Quarterly planning best practice

8 Dec

Are you in the throes of quarterly planning yet? (If not, what are you doing instead?!)

With three weeks to go until the end of ‘work time’ in 2023 and indeed Q4, the vast majority of Product teams will find themselves in some sort of look forward to what they will be working on in January. Of course, we will all come back in the new year with a vague recollection of what we discussed and agreed prior to overdosing on mince pies and Quality Street (or whatever else takes your fancy during the holidays!)

We put ourselves through these motions every 12 weeks, in the hope that planning will guarantee success and enable us to overcome adversity, i.e. anything that can get in our way of delivering continuous value to customers. A much overused saying is of course the one by Benjamin Franklin: if you fail to plan, you plan to fail - which implies that despite the tendency for life to throw us curveballs which completely disrupt our best intentions, having a plan is better than not having a plan.

So why does quarterly planning get such a bad rep?

I believe it comes down to three factors:

Humans are bad at predicting the future
Humans are bad at making decisions
Humans are bad at resolving conflict

Let’s look at each in turn, and then what you can do about it instead.

Humans are bad at predicting the future

Here’s a truth bomb straight up: we don’t know what’s going to happen to us in a few minutes, let alone a few months. Shocker, I know.

Time is a weird creature that humans haven’t yet managed to master. Which means that any plan we make is pretty useless, even as we are making it. Can we foresee what is going to happen in the future? No. Can we account for every eventuality? No. Is it even worth bothering with planning? Yes.

Modelling what we would like to achieve against potential scenarios can be helpful in as much as they get us ready to quickly adapt as things inevitably change. The value is not in following a set plan rigidly, even when it doesn’t make sense anymore. The value is in being prepared enough to anticipate new scenarios and adapt as the situation evolves. That’s a combination of individual mental readiness, having enough slack in capacity that teams can change track rapidly without much downtime, and leadership supporting them to do so by providing whatever resources they need. All of these are super valuable to develop, as part of the quarterly planning process. We want teams to:

Be open to new possibilities, whilst clear on what the goal is and our best guess at how to achieve it
Have enough time and space to explore those new possibilities, and not be maxed out and stressed out with delivery
Have all that they need to be do this successfully - data, tooling, quick decisions by leaders

And on that note about making decisions…

Humans are bad at making decisions

On your own, you are bad at making a decision because of cognitive bias, emotional influences, limited information processing capability and overconfidence.

When we’re in a group making decisions it gets even worse.

Psychologists agree that one of the worst things you can do when making a decision is get everybody in a room together (sorry, Agile practitioners). It’s well researched that the bigger the group, the more likelihood of social loafing occurring (Latané et al, 1979). Essentially just adding another person can impact individual effort by up to 34%, and having six in a group reduces individual effort by 64%! So my advice is keep groups small and definitely have no more than 4 to 6 people in a session where you’re trying to make a decision on quarterly planning (and even then expect some people not to fully participate in the process).

In addition to slacking off - sorry, social loafing - teams may also suffer from social norming processes that influence the robustness of decision making. Taking group polarisation first (Moscovici and Zavalloni, 1969), that’s where a group can adopt a more extreme position than that of individual members, because they are swayed by the persuasive arguments that others put forwards. In other words, folk don’t just want to say they don’t agree - they want to say how much they do agree with a position that may not be their own just so they can fit in. Peer pressure much?

And if that wasn’t bad enough, there’s also groupthink to contend with (Janis, 1982). This phenomena has been responsible for many disasters, including NASA’s Challenger explosion, the Bay of Pigs invasion in 1961 and the futile search for weapons of mass destruction in Iraq. Essentially, sticking people in a room away from others, with a directive leader with a strong opinion on what should be done (HiPPO) and a high stress situation will result in groupthink. Does that sound familiar?

These social norming processes operate to create cohesiveness and harmony: we think we’re agreeing because people are saying so. But what people do, say and think can be entirely different. In fact, people may not be agreeing but because we have an aversion to conflict we’re taking the easy way out. Which brings me to…

Humans are bad at resolving conflict

We don’t like conflict: somewhere in our ancient brain conflict represents a threat to our survival, triggers our fight, flight, freeze response, and so is to be avoided at all costs. But avoidance isn’t a panacea and creates more problems than it solves. Unfortunately some folk see quarterly planning as a bidding war, a competition to see who can get the most ideas through the process. Let me tell you, there’s no glory in ‘winning’ to get an idea through if a team can’t deliver it because they foresaw issues but were too afraid to speak up.

To be good at resolving conflict we need skills in active listening, empathy, problem solving and negotiation. We need to understand the other side’s perspective - walk in their shoes. To do this, we need time, which ironically is often a luxury in quarterly planning (even though we know it’s going to come around when it does). Don’t start quarterly planning a week out from when you want to begin, or even worse, when you’re already in the quarter. This puts massive amounts of pressure on people to conform, for the sake of getting the process done, when really with more time they would express their concerns and you would work through them together - arguably a better, more effective outcome.

How to be good at quarterly planning

It seems that there are many challenges when it comes to effective quarterly planning - yet there is a point to it - so how can you do better?

Essentially I believe it comes down to these 7 recommendations (but would very much like to hear from others on what’s worked for them):

Make sure you are super clear on what goals the business is striving for. If you don’t have any then quarterly planning ain’t gonna help you (in that case a starting point may be creating a business strategy and objectives). I really like the frame of a North Star Metric, so you can tie every initiative back to how it contributes to this - and if it doesn’t, why the hell are you prioritising it?
Ensure that everybody in the company is signed up to quarterly planning being the mechanism by which the bigger pieces of work get prioritised. Don’t let it get derailed or undermined by one team saying they didn’t have input to the process, they weren’t consulted, they have a big laundry list of things they need done. Everybody needs to respect that quarterly planning is going to drive the outcomes the whole business wants, linking back to the bigger company goals, rather than just what one individual or group wants (and that goes for leadership peeps who are building their own empires too!)
Rather than treat it as one big conversation, break it down into a series of smaller conversations. Product teams can chat to Finance, business stakeholders and their tech teams separately, in smaller groups. That way you will get more active participation from folk (and less social loafing!)
Give yourself enough time to have those conversations. We arbitrarily put a time container around this kind of planning (namely, a quarter, d’oh), but that doesn’t mean the conversation has to happen once every 12 weeks. The best teams are continuously having these conversations throughout the quarter. The best planning process is one that isn’t rushed - use time to your advantage by starting early and scheduling what needs to happen.
Use an objective criteria for making decisions, framed in a matrix. RICE is one, there are others such as MoSCoW, Kano, Eisenhower. Set up the rubric in advance, then get what data you can - product analytics, customer insight, financial modelling, tech high level estimates - put it all together and see what comes out.
Assign a devil’s advocate - someone who will challenge your thinking on a particular topic by arguing for opposing perspectives. Listen when they say things won’t work, will take longer, create dependencies between teams, and so on. Don’t just bury these issues in a rush to get to consensus and harmony: humbly acknowledge these challenges and work through them one by one.
Hold a retrospective once you’re done - so you can learn what worked and didn’t, and do better next time.