Episode 1
· 19:13
Welcome to opening the c suite. Corey. Mike. And, today, we're gonna talk about the annual planning process, and I don't care how
Mike Shannon:big It sounds almost too boring to be.
Corey Ferengul:It does. It does. But I don't care how big or how small your company is, There should be some annual planning process. Yeah. And and, Mike, the the the first question for you on this is, so what do you think is part of the annual planning process?
Corey Ferengul:I mean, we go all the way from strategic to just give me a budget for the next year. Like, where did you fall?
Mike Shannon:Oh, yeah. I mean, I went to the full, like, evolution. There was a learning curve to, enough of these kinda oh shoot moments coming up to sneak up on me once we had a a growing operation, probably around series a time. Right. So I had to learn, you know, from you and others what the planning process was.
Mike Shannon:There was no annual planning process until that. So from the the more kind of mature company standpoint, yeah, walk us into it when you even start planning. It's middle of summer right now.
Corey Ferengul:Yeah. I mean, if I were, you know, run a company today, I'd be starting thinking about my planning process. Today. We're going into June. I would I know.
Corey Ferengul:It's June. Yeah. I I wouldn't be entering the planning process. I'd start mapping it out.
Mike Shannon:So far. And your your business cycle is on the calendar year?
Corey Ferengul:On the calendar year. And and and when I say planning process, if I think of the continuum of going all the way from purely assessing strategy, which some companies will reassess strategy every year and and the and the short end is just crank out a budget. Right? Yeah. I was somewhere in the middle where I always looked at my planning process as being part, how are we doing against strategy?
Corey Ferengul:Are we how are strategic initiatives? I always wanted my goals to be an output of the planning process and the budget. Alright. But if I was doing it right, I won't say I always did it right, I was thinking now about the calendar. Yeah.
Corey Ferengul:And the calendar of the planning process involves when you're gonna get a tops down plan, meaning when you're gonna talk with your board. Yeah. If you're a public company, listen to your investors and hear what people are expecting on the numbers next year, both the revenue and cost side. Okay. I would be talking to sales, give me bottoms up, what they think is accomplishable.
Corey Ferengul:I'd be talking to my my product oriented teams in the software world that's, you know, product management engineering, and, you know, what do you think is possible in the market? What can we do launch next year? What's there?
Mike Shannon:So you're having these conversations in the summer.
Corey Ferengul:Yep.
Mike Shannon:And you as a CEO are, what, grabbing 1 on ones with those partners?
Corey Ferengul:Yeah. Yeah. Yeah. And and so not big meetings or anything like that. But, like, good example, I go to the CFO and say, hey.
Corey Ferengul:We're gonna need, you know, just give me the baseline of next year cost by September 1st. Okay. Like, if we in other words, if we just run it next year as is, what's our baseline cost? Where are we at? Yep.
Corey Ferengul:You know, just give me that. And and usually the CFO would be like, well, if I'm doing my job right, I can give it to you tomorrow because I should
Mike Shannon:have that.
Corey Ferengul:Yeah. You know, something like which is which is what you want, you know, sales leader. I'm gonna probably tell them I want your bottoms up here by early September because I would plan, an executive get together sometime in September. Yeah. And that would be one where we would more brainstorm.
Corey Ferengul:Like, hey. Here's what we could bring new to the market next year. Here's what we could build.
Mike Shannon:Yeah.
Corey Ferengul:Here's what we could launch. Here's what we see from competitors. Here's how we're competing in the market. Here's what we think that the state state of the sales team is. Here's what's opportunity.
Mike Shannon:Yep. Wagner, let me ask you this though. So I'm I'm coming at this even when we had more of an operation on a few $1,000,000 in revenue. The fall, we were on, as you know, you know, seasonal sales side. Yeah.
Mike Shannon:Yeah. Yeah. Fall, we're in education tech. Fall semester, spring semester. So if you got me in the middle of the summer, I'm not thinking about anything but the fall revenue number.
Mike Shannon:Right. And so and then even right after that, I'm kinda just thinking about January revenue. How do you, as CEO, how do you pull yourself away from the immediate thing that's right in
Corey Ferengul:front of you? It's literally the job of the CEO. Right? It's the hardest part the CEO has is to know when to pull back and when to fly above versus when to dive in and do. And I will say having dealt with a lot of early stage CEOs, and you were better than this
Mike Shannon:more of them.
