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Nobody likes a skeptic.
It’s happened more times than I can count.
I’m working with a leadership team in a strategic planning session. They’ve set their financial targets. They’ve established the OKRs (Objectives and Key Results) that will help them achieve their big goals.
They’re fired up and feeling great.
Then, I start asking questions. Testing the plan. Interrogating the assumptions.
The smiles start to fade. People shift in their seats. The answers get shorter, less certain.
Finally, I make the statement they already know is coming.
“I don’t buy it.”
How do I know when a plan isn’t set up to succeed?
The short answer is that I’ve been doing this a long time. I’ve been that optimistic entrepreneur who was long on confidence and short on guarantees.
Not helpful, Eric.
Fair point. It’s more than just my gut. There are some specific triggers that set my bulls*** meter off.
Let’s start with financials. If you say:
Our gross profit will increase significantly (example: from 20% to 35%).
How? Major price increase? Sudden access to cheaper labor? Dramatic shift to more profitable offerings?
Net profit will increase significantly (example: from 0% to 15%).
Again, how? Does this change require a revenue increase or an increase in gross margin? Are you overinvested in operating expenses and about to make major cuts?
Revenue will increase…at all.
You know what’s coming. How?
If the growth is organic, does the projection align with previous data on organic growth? As you get bigger, can you sustain that growth rate (it gets harder the bigger you get)?
Will past results dictate future success? Or are you at a tipping point where you need to do something different to continue growing revenue?
Are you over-indexed on experiments, things you think will pay off but haven’t tried yet?
If the financial targets pass muster, the operational targets come under the microscope next.
OKRS - are your goals robust enough to align with what’s mapped financially?
To hit bigger financial targets, you probably need to do something differently. OKRs drive those changes, and the connection between hitting your OKRs and hitting your financial goals needs to be clear.
People - do you have a clear plan for filling the people gaps required to hit your financial goals?
If you’re going to crush sales this year, you might need more sales reps. But if you go from, say, 2 reps to 8, you don’t just need 6 more bodies on your team. Now you need a sales manager as well. Is that in your financial plan? (If you use a Role Map, it should be!)
If your Roadmap calls for adding new services or additional expertise on your team, who’s going to do that work? And who will manage it?
If you can’t confidently state “here’s how we get from x to y to z,” you lack clarity. That lack of clarity can cost you.