When I joined Amazon in 1999, it was a high-growth startup with little structure. In particular, our early attempts at annual planning were clumsy. Here are the top 8 pitfalls we have observed along the way:
1) Setting goals but not tracking them
Setting goals is easy, but tracking progress with real data requires diligence. Too many companies set ambitious targets but don’t have a systematic way to inspect whether they’re on track. At Amazon, we built Weekly and Monthly Business Reviews to track inputs and detect variance early.
2) No processes for when things change
They say that no plan survives contact with reality. New data emerges, unexpected challenges arise, etc. If you don’t have a mechanism for course correction, your plan will quickly become unhelpful.
3) Setting goals without understanding dependencies and resources
Great planning surfaces resource constraints and interdependencies. If a team can’t tell you precisely what resources they need from other departments or third parties, then the odds of achieving the plan plummet.
4) The goals are too top-down
When goals are imposed from above without ground-level context, they are often unrealistic or misaligned with the reality of the work. At Amazon, we expected each team to build a bottom-up plan that reflected its realities, and then to reconcile that with top-down guidance.
5) The goals are too bottom-up
Conversely, when every team creates a plan in isolation without executive guidance, you lose the benefit of central direction and coordinated prioritization. This often leads to wasted effort where teams invest weeks building plans that are rejected upon executive review.
6) There’s a lack of executive review and engagement
A good plan is a contract. It should be developed by the teams and then carefully inspected and adjusted by the Executive team.
7) There’s a lack of alignment between teams
Misaligned plans create friction. Dependencies get missed, timelines don’t sync up, and teams work against one another.
8) Teams and Execs don’t make the tough prioritization decisions
Deciding what not to do is as important as deciding what to do. But most teams and Execs fall into the bad habit of creating long lists of initiatives that can’t be achieved with their limited resources. Without good prioritization, everything and nothing are priorities.
When Amazon was scaling from a few to dozens of business units, we faced all these challenges. It took a deliberate effort to build mechanisms that forced clarity, tradeoffs, and alignment.
If your company’s Operating Plan feels like an annual exercise in bureaucracy and wishful thinking rather than a useful blueprint, it’s likely because you’re falling into one or more of these traps. Fixing them is possible, but it requires a willingness to adopt new mechanisms and stick to them.
You can learn more about how to do this in our brand new course, Operating Plan Mastery: https://lnkd.in/gVQB3Qj9
