The planning carrousel

Hugo Froes
8 min readDec 6, 2022

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Every year we need to make decision about budget, hiring and where to focus our best efforts to drive growth and innovation. It’s needed as much as we try to avoid it.

I see yearly planning as a huge oxymoron.

We want to be scrappy and agile, focusing on outcomes and iterative processes towards building the most incredible product.

But, at the same time, we need to estimate how much budget we need available for investing in both new hires and building our product.

On the one hand, we could keep building the product and ask for cash as needed, but without knowing the potential return of investment (ROI) or whether it will bring any revenue at all, it’s a shot in the dark, so we need to make calculated risks.

I have to admit that this issue may seem a bit all over the place, but I’m sharing some randoms thoughts I’ve had on the topic.

The Merry-go-round

This is just a really simplified example, but I imagine conversations like this are very common:

Product Leader — “Some of the customer insights are telling us we need to change our direction slightly. That’s going to take effort and for that, I need to hire about 50 new people next year!”

Finance — “Great! Considering how much hiring costs, how much money do you expect to make both with and without those people?”

PL — “You’re asking me to make estimations based on too many assumptions. We can’t be sure because we don’t know what we’ll need to build.”

Finance — “Okay, so you’re making enough extra profit to be able to hire 2 people right now. With our current projection model and considering inflation, we can assume the budget for an extra 5 people. So that’s 7 people total.”

PL — “Valid point, but the potential here is huge and we estimate we could double our profit margins.”

Finance — “But doubling will only cover those 7 people, potentially we can stretch to 9.”

PL — “Alright, let’s negotiate. I’m pretty sure I need 50 people, but as long as we can hire a few extra people now and then keep adding as our profit grows, that would be awesome.”

Finance — “If the budget isn’t allocated then we have to do a new analysis and see if that’s possible and only based on gains. But historically, product has made huge estimations without delivery on that growth.”

And it keeps going around in circles. The never ending carrousel. And similar conversation may happen with stakeholders and executives as well as investors.

We want to know if we have enough people to build what we envision, but we still don’t have a clue if what we envision is exactly the right option, but we need to build the team earlier…

Round and Round… it can be very depressing.

We spend so much time on planning that we almost don’t have time to think properly about the product and organisation.

To plan or not to plan?

That’s the big question, isn’t it? With too little planning, we keep moving, but may realise too late that we don’t have the budget or people to achieve our goals.

However, too much planning means we invest too much time and getting into so much detail that we hate the idea of changing that plan down the line.

Whether we like it or not, at some point and on some level we need to do planning, especially in large organisations with so many moving parts.

I’ve heard/read some great arguments for doing shorter planning cycles, continuous planning or outcome driven planning.

I personally think every option for planning is both valuable and has its pitfalls, but the truth is some planning needs to happen.

So the question is how may we approach planning that is more agile and fits with the needs of all in the organisation and helps us evolve?

What’s the plan? (See what I did there?)

Like I was saying in the previous section, there is no real silver bullet and we’ll often see positives and negatives in every planning option.

I do however believe that we tend to approach the planning process from the middle, rather than the root need and I’ll explain what I mean a little more and hopefully it can help you and your organisation in the next planning cycle.

Many product teams understand the need for continuous and agile planning processes, but in most large organisations, the cadence is set by the calendar of big stages through the year rather than the way most product teams wish to work.

My theory? This happens because Product folks are focusing on the product and related milestones, while business and finance teams are focused a lot on those planning milestones because it will define their scope for the next months/years.

But how can we find the right balance?

This is where the ever elusive continuous planning comes into play and I go more into detail on maturity levels of a concept or initiative further down.

But the truth is that we have to simultaneously be looking at the work in 3 different levels. For product leaders there is an extra level, because they need to look at year long plans and direction, yet be able to change if needed.

It’s a hard ask and why so many organisations get it wrong. Because they want a plan they can stick too, when that might not be viable as you discover challenges or opportunities.

Embracing uncertainty is scary yet needed. More so, it needs to be adopted by financial and business teams. That’s the hardest ask and I would say it needs a leader that is willing to shake things up.

But don’t ever underestimate the complexity of financial teams try to allocate budgets. Be understanding and work with them to find a middle ground that works for all.

Estimations of ROI

Just a thought, but I think the best way to get buy-in for an adaptive budgeting/planning process is to show Return of Investment (ROI).

If you can present a reasonably accurate estimate of how much it will impact revenue and then are able to deliver those results or better? After a few times, you need to be able to prove why you might need budget.

Let’s look at it from a financial perspective. Going back to the conversation earlier, the product team has asked for an extra 50 headcount. Their reasoning, to build extra features and improve the exiting product, but without certainty, because they aren’t sure what they need to build. The research and experimentation will tell them that.

The gamble on the financial side is a huge investment with 0% guarantee of any result whatsoever. So we ask for an estimation of what return we expect on the investment or at the very least, when we will break even on that investment.

The product team wants to focus on outcomes, but will those outcomes bring in any money to cover the costs.

It comes down to basic math. If I invest 5$, but only get 2$ return, I’m working at a loss, which makes it hard to invest more or grow the company and yet this is what we expect to be able to do.

That’s why we need those estimations we all hate so much. But to be able to achieve those accurate investments, we need to build an estimation process that works. Here we’re talking about a mix of historical data, estimation calculations and understanding the space needed for adaptability.

It’s not something we can get right in a single year. It will take time.

Different levels of maturity

This is a hard ask of folks, but at any given time, product teams will simultaneously be working on 3 different levels of maturity of any idea or concept:

  1. Idea — Still needs exploration, discovery and ideation. We have no idea what we need to build yet
  2. Understood — We have a pretty good notion of what it is and what we might need to build, but still some unknowns about milestones and the actual build.
  3. Defined — We know what we want to do, how we want