By Andreas Pettersson, Founder, Leaders ADAPT
The leadership team drives two hours to a lodge. Half of them read the pre-read on the way. One read nothing. The finance lead is still closing last month on a laptop in the car park.
By lunch on day two the whiteboard is full. By the second week of January, nobody can find the photo of it.
That is not a planning problem. That is a preparation problem and a follow up problem, and the two days in the middle take the blame. This page is the annual planning chapter of our operating cadence guide. I ran annual planning on the Entrepreneurial Operating System (EOS) for years at Arcules, the company I founded, scaled to 150 people and sold to Canon, and I run it today at Leaders ADAPT with about 10 people.
Quick answer: Annual planning is a one to two day leadership session that reviews the past year, confirms the three year direction, and commits to a one year plan with a few measurable goals, a budget and the first quarter's priorities. Whether it works is decided outside the room: pre-work assigned weeks ahead, and a follow up rhythm that starts the first week back.
What is annual planning for a leadership team, and when should you hold it?
Annual planning is the once a year session where a leadership team turns its long range direction into a one year plan that the next four quarters are measured against.
It is not the finance team's budgeting cycle, although the budget comes out of it. If you searched for the corporate annual planning process run by FP&A, this is the leadership half of it. It is also not a quarterly session with a nicer venue.
Most operating systems prescribe one. EOS annual planning runs over two days. Scaling Up puts an annual planning session into its meeting rhythm. OKR teams set yearly objectives and break them into quarters.
If you want the wider verdict on the first of those, read my independent EOS review.
Hold it four to eight weeks before the new fiscal year. Early enough that the budget can follow the plan. Late enough that you know how this year is landing.
What pre-work should the team do before annual planning?
My rule is blunt. If people show up stressed, have not finished their own work and have not read anything, they walk in with the wrong mindset, and no agenda recovers that. You have to prime the pump, and I do it weeks ahead.
Priming the pump is the Leaders ADAPT pre-work sequence that gets every leader into annual planning with the numbers read, a written point of view, and their open work closed.
Delegate the preparation. Do not let the CEO or the Integrator build the whole pack alone. Each leader should bring a slightly different viewpoint and a slightly different experience into the room, prepared in advance.
| When | What happens | Owner |
|---|---|---|
| 6 weeks out | Dates locked, draft agenda sent, pre-work assigned by name | CEO or Integrator |
| 4 weeks out | Year in numbers: revenue, cost split fixed and variable, cash position, scorecard trends | Finance lead |
| 3 weeks out | One page per leader: what worked, what did not, the one bet for next year | Every leader |
| 2 weeks out | Viewpoint assignments: one customer view, one competitor view, one frontline view, one outside view | Named leaders |
| 1 week out | Issues list cleaned and pre-ranked, every one pager read by everyone | Whole team |
| 2 days out | Open work closed or handed off, so nobody arrives firefighting | Whole team |
Diverse viewpoints are not a courtesy. This summer I helped design a two day workshop for a leadership team that was described to us as excellent at doing and weak at planning. The design leaned on one thing: getting every voice into the room, especially the voices that usually get talked over.
Leaders ADAPT is an independent advisory firm. We have no affiliation with, certification from or endorsement by EOS Worldwide, the owner of EOS, or by Scaling Up, Pinnacle Business Guides, FranklinCovey or any other framework owner. Their system names appear here only to describe them, and the agenda below is our own design.
What does a two day annual planning agenda look like?
Day one looks back and sets direction. Day two commits. Here is the agenda I use, in our own format.
| Time | Day one: review and direction | Day two: commit |
|---|---|---|
| 08:30 | Arrive and check in, one sentence each | Overnight thinking, one sentence each |
| 09:00 | Year in review: what we said versus what happened | One year plan: three to five goals, one number and one owner each |
| 10:30 | Each leader's one pager, wins and misses | Budget: revenue, fixed cost, variable cost, cash floor |
| 12:00 | Lunch | Lunch |
| 13:00 | Three year picture: where we are going, what must be true | First quarter Rocks: one company wide, one per leader at most |
| 15:00 | The laundry list: every current project on the wall | Top three issues, solved not discussed |
| 16:30 | Boil the list down to three to five strategic initiatives | Follow up rhythm: owners, dates, first review |
| 17:30 | Close: what changed in your thinking today | Close: rate the two days, one commitment each |
The laundry list block is the one I suggested for that summer workshop. Capture every project the team is running, then boil the wall down to three to five initiatives. Teams are always shocked by the length of the list. That shock is the point.
A company under about 20 people can compress this into one long day. Above that, protect both days. The printable version is our annual planning agenda template, hour by hour.
What goes in a one year plan?
A one year plan is a single page stating next year's revenue, profit and cash targets, three to five goals with one number and one owner each, and the first quarter priorities.
EOS records it on the Vision/Traction Organizer. Scaling Up records annual priorities on its one page plan. OKR teams write annual objectives.
The labels change. The shape does not.
The value is in what the page leaves out. At Arcules, EOS gave us a framework to say no to a lot of things. That was worth more than any single goal we wrote down. A one year plan with nine goals is a wish list with a date on it.
The first quarter's Rocks come straight off this page. Setting them well is its own skill, covered in our quarterly planning guide. If your team argues about whether a goal should be an OKR, a KPI or a Rock, the OKR vs KPI comparison settles the vocabulary.
Should you use a facilitator for a leadership retreat?
