Jory MacKay on December 19, 2023 The ultimate guide to annual planning for product teams
Contrary to what most product teams have heard, annual planning isn’t just reserved for senior executives and finance teams. Instead, it’s a core part of the project and product management process.
In fact, an annual product survey found that over 30% of teams plan their roadmaps a year in advance, dispelling the myth that agile teams shouldn’t waste their time planning far into the future.
If you’re a project manager or team leader gearing up to build a long-term product roadmap, this article is for you.
Jump to a section:
In this guide, we’ll cover all things annual product planning — from what it is to a step-by-step guide to creating a highly effective plan.
What is annual planning?
Annual planning is the process of developing a plan — complete with goals, objectives, and milestones — for the year ahead. For product teams, annual planning helps create a high-level development roadmap that’s aligned with the product’s vision and strategy.
The key phrase here is high-level.
An annual product plan isn’t detailed because product teams must remain flexible to change priorities and customer needs. Instead, view your annual plan as your guiding star rather than a detailed set of instructions.
What’s the purpose of an annual plan for products?
So, if annual planning for product teams is just a guiding star, why bother spending time on it?
Here are some of the main benefits teams see when they go through the annual planning process:
- Connects the product to the organization’s strategy. Annual planning happens at all levels of the organization, providing an excellent opportunity for teams to align. The best annual product plans connect to the organization’s mission and strategy to ensure everyone is pulling in the same direction.
- Provides a sense of direction for your team and product. Product teams often complain that they don’t see how their day-to-day work links to the bigger picture. Your annual plan is that bigger picture, helping everyone connect the dots between their work and the business strategy.
- Aligns everyone on the priorities and focus areas. As products grow and evolve, new ideas emerge from the woodwork. An annual plan provides a focus for the team by detailing which areas are priorities and which are on the backlog.
- Establishes goals and milestones to measure performance. An annual plan helps you set expectations for the next year by defining what should be achieved and by when. Monthly or quarterly milestones give everyone targets to strive towards and clear KPIs and metrics to measure performance against.
- Sets a clear benchmark to reflect on next year. Every annual plan is also an investment for the future. A lot changes in a year and annual plans are a great reference point to reflect on where you’ve come from, what you’ve achieved, and what’s changed over 12 months.
It’s a myth that agile teams shouldn’t waste their time planning far into the future. 30% of teams plan their roadmaps a year in advance.
What should you include in an annual plan for your product?
While every organization has its own annual planning template, they all have several elements in common.
Here are some of the key components to include in your next annual product plan:
- Company vision/mission statement. This is a guiding statement of what your company does, why it exists, and what makes it unique versus the competition. Your product should contribute to this, so leading with it as a reference point is good practice.
- The previous year’s performance, achievements, and setbacks. This provides the context for your annual plan. While it’s important to keep this section concise, it should give the story of your product so far and serve as the baseline for this year’s annual plan.
- Product goals for the year ahead. Now we start looking forward by setting the product’s goals. While setting effective goals can be hard, it’s best practice to follow the SMART framework and keep the number of goals between 1-3. They should align with your organization’s strategic goals wherever possible.
- Underpinning objectives, milestones, and KPIs. Objectives, milestones, and KPIs underpin the achievement of your goals, helping to break them down into monthly or quarterly achievements. They also help monitor performance, allowing course correction if things are going wrong.
- Required budget and resources. For many organizations, annual plans serve as a mechanism to secure budgets and resources. Include a high-level view of what you’ll need to deliver your goals.
- Risks, buffers, and contingency. Annual plans are built without the luxury of a crystal ball. Knowing that things will change, it’s good practice to identify any risks that may hamper your progress. To be proactive, also highlight any buffer or contingency plans you’ll call upon to mitigate those risks.
- An executive summary. While this is the last thing on our list, it will actually go at the top of your annual plan. Summarize everything into 5 or 6 sentences to help busy stakeholders understand the salient points.
How to create an annual product plan you’ll actually use
It pays to follow a set process to get the best results from your annual plan. This helps everyone involved to stay organized, have an opportunity to contribute, and align on the final output.
To help you complete your next annual planning cycle and create a plan you’ll actually use, here’s a seven-step guide to take you from A to B.