Corey Ferengul:Yeah. Yeah. You were better than most because too many of them think, well, I have to do it. Yeah. And they jump into too many activities like, I have to do it.
Corey Ferengul:I should be the one to do You know? Yeah. But if you don't nail planning right and and cycle your cycle would have to be off. Right? Because you had a fall.
Corey Ferengul:Yeah. Right. You were too busy. You couldn't do a meeting then you're the middle of it. You're you're a big seg you've generally got 60% of your revenue for the year.
Corey Ferengul:That was, like, you were done. But you had to have the planning process. Yep. And there's never a time in the calendar for the CEO. I'm like, oh, I can just carve this Yeah.
Corey Ferengul:If you don't have time, then you probably have a problem with one of your executives somewhere because you're going too much of someone else's job.
Mike Shannon:Yeah. Good
Corey Ferengul:point. Right? And so that's that's always the way I I look at it. And,
Mike Shannon:when does the board get involved? You're you're talking about having these slight conversations in the summer. Yeah. Walk us actually through. It's a little tedious, but, you know, on Corey's calendar as CEO, you have these 1 on ones happening in the summertime.
Mike Shannon:When do you get the rest of that team altogether? When does the board get involved?
Corey Ferengul:I mean, if you go through the team right? So some are doing 1 on 1 conversations. I get a bunch of materials, kinda call it early September. Everybody's taking turns presenting it at group meeting. It's mid September.
Corey Ferengul:We're leaving that with to do items, you know, and nail this down closer, get tighter on these. Let's prioritize these areas. Okay. You know, prioritize investments which is gonna lead to the financial side of the budget being nailed Alright. And asks for headcount being nailed.
Mike Shannon:Yeah.
Corey Ferengul:I would target a November get together for the exec team to kind of nail down our plan knowing it's not gonna be finalized till January till we have all the year wrapped up.
Mike Shannon:Got it. Okay.
Corey Ferengul:Assuming a calendar year. Yeah. The board, sometimes, you know without asking. Yeah. If you're a public company, you are you know the consensus that the market has for you.
Corey Ferengul:Like, when I was a public company, our CFO could tell me by, you know, July 1. Well, next year they're gonna expect this.
Mike Shannon:Yeah. Okay.
Corey Ferengul:It was over. I didn't even have to go to anybody. We didn't we didn't have to talk with the board. We would tell the board what the market is expecting.
Mike Shannon:Yeah.
Corey Ferengul:Private companies, it may be over as well because you might have investors that came in on a thesis
Mike Shannon:Yeah.
Corey Ferengul:Of a certain growth level, and that's just actually in your brain and you know. Generally speaking, you should be talking to them as soon as early July or as soon as you get 2 two results.
Mike Shannon:Talk to the board. The board. Early July.
Corey Ferengul:Yeah. And then once again, assuming an offset calendar, 2 quarters into the year. I'm halfway through the year. Yeah. Here's what it looks like.
Corey Ferengul:I should have a little better visibility into the the the year now.
Mike Shannon:Yeah. And this is in a in a situation where you have, like, what, 4 board meetings a year? Sure. I I just assume that. Yeah.
Mike Shannon:Okay.
Corey Ferengul:Yeah. But but those are 1 on 1 We were
Mike Shannon:doing 6. Those are 1
Corey Ferengul:on 1 calls to board members. Yeah. Those are that's, you know, so that that's a harder conversation to have with the whole room unless you have a completely closely held company and only a single firm on board Yeah. Yeah. Which happens regularly.
Corey Ferengul:Right? But, yeah, assume 4 board meetings, but I'm after the first half of the year, I'm going back to the board and saying, alright. Kinda here's where we think the year's gonna wind up. Yeah.
Mike Shannon:Now what do you think next year should go? Alright. Let me ask you this. That's obviously there's some patterns that had to have taken place for you to get there. I remember the first time I thought I was way out of a year.
Mike Shannon:It was like around the holidays. Right. Right. December, I'm sitting at a coffee shop, I've got my calendar open, notes or whatever, like, alright, here's what snuck up last year, I'm way out of it. You're talking 6 months before even me thinking I'm ahead of it.
