by long range objectives; that doesn\u2019t mean you stop doing them!\u00a0 To steal a quote from John F. Kennedy, \u201cwe choose to go to the moon in this decade, and do the other things<\/em>\u2026\u201d\u00a0 We didn\u2019t put the rest of government on hold while we went to the moon.<\/p>\n Landing a man on the moon in this decade (1960\u2019s) was one whopper of a long range\u00a0plan; parts of going to the moon were inserted into the AOP each year, along with \u201cthe other things\u201d, and we landed two men on the moon on July 20, 1969.\u00a0 When Kennedy established that goal it had only been four years since the Russians orbited Sputnik; by 1961 all we had in orbit were a few communications satellites.\u00a0 But we had a robust government going (some would argue a little too robust) that still needed attention!\u00a0 The \u201cmanagement team\u201d took on all those details.<\/p>\n The point; plan and budget for all the day to day\u00a0activities of your organization, but highlight in the AOP\u00a0those that relate to the LRP and make sure they get special handling to avoid losing them in the shuffle of your daily work.\u00a0 When your annual operating plan is complete you will have a roadmap of your entire route from January 1 to December 31.\u00a0 You\u2019ll know the mile posts you need to pass, and you\u2019ll have that dashboard telling you everything you need to know to gauge progress and results through the year.<\/p>\n Now your management team will need to put that plan into action.\u00a0 Every Division, Department, Branch, and Work Team will need to figure out all of the\u00a0tasks and activities needed to achieve\u00a0the AOP\u00a0goals.\u00a0 They\u2019ll need to sit down with their teams and figure out the deliverables, timing and budget objectives\u00a0and the incentives and consequences needed to keep everyone on track.\u00a0 While they\u2019re doing all that work they\u2019ll need to keep in sight the key components driving all of their activities, the objectives\u00a0of the LRP\u00a0and AOP.<\/p>\n I\u2019ve tried not to get too detailed but to give you just enough about this particular business basic, this piece of common business sense: plan your work and work your plan.\u00a0 Larry Linville\u2019s character,\u00a0Major Frank Burns (M*A*S*H, CBS, 1972-1983) put it better than anyone else while digging foxholes all over the camp in preparation for the potential air raid when he said, \u201cprior planning prevents poor performance!\u201d\u00a0<\/p>\n Of course, even the best laid plans can be co-opted or sabotaged when people are not all on the same page; as Frank found out the instant he dove into his foxhole outside the \u201cSwamp\u201d; the one Captain B.J. Hunnicutt had conveniently filled with water just before hollering \u201cAIR RAID!\u201d\u00a0 And that sets up the subject of my next post, get your people aligned!<\/p>\n","protected":false},"excerpt":{"rendered":" The next step in drilling down to the actual\u00a0tasks that people perform\u00a0is developing the Annual Operating Plan or AOP.\u00a0 If you have done a good job on the Long Range Plan and the remainder\u00a0of your Business Plan, you should have several solid objectives ready to be divided into more detailed short term\u00a0team and individual objectives\u00a0that … Continue reading Business Plans: The Annual Operating Plan<\/span>