Everyone at Zingerman’s is currently engaged in what we’ve affectionately come to call ZAP, a simple acronym for Zingerman’s Annual Planning. Like any skill one is attempting to perfect, it takes time, practice and dedication to become a master planner.
Planning—and even more importantly following the plan—has become such a normal part of what we do that I can’t imagine trying to guide an organization without it. Yet based on conversations with hundreds of specialty food managers and owners, my guess is that many businesses do not create an annual plan.
Basically, the plan is how we map out the future we want to strive or in the coming year. We begin planning activities, not with the present-day reality, but with a vision of a better tomorrow. This process is sometimes referred to as “positive futuring,” or “beginning with the end in mind.”
Zingerman’s Annual Planning
The fiscal year at Zingerman’s starts August 1. The actual planning work kicks off in late March and ends in early July. As founding partners, Paul Saginaw and I draft a vision for the entire organization that goes out three years, then make adjustments and changes and get a consensus on the revised vision from the 13 managing partners. The vision needs to be broad enough to be meaningful to everyone in the organization. It will include some level of financial detail, plus a few major themes or focal areas. From there, we draft visions for each business within the organization, and each department as well.
Once the vision drafts are done, we back up and map out the action steps and financial budgets that will lead us to successfully arrive at those visions. Whereas a lot of folks in the business world use the terms “plan and “budget interchangeably, the budget is only one important element of what we do at Zingerman’s. The budget is the financial backbone. BUT we don’t start with a budget: We always begin with a vision.
We strive to encourage creativity and out-of-the-box thinking. We also connect as many dots between businesses and departments as possible, knowing that the better we can coordinate amongst ourselves during the planning, the more effectively we’ll be able to implement the plan.
The process should not take most companies as long as it takes us. We have a complex organization—eight businesses, more than 400 people, $27 million in annual sales—so planning is a significant and lengthy undertaking. In a small business with staff of fewer than ten, you can probably do a sound annual plan in a few weeks, or even a few days. No matter the size of your business, good planning will save time and yield far better results than the alternative—flying blind, working hard and hoping that things will turn out for the best.
Developing the Vision
Vision, as we define it, is a picture of a successful future that we’ve all agreed to go after. It’s pinned to a particular point in time, and includes enough measurable detail that we’ll know if we’ve arrived. In other words, if you were sitting on a magic carpet floating up above your organization, maybe two or three years down the road, and you could see success, what would it look like? How big would the organization be? What would it be known for? What does the community say about it? How would people be dealing with each other inside the organization? Who are your customers and what are they saying about you?
A vision of greatness for one of our businesses would include some key financial numbers—probably sales levels, profit levels, maybe cash or debt. These are important to state in the vision; growth of 10 percent is radically different from growth of 40 percent. Either can work, but the key is to have agreement in the vision of the growth level we’re going after so that we can effectively map out action steps to get there.
But the vision is much more than just numbers. It talks about improved product and service quality; how we’ve made the business a better place for people to work; how we’re perceived by our peers/the community/the trade. It would include any major changes or improvements to our systems or facilities, how we’re giving to the community, new initiatives and so on.
To be successful in any venture—large or small, business or personal—you must know what it will look like when you get where you’re going. Otherwise, you will spend a lot of time wandering. Worse still, you waste a lot of organizational energy while everyone either comes up with their own vision or waits for you to come up with yours.
Inspiring and Strategically Sound
A vision must be both inspiring and strategically sound. One without the other does not cut it. A successful vision also needs to be documented; when it’s not, it’s too nebulous, too simple to alter in conversation, too easy to back away from when things get tough. Putting the vision in writing adds power, making it more real and significantly more likely to succeed. Lastly, the vision must be communicated. An inspiring vision that nobody knows about is worthless.
The time frame is up to you; if you’re doing annual planning, it has to be at least one year out. (I recommend that you also develop a long-term vision—we’re working on ours for the year 2020, in which case our near-term visions should actively support that long-term vision.) It’s all about thinking big, approaching the future with a spirit of generosity, believing that everyone involved in the organization can win, along with the community, our industry and the world at large.
Doing the visioning work is an amazing thing to be part of. You can feel the energy level rise as people look at the future and start to let go of the day-to-day burdens of the present. It makes planning a fun and inspiring piece of work. People really get into it. Kari Nehro, a five-year employee, said that the most enjoyable part of the planning for her was, “knowing where we are heading as a business and being a part of making those decisions.”
Vision vs. Strategic Plan
The vision and a strategic plan are two different things. We start with the vision because that is what we agree that a successful future will look like. Vision is where we’re headed; a strategic plan tells us how we’re going to get there.