1. Bring together your product’s A-team
The trick to an awesome annual plan is to create it as a team. Co-creation builds trust, buy-in, and collaboration. Without this, your plan is made by a sub-selection of people that inadvertently alienate everyone else.
Top tips for an awesome annual plan:
- Bring in diverse voices. Annual planning is an excellent opportunity to also re-consider your ways of working. As a leader, this collaborative approach speaks to a bottom-up leadership style which is proven to increase communication, trust, and team engagement.
- Don’t forget to include a range of stakeholders. Stakeholder engagement is key to bring the right people into the annual planning process. Here’s a guide on how to get stakeholder management right.
- Document your plan from the start. We’d recommend using a project management tool like Planio right from the start of the annual planning process. Create a project and use Planio’s Task Management module to get everything and everyone together in one place.
2. Reflect on last year’s performance
You often have to look back to look forward. Annual planning is a great opportunity to reflect on what’s gone well and what could be improved from the last 12 months. This will help you learn lessons and put you in a better place to move forward.
Top tips for an awesome annual plan:
- Reflect on your lessons learned. In project and product management, lessons learned are a key part of delivering value to your customers. Take the time to reflect on any things you’d like to keep doing, and things you’d like to improve on, by reviewing lessons learned from the previous year.
- Get honest feedback from executives. With your stakeholders assembled, a great way to do this is to ask for feedback. When you do, create a safe environment in which people feel comfortable sharing to ensure you get honest, constructive feedback.
3. Align your strategy with the company goals
In most organizations, leaders want to see a joined-up approach. When formulating your own roadmap, it must align with the goals of your wider organization to ensure you’re doing your bit to achieve the company’s aims.
Top tips for an awesome annual plan:
- Keep the company’s mission front and center. Before you even think about your own strategy, take the time to review and understand your organization’s missions, goals, and values. If you need to keep this handy, use the Planio Knowledge Management module to store strategy information in one central place for the entire team.
- Define or revisit your overall product vision. This will form the basis for your goals, milestones, and objectives. If you need some help, try checking out our Product Strategy 101 guide, which includes a free product strategy template.
4. Identify your major goals, objectives, and milestones for this year
You’ve assembled the A-team, reflected on last year, and got your strategy in place. Now, it’s time to make your to-do list for the year. Break your delivery down into goals, objectives, and milestones, but remember that an annual plan needs to stay relatively high-level.
Top tips for an awesome annual plan:
- Follow an established goal-setting framework. At this stage, your best friend will be goal-setting frameworks such as OKRs, KPIs, and SMART. As a general rule, ensure all your goals and objectives are measurable and follow a similar format for consistency.
- Don’t forget to follow Agile principles. If you need additional help, we recommend checking out our guide on long-term Agile planning. It will help you focus on outcomes rather than outputs, identify key business metrics, and group information into themes to ensure you’re planning at the right level.
- Plan in public. Planio’s Communication and Team Chat features offer a great way to share, collaborate, and review ideas when workshopping goals, objectives, and milestones. It’s easy to pull the entire team together into one place while keeping communication secure, readily available, and clutter-free for everyone.
5. Consider your controls and draft your annual plan
Once all of the goals, milestones, and KPIs are agreed, it’s time to get on and actually create your annual plan. To make your plan a success, you also need to overlay your typical project management controls such as resourcing, budgets, risk, and issues.
Top tips for an awesome annual plan:
- Don’t ignore risks. When you’re planning so far in advance, it’s important to take the time to consider the risks ahead. A basic risk management plan should help you here, clearly showing the dangers ahead, their likelihood and impact, and your plans to mitigate them if they arise.
- Be realistic about what you can accomplish. Your annual product plan must balance ambition with reality. Too often, leaders will write a plan with deliverables that can’t be achieved without an astronomical budget. When you’re writing your annual plan, consider the project management triple constraint to balance off your time, scope, and cost.
6. Gain approval from your stakeholders
Approval flows look different in every organization, but one of the final steps in the annual planning process is to get your plan rubber-stamped. This will ensure you have the resources, budgets, and stakeholder buy-in you need to realize your goals.
Top tips for an awesome annual plan:
- Back up your annual plan with a business case. In some organizations, you may need to accompany your annual plan with a business case. While it may seem like duplication, a business case helps explain all of the key points and provides your senior stakeholders with a summary to review and approve.
