Annual Business Planning: what the OP do you need to know?

Now we are halfway through the year, it is often the time when we reflect (hello half year reviews) and think ahead to what’s next. At Amazon, the annual planning cycle, otherwise known as OP1 - or Operating Plan 1, starts around mid-summer. This is when teams start thinking about what they will deliver in the next 12 months, and bid for investment.

The OP1 document is a time to not only plan but to reflect too. Reflect on what you delivered, what was successful, what didn’t go as planned, and what you learned. This last part is often the bit that intrigues. You talk about your failures? Why?! Surely that erodes your chance of getting more cash for future projects.

Wrong. The reflection part of the document is often the part that leaders love to read. It holds a mirror up to the team, and in the honest reflection they see the growth, experimentation, and willingness to fail and learn.

Bezos himself has said, “Failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it's going to work, it's not an experiment.”

At Amazon, the OP is a written document (but you knew that already, right!) It is a maximum of 6 pages, and follows a similar framework to the one below. As I’ve mentioned a few times, this framework is a guide, and if any of these sections don’t fit your business or product then you don’t have to use them. Flex the frame to suit your document!

1. Agenda or BLUF - this sets out the overall purpose of the document, has a brief summary of what the doc will contain, and any asks. This could be in the form of budget, headcount, vocal support etc.
2. Strategic Overview -  this part will bring your reader up to speed and include relevant market data, an overview of the strategy, insights into the end users and risks. This part is usually where you set out the product structure, and how each product fits together.
3. Financials - usually the trailing 12 months, this could sit in the appendix and if included in the main body should take up no more than a paragraph. You should explain where the money has gone and the big investments from the previous year. You should also touch on value created and ROI. Explain the context rather than just quoting numbers. For example, “in 2022 we spend $1M on migrating our on-prem data centres to the AWS Cloud. This reduced our utility costs by $35K in the first 6 months, and reduced our associated carbon emissions by 82%.” Amazon isn’t a big fan of tables, but it can be a simple way to show where you are spending, returns and value created, and trends in spending over the last 2-3 years, especially if this is a focus for your business.
4. Learnings - this is where you talk about what you have already delivered (successes and failures), and what you learned.
5. Plan or Key Initiatives - this is where you set out your strategy at a high level. You talk about the big things you will deliver, the experiments and iterations. There’s no hard and fast way to approach this section, but you can think about it in terms of Customer Problems or Products, for example.
6. Roadmap - You detail a little about how you will go about delivering it and by when, but try to be as succinct as you can. This is also where you can reference the metrics you will track to know you are delivering value. In this section it is important to follow the money. The more money allocated or value that will be driven means more you’ll go into more detail within the document. Remember you also have appendices, so wireframes, technical documents, and other supporting material can go in there for readers to reference if interested.
7. FAQ & Appendix - these sections aren’t included in the six pages, but instead are reference material. I have two rules for this, don’t expect people to read this but be prepared for them to ask questions on anything you include. This section shouldn’t be a dumping ground for your document. It should be highly curated and include only assets that support your overall narrative. The last thing you want is for a reader to be fixated on charts and diagrams in Appendix 67 that has little to no tie back to your overall plan!

Once you have this drafted, start sharing. The more you share with interested people, the better your OP will become. Consider sharing with teams that work closely to yours, or with stakeholders and customers (if you can without needing NDAs!!) Refine your doc and focus on the story. Make sure the value you are proposing ties back to real customer problems. Follow the money, and be prepared for leadership to give you less budget. Think about where you will focus and where you could cut.

After OP1, comes OP2, when you know the budget you are getting for the next financial year and the real planning can start!

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