Mike Shannon:Absolutely. And the only reason I was doing that in December, you know, that one year was, because things had snuck up on me and I always like, oh, shoot, you know, somebody's asking for this. I don't know. I haven't thought about when, you know, whatever the performance review cycle might happen or, you know, whatever. This this rescue attempt on a on a, you know, sales effort is going to happen.
Mike Shannon:So I started preplanning those. What can go wrong? And maybe what have you experienced yourself or with other CEOs that got you to this perspective of the summer before the next year you start the process?
Corey Ferengul:You hardest part, you get into March or April, you don't have a plan for the year, you can't roll up commission plans, you don't know bonus plans for the organization, you don't know sales target, you haven't prioritized your engineering or your your product oriented works for the year. You haven't prioritized the market launch. But all of a sudden, you're a quarter into the next year, and you're trying to figure out what you're gonna do this year? Yeah. You know, now what?
Corey Ferengul:And and I mentioned that it's really wasted dollars and opportunity. Right? Right.
Mike Shannon:And and
Corey Ferengul:by the way, that happens to companies when things are both going really well or really poorly. When it's going really well, it's like, oh, it's good. Let's just keep doing it again. We'll just hit those numbers next year. And as you you know, I'm a big believer in I wanna know why something went well Totally.
Corey Ferengul:So I can repeat it again.
Mike Shannon:Oh, yeah. Yeah. And I've been selling on that probably by you in in board meeting of things are going well. Yeah. It's not this is gonna be an easy board meeting.
Mike Shannon:What's going well? Yeah. And why is it happening?
Corey Ferengul:Yeah.
Mike Shannon:And how are we repeating or doing more of it in in those latter two questions, you know. Not always the most intuitive dance.
Corey Ferengul:No. And and sometimes you're so happy it's going well that you don't inspect.
Mike Shannon:Yeah. Right?
Corey Ferengul:Good. Good. Good. It's working. Oh, it's been good.
Corey Ferengul:I got this. It's good. Exactly. Now what's working? Why is it working?
Corey Ferengul:When it's working. Yeah. So, yeah, it was I mean, I've had a situation like that where I was a public company where in December, we were creating the budget. It was a tops down budget. Let's be very clear.
Corey Ferengul:The market was saying, you know, here's your numbers for next year.
Mike Shannon:Yeah.
Corey Ferengul:And the expense budget, everyone was asking for money and head of FP and A came to me and said, so you know, we got x millions of new spending next year. I don't know how to justify in the board meeting. Yeah. And the board will tell us to cut it if it's not clear, which they should. Right?
Corey Ferengul:If it's not clear
Mike Shannon:And that x spending came from kinda bottom up request of headcount.
Corey Ferengul:Exactly. And it fit the financial model, but without the detail. Oh, interesting. You know? And so so it was like, okay.
Corey Ferengul:Next year, we could hit this top line number, hit this profitability number that meant our expenses can go up this amount. Yeah. And then people put in their requests little horse trading. I was like, okay. Now you get that.
Corey Ferengul:Mhmm. But then with the board doing its job, they said, why? Why are you spending there? What's that gonna do? And and I know the model works, but Yeah.
Corey Ferengul:What? And we didn't have it. And all of a sudden, we we strangled around for a couple of weeks over holidays pulling it together for January board meeting to approve the budget. Right?
Mike Shannon:Now have you ever had this where have you ever, as CEO, incidentally or casually, like, approved, you know, sort of the wish list and then it gets to the board meeting and it gets cut off?
Corey Ferengul:A little bit. Okay. A little bit. Yeah. It I think I am.
Corey Ferengul:I just think you're laughing. Yeah.
Mike Shannon:It's like because we're we're doing things internally and it's like, oh, yeah. It makes sense. This makes sense. And then the, you know, end of your board meeting happens, maybe the revenue numbers aren't where they want them to be, but now you're going back to the team.
Corey Ferengul:Yeah.
Mike Shannon:Oh, that I we're actually not doing that. Right. And, like, how do you how do you approach that now
Corey Ferengul:Yeah.
Mike Shannon:As CEO? I mean,
Corey Ferengul:it's just it it, honestly, it's like a little crow. Alright. We didn't have all this through well enough in advance. Yeah.
Mike Shannon:You know,
Corey Ferengul:I hope Yeah. Yeah. Went to the board. They asked us the questions. Here's what we're gonna do.