- Make it easy to sign-off on your plan. Your stakeholders are busy people, so you must master the art of a quick and efficient sign-off meeting. To help, check out our guide on 5 Steps to Planning and Running Fast, Efficient Meetings.
7. Implement the plan, then monitor and report on progress
Great job! You’ve got your annual plan signed off, and it’s time to put it into action. Now it’s all about launching your plan and setting up management structures to monitor and report on your progress.
Top tips for an awesome annual plan:
- Kick-off the plan with your team. The best way to launch your new annual plan is to have a team kickoff meeting. This not only creates a great excuse to bring the team together, but it helps you set expectations and ensure everyone is aligned.
- Translate the high-level plan into sprints and milestones. Depending on your working methods, you’ll likely get into a cycle of planning, delivering, deploying, and reviewing new product features. To help you get started, schedule your sprint planning sessions to plan out what you’ll do and when.
- Organize tasks and sprints in your project management tool. Sprint planning, execution, and retrospectives are all made easier with Planio’s Agile Project Management boards. Planio helps you stay organized while monitoring key metrics such as burndown and velocity and keep an eye on effort thanks to intuitive time-tracking features.
As a final tip, remember that a new annual plan offers everyone a fresh start. The slate can be wiped clean, and everyone can re-focus on bigger and better things. To mark this fresh start, try bringing the team together with new team rituals to boost engagement, collaboration, and morale.
Annual planning is an excellent opportunity to also re-consider your ways of working. A bottom-up leadership style is proven to increase trust, and team engagement.
Annual planning FAQ: When to start, who’s responsible, and more
Annual planning can be daunting, especially if you haven’t done it before.
To finish, let’s run through some common annual planning questions and answers to ensure you’re fully prepared for your first planning cycle.
Q. Who is responsible for annual planning?
For software products, the annual planning responsibility will likely sit with the Product Manager. But, depending on your organization’s structure, it may sit with someone more senior, like a VP of Product, or more junior, like a Product Owner.
If you have any management or leadership responsibilities for a product, expect to be involved in annual planning at some point.
Q. When should you create your annual plan?
In most organizations, annual planning ties in with either the beginning of the calendar year or the beginning of the financial year. This is because budgets are allocated around these times.
But, if you have no constraints in your organization, you can do your annual planning at any time as long as it’s consistent year-to-year.
Q. How is an annual plan different from strategic planning or sprint planning?
Take a look at the table below to see the key differences.
| Strategic Plan | Annual Plan | Sprint Plan | |
|---|---|---|---|
| Objective | Sets the strategic direction for a product, including the mission and value statement | Sets out the goals and objectives for the year ahead | Details the work to be completed in the next development sprint |
| Level of detail | Very high-level, focused on outcomes rather than outputs | Still high-level but includes tangible delivery objectives | Very detailed on the specific items to be delivered and the tasks required |
| Planning horizon | 3 - 5 years | 1 year | 2 - 4 weeks |
| Frequency of review | Every 1 to 2 years | Quarterly or Monthly | Daily Standup |
| Stakeholders involved | Senior Executives, VP of Product, Product Manager | VP of Product, Product Manager, Product Owner, Dev Lead | Product Owner, Dev Lead, Dev Team Members |
Q. Once it’s agreed, can you change your annual plan?
Like all good plans, you need to have a structured process in place to make changes. Like in project management, products should have a built-in change control process to ensure changes are requested, reviewed, and formally approved.
Lose this control, and you risk scope creep eroding your objectives, goals, and customer value.
Q. Where does release planning fit into all of this?
Good question! In many annual plans, the yearly goals and objectives are linked to release plans, either quarterly or monthly.
Given releases are the points you deliver customers new features or upgrades, they’re great markers of your progress throughout the year. If you’d like to know more, check out our guide on how to master release planning, including a Free Agile release plan.
You don’t have to wait to start planning ahead
Despite the myths, annual planning is a crucial part of the product management process. While you need to remain flexible with your release and sprint plans, annual plans help set direction, secure resources, and align the whole team.
If you’re new to running a product, we’d recommend using a project management tool such as Planio to help with the annual planning process. Whether it’s bringing stakeholders together, brainstorming ideas, or simply keeping the planning team on track, there’s a range of handy features to ensure your next annual plan runs smoothly!
Try Planio with your team – free for 30 days! (No credit card required)
