Annual calibration exercise
This past week, we at Knowtify (ok…it’s just Dane and I right now) started a practice that we hope will become an annual tradition for the company. We called it an annual calibration exercise (for lack of a better term right now).
Basically, we created a simple survey with a set of questions about what we want and expect from 2014. We both completely the survey separately and then met to go through our answers together. Here were the questions we used:
BY THE END OF 2014…
- How many paying customers should be have?
- Where do you think we should be in terms of MRR (monthly recurring revenue)?
- What will our product look like (be specific about what features/functionality/integrations/etc it should have)?
- How many employees should we have (be specific about their roles)?
- What kind of funds should we have raised?
- How do you see your role evolving (how would you like to be spending your time)?
- Name 1-3 things you would like to personally get done.
- What do you expect your partner to have achieved?
- Is there anything else you hope or expect to see by the end of the year?
This wasn’t an exercise we spent any time planning for, I just created the survey on a whim late Sunday night. My goal was to make sure we were on the same page for what we wanted to get out of 2014. And if we weren’t - if there were some glaring gaps in our expectations in any of these areas - to clear them up before they caused problems.
As it turned out, Dane and I were almost freakishly in agreement on all points. It was almost scary. So that was good news (except that it made for a very boring meeting - I was hoping for more fireworks!).
But, more importantly, I really fell in love with this exercise - especially in contrast to the traditional ‘annual planning processes’ that successfully ruin the holidays for most companies. Running this exercise with just the two of us made me excited for what this can become as we grow.
Here’s what I like about it:
- It’s super simple. I made the survey in 20 minutes using Survey Monkey and it took each of us about 10 minutes to take it (question #7 takes a bit more thought).
- It’s fun. We each had some goofy answers to some of the questions (we may have to do a MadLibs-esqe version next year), so the meeting to go over the answers was fun.
- It surfaces ideas/thoughts that we never would have imagined on our own. I can just tell that some of our biggest innovations & initiatives in the future will be borne from this exercise.
- It serves as an incredible basis for discussion. Like I said, Dane and I were in freakish agreement on 2014, but there were still a few points that we expressed in different ways that led to great discussion. If there were any big gaps in our expectations, this would have been a great way to surface and face them head on before they could become major issues over the course of the year.
But more than anything, I love this because is a scalable vehicle for giving everyone on the team a voice in how we will attack the coming year. Yes, our team is more a ‘pairing’ than a ‘team’ right now, but as we grow, this exercise could become a tentpole of our culture. It’s important to us that everyone on the team has a voice and that we use those voices to shape the way our business develops. I’m especially interested in comparing the answers we get from our employees vs those we get from our board members :)
Quick word on why I hate traditional annual planning
This post wouldn’t be complete without a little rant on traditional planning.
Ugh. In most places, annual planning (some even refer to it as ‘budgeting’ which is so much worse) is probably the worst part of any business year.
First of all, most companies spend WAY too much time on it. It drives me crazy to see companies spending 3 months creating an annual plan - leaving them only 9 months to execute on it. Silly.
Secondly, annual planning is generally a top-down exercise that is completely detached from the realities of the business. It takes the form of a bunch of executives & board members sitting up in the ivory tower pulling numbers out of their asses, sticking them in a spreadsheet and calling them ‘goals’. At which point…
…they take them down the mountain to the rest of the team (you know - the ones who didn’t have a say in the creation of these ‘goals’) and hold them accountable for achieving them.
This about sums it up:
My hope is that this calibration exercise may really help eliminate a lot of the problems with traditional annual planning.
I have some more detailed thoughts on how to maximize the benefits this exercise and how to use it for planning, but I’ll save that for a later post after we learn more ourselves.