Corey Ferengul:Now one area I wanna ask you about, you were great about setting annual goals, about having OKRs, about having shared clear direction for the company. When did you start doing that first off and what was your process for coming up with those?
Mike Shannon:Yeah. It's a great question. We came out of, you know, as as, you know, 4 years of trying to bang our heads against
Corey Ferengul:the wall Yeah. On a
Mike Shannon:model that wasn't working. Right? We were trying to rent digital textbooks by the day requiring publisher licensing rights. We didn't get there. So for 4 years, it was like this really heavy lift we're trying to pull off.
Mike Shannon:By the time we had pivoted had, you know, a piece of software of our own Yes. This writing practice tool that we could sell. It it was so tough to get the first funding on that. And so we I had a list of, like, 88 thesis, you know, all those on a small, like, 2, 2 and a half $1,000,000 series a. So by the time we got the the first, like, multimillion dollar, you know, relatively small series a
Corey Ferengul:check Yeah.
Mike Shannon:It was actually dependent upon a very specific number that, in that case, came from the market. Right. Right? So, like, we've talked about this. Sometimes the number you have to hit comes from the market or from the board top down.
Mike Shannon:You know, other times you're building bottom up, and and you're usually doing both trying to figure out where where it matches. We just had a number of, like, well, if it can get to it's about a $1,000,000,000 revenue year. Yeah. Then maybe that's something investable. And so we just came from having that number, and then once we had, like, the funding down, we were starting with an operating plan that we knew we we had to hit.
Mike Shannon:So we were always kinda starting bottom up trying to figure out the math and the operation that would meet the number that you know, at least for the first couple of years. Right. We knew we had to get because you have to go from a 1,000,000 to 2,000,000 to 4,000,000. Now once you're past, like, you know, the 5 or 6,000,000, I think we were collaborating with the board and an exec team coming up with something bottom up of where we think we can go based on the leverage we pull. Yep.
Mike Shannon:But, yeah, like, we were just so disciplined after years of having no traction and, like, no VC investment that finally was, like, I just depended on having everybody know here's the goal and here's the you know, we're OKRs. So here's the objective. Here's the key results to get there. Because if I can't explain that to you, right Right. In a way that also the exec team and the rest of the team is on board with.
Mike Shannon:It's like, as a CEO, I'm on an island.
Corey Ferengul:So how many OKRs? I I mean, start there. Like, how did and how did you decide? Like, is it by this year, 2 this year? What would it do?
Corey Ferengul:Yeah.
Mike Shannon:I I think everybody's quite different. I my rule of thumb, I'd like to have kind of 3 and 3. So there's always, like, 3 objectives even, you know, being at the ground floor when you start. It's like 3 objectives. No more ideally than 3 key results per and, obviously, those will go more granular into team product plans.
Mike Shannon:Yep. But I would you know, this open every board meeting, every exec team meeting, we're opening up the OKRs Yeah. And then, like, it has to just fit. It was not that visual. You have to be able to go through really quick.
Mike Shannon:This is red, yellow, green. Was revenue one of those? Yeah. It's usually, like, the growth objective. Yep.
Mike Shannon:You know, toy with the verbiage to that. We're inspired behind the revenue. It's growth. Actually, no. We we'd go product, then there'd be growth.
Mike Shannon:And then 3 is sort of, like, experimental. It could be that we're trying, you know, what we're trying to channel partners, I think, at one point. Yep. You know, there might be some operational things, culture
Corey Ferengul:New markets that you're opening.
Mike Shannon:Yes. Like, catch all packs in the
Corey Ferengul:3rd, but product growth and then catch all. And and then would you roll that out to every other org early so they can create their roll up to it? Did you just pull them to the company top ones?
Mike Shannon:Yeah. That so that that became, like, my more core experience with, like, annual planning is, the the exec team sessions, and we would do usually, like, 2 day off sites
Corey Ferengul:Yep.
Mike Shannon:That formed the the OKRs. And I I tried both ways, like, I would try to come in with blank canvas Yep. And sort of conduct, like, a whiteboard session across the team. Yeah. Often times I get some feedback there from executive members of we're wasting some time Yeah.
Mike Shannon:Going from nothing to something. Why don't you come in with a draft? Yep.