A leadership retreat without a plan at the end is a retreat. Enjoy it. Do not call it annual planning.
For the planning version, an outside facilitator helps for one reason. The CEO cannot run the process and argue a position at the same time. I am not a fan of self implementation of EOS, because it is often driven by a Visionary who does not want to give up control to the Integrator. The self facilitated offsite has the same smell.
Hire one to change decisions, not to decorate the agenda. If the outside voice you want is an advisor for the CEO rather than a facilitator for the room, our guide on how to choose an executive coach covers the difference. Just make sure you are not doing it to check a box. You are doing it to improve things.
The second rule for any leadership offsite or executive offsite is about honesty. Prep people. Do not trick people into things.
Tell people straight up, ahead of time, what is on the table, including the hard seat or budget conversations. Then, in the room, separate the problem from the individual. That is the Nordic habit I grew up with, and EOS works well with it because it surfaces the issue without making it personal.
Why do leadership offsites fail, and what happens the week after?
Here is what happens when the follow up is left to goodwill. The first week back is full of the backlog you created by being away. The weekly meeting skips the plan to deal with fires. By March the plan is a PDF.
Written. Photographed. Shared. Forgotten.
There has to be a clear follow up rhythm the moment you are back in the office, otherwise it is just a meeting. A lot of teams miss that. This is the rhythm I use:
- Day one back: the plan goes out on one page, owners and dates visible.
- Week one: the weekly leadership meeting reviews the new Rocks, on track or off track.
- Week two: every leader walks their own team through the plan and their part of it.
- Day 30: the monthly numbers review compares results with the plan.
- Day 90: the quarterly business review closes the first quarter against the plan before the second quarter is set.
Motion is not progress. The offsite is motion. The rhythm after it is progress.
Where AI fits in annual planning, and what stays human
AI is good at the heavy lifting around the room. It can build the year in numbers pack from your systems, summarise every one pager into a single brief, cluster the laundry list, and turn the decisions made on day two into a draft plan and a to-do list by the time you drive home.
Be careful with the inputs. Companies self implement AI, skip the validation, never turn their prompts into repeatable skills, and things go off the rails.
I have walked into an organization where someone had built a CRM as a single HTML file with over 12 million lines of code. Too much generated information in the hands of people without context can send a whole organization in the wrong direction. After about a month of proper training, the right rules and a clear framework, the results come much quicker.
What stays human, every year:
- People decisions, including who owns which goal
- Issue solving judgment on the top three issues
- Accountability consequences for last year's misses
- Strategic commitments in the three year picture
- Performance conversations the plan will trigger
- External promises to a board, a bank or a customer
For the full list and the reasons, read what not to delegate to AI. For how AI maps onto every part of an operating system, see AI for companies running EOS.
What annual planning does not fix
A plan assumes leaders who can delegate, hold each other to account and have hard conversations in the weeks after. The plan cannot supply that.
Many companies have started with EOS first in order to move ahead, and they were not able to do it successfully when the leadership was poor. The same is true of an annual plan. A great plan in the hands of a team that avoids conflict produces a great PDF.
If your offsites keep producing the same issues list, the gap is not in the agenda. It is in the leadership team, and that is the subject of our leadership team development guide.
Common questions about annual planning
What is annual planning for a leadership team?
Annual planning is a once a year session, usually one or two days, where the leadership team reviews the past year, confirms its long range direction, and commits to a one year plan. The plan names a few measurable goals with one owner each, sets the budget, and defines the priorities for the first quarter of the new year.
How long should an annual planning session be?
Most leadership teams of five to ten people need two days: one to look back and confirm direction, one to commit to the plan, the budget and the first quarter priorities. A company under about 20 people can often finish in one long day. The pre-work, which starts weeks before the session, matters more than the length.
What should an annual planning meeting agenda include?
A workable agenda covers a numbers review of the year, what worked and what did not, the three year direction, a full list of current projects reduced to three to five initiatives, the one year goals, the budget, the first quarter priorities, the top issues, and a follow up plan with owners and review dates.
What is a 1 year plan in EOS?
In the Entrepreneurial Operating System, the one year plan is a section of the Vision/Traction Organizer. It states next year's revenue and profit targets, a few measurables, and a short list of annual goals. Quarterly Rocks are then set to move those goals forward. Other frameworks, such as Scaling Up, record the same idea in their own one page plan.
Should a CEO run their own leadership retreat?
It can work for a small team, but it is hard to run the process and argue a position at the same time. Many leadership teams use an outside facilitator so the CEO can participate as a leader. The facilitator adds value only when the team wants the session to change decisions, not when it is booked to tick a box.
What should happen after an annual planning offsite?
Within a day, the plan should go out on one page with owners and dates. Within the first week, the weekly leadership meeting should review the new quarter's priorities. After 30 days, the monthly numbers review should compare results with the plan, and after 90 days the quarterly review should close the first quarter against it.
Your next question
- How the quarterly business review closes each quarter against the plan
- OKR examples a leadership team can copy
- 1:1 advisory for the CEO preparing the year
Look at the photo of last year's whiteboard. How much of your annual planning actually made it to December? Tell me in a reply.
What it is: 1:1 advisory with Andreas Pettersson, who has run annual planning at 10 and at 150 people, to design the weeks before, the two days and the follow up rhythm. Who it is for: CEOs of 20 to 200 person companies who want next year's plan to survive past February. Explore 1:1 CEO advisory