Our approach to annual planning includes these three key elements:
a) a vision of the future agreed upon by the entire staff;
b) a strategically sound plan of objectives and supporting action steps that we’ll take to get there;
c) a financial budget that supports and reflects the vision and the action plan. When we add up all our numbers—sales, profits, cash, debt payment, inventory levels, etc.—the business’ financial standing must look healthy and balanced.
At Zingerman’s, we want everyone to be in on the planning. (In practice we never get literally everyone, but we do involve a far bigger percentage of staff than most.) All planning meetings are open to staff; we want as many people to participate as possible. Most departments and businesses hold sessions where all staff are actively invited.
Why get everybody involved? Quite simply, we end up with a much better plan and far better execution. When people at every level of the organization have contributed, the diversity of views, backgrounds and levels of experience lead to a sounder, more robust annual plan.
But it’s not just the quality of the plan itself. When people participate—and remember, they’re actively creating the future of their choosing—they will be more interested in implementing the plan. Which means we have a better game plan going into the year, more staff aware of our goals and committed to meeting them, and hence a higher likelihood of making it come true.
The planning process is an ideal time to challenge the status quo. While we’re always working to recognize and reward creativity, the planning “season” is a great period to actively push for creative improvements. It provides an annual opportunity when we require ourselves to get strange, seemingly impossible, and definitely out-of-the-box ideas on the table. To do that, we want to unleash everyone’s creative powers.
The best ideas often come from where you’d least expect them. Sometimes it’s a new front-line staff person, sometimes it’s someone working in a different part of the organization. It can also be a supplier or a customer. Throughout the process, we are actively supportive of risk taking so that people are willing to overcome their natural fears of going after something too strange or unusual. An idea that is well thought out
a) has bought into the numbers in the budget
b) grasps the concept that all in the organization are operating out what is the equivalent of a “joint checking account.” Good budgeting ensures that we’ve all agreed on how to spend the inevitably-more-limited-than-most-people-want amount of cash we have to work with.
c) agrees on the levels of sales growth we’re going after. While sales are only one part of the equation, they are the key indicator of growth and so many other things—staffing, production, capital investment, etc.—are driven off of them. Remember, there’s no “right” or “wrong” level of growth. The key is to be clear and in agreement on what level of growth we’re going after and why.
d) understands that the profit targets are serious numbers. The profit is essentially the “paycheck” of the business. We have a huge obligation to the organization as an entity and all its stakeholders—staff, customers and community at large—to deliver on what we commit to. If we are not going to be able to deliver, we must be upfront about it and make appropriate adjustments in the budget so that things are as “in line” as possible by the end of the year.
We use a series of sign offs to verify that everybody is on board, has checked the plan and is 100 percent ready to give all to effectively implement it. If I think the plan is too aggressive or too flat or the action steps are not sound, I have an obligation to not sign off on it and to work with those involved to help make them better. This is true of everyone. I’m a believer in having everyone sign off on the plan before it can be finished—the manager may literally go around and get signatures from everyone who works in the department. This is just another way of creating a real commitment to the plan. A plan that belongs to everyone in the department or business rather than just the few folks at the “top” is always more effective.
Both during and after the planning process, leaders must sell the plan to all in the organization. It’s a lot like selling a product. To that end:
a) Think in headlines so it’s easy to sell. If I can capture the key points in an attention-getting phrase or two, it is more likely that we’ll get people to buy in.
b) Talk about it a lot. Each new hire throughout the year needs to be oriented to what we’re working on. How can they contribute if they don’t know the game plan and how things are going to date?
Implementing an Annual Plan
The results are only as good as the implementation. That requires regular revisiting of the plan during the year, making adjustments as needed. Some items in the plan will drop off the list for good reasons, others will get done just as planned, others may fall a bit behind. The ultimate commitment is to deliver the results. It’s imperative that we keep the end in mind—if we’ve agreed on a vision we have to talk about it regularly, and check our measurable targets for success throughout the year.
To keep moving in the right direction, some parts of the organization simply post their plans on big, poster-size sheets on the wall where everyone can see them. Some have it all on special software; others build quick updates into their weekly huddles. And we all do quarterly reviews where we touch base to see what’s working, what’s not and where we forecast to end the year.
Annual planning is ultimately just one more tool. Writing a good plan does not guarantee that all will go well; no tool will work better than the hands that are used to put it in play. But a well-written plan, one that starts with an inspiring and strategically sound vision, a set of strategically planned action steps to get you there, and a detailed budget will increase the odd of success.