Corey Ferengul:So
Mike Shannon:then I started coming in. I'm not, like, dictating top down here's exactly what we're doing. Yeah. But I I have more of the insight from, like, what the board or the market's gonna need to see. So I come in with a draft, and would usually ask for that to just get reviewed, maybe some comments on a Google Doc, then we go into this whiteboarding session.
Corey Ferengul:Yep.
Mike Shannon:That's usually a 2 day thing. And as the team is larger, like, over a 100 employees, it was a core exec team that's, like, 8 or 9 doing that for 2 days, then we take it to what we call senior leadership that was, you know, 15 or so people. Then it goes across the whole company in this town hall. The town hall is like this little celebratory, like, yeah, we're launching, you know, big exciting Next year
Corey Ferengul:is gonna be great.
Mike Shannon:Yeah. And and here's what we're doing. So I'd like to have, like, the objective states consistent throughout the year. Yep. We tried doing them, like, trimesters of the year, 3 different ones, but it's hard to change them that many times.
Mike Shannon:So it's like the objectives stay the same. The key results are gonna shift, you know, 3 to 4 times a year.
Corey Ferengul:But you effectively had a planning process. Yeah. So your planning process, we kinda put it all together. It was not full strategy revisit every year, but it was how do we continue down the path. Yeah.
Corey Ferengul:Right? And every few years, you probably should do a full strategy look. But Yep. At least every year, you gotta say, what are we doing next year to continue to get where we're gonna go?
Mike Shannon:Yeah.
Corey Ferengul:It's gotta include what are the activities of the business, and it's also gotta include the financial plan behind that. Yeah. It's gotta have input from the board, not only on the market direction, but also the numbers. Yeah. You gotta have your sales team input on what's choppin' accomplishable.
Corey Ferengul:Finance has gotta help you level set where we're at. Sure. And then also tell you, you know, where where are our options if we're able to hit these numbers. What does it look like? Yeah.
Corey Ferengul:And you need to involve your executive team. So not only you're not telling them what to do, but you are also bringing them in to the conversation so that they are part of the process and they hone it with you as the executive.
Mike Shannon:Yeah. And then And then unpack that one. I'm curious your your take on this. So the communication of it all Yeah. I think it's like central CEO job.
Corey Ferengul:That's right. And I
Mike Shannon:like to think of, you know, the sort of late person terms, OKRs, is like the cover art on the financial plan. Yep. We did get more files to kinda your level as we're above 10,000,000 revenue Sure. Where it's it is a financial plan that we're talking about the board and exec team level. But without the cover art of, like, you know, common language, OKRs, and being able to point to here's the levers within that financial model, Now we're just like in this big spreadsheet.
Mike Shannon:So how do you approach the the common communications of it all?
Corey Ferengul:I I mean, more than that. I'm a big believer in transparent leadership. That'll be another discussion we have at some point. And I I'm I believe walking into the organization and just laying it out as clearly as possible, but giving it to them on an understood timeline. We're gonna do a kickoff beginning of the year whether that's virtual, whether that's in person, we're doing a kickoff.
Corey Ferengul:At that kickoff, I'm gonna tell you what our goals are for the year. I'm gonna tell you what our finance plan looks like for the year. And then you're gonna have information coming from your managers on hires and and, you know, your expectations for the year. And it was always to your point, celebratory meeting. Yeah.
Corey Ferengul:This is exciting. I would also share with them the results from the year before.
Mike Shannon:Yeah. The retro. Yeah. Yeah. And this Always the retro.
Corey Ferengul:Absolutely. That's what we think we did right, we did wrong. But, more importantly, it was not just a launch, but then it was the constant reinforcement. Love your point about bringing it up every board meeting, every company meeting. These are the goals to see how we're tracking.
Corey Ferengul:I was a big fan of that. I will tell you some of the organization didn't feel good when we weren't doing good at something. Yeah. But we're not tracking well. Do we really wanna get people excited?
Corey Ferengul:Yeah. We should let's be honest with ourselves. Yeah. We're not doing good. Yeah.
Corey Ferengul:We should do better.
Mike Shannon:So Well, and I know we have another segment coming up on meeting design that we will take, you know, it's not just this annual plan, but it's then how is that conducted through whatever it is weekly, monthly, you know, throughout the year Yep. Meeting design. So not time to get there today. I think that's it for annual plan. That it?
Mike Shannon:Alright. Thanks, everyone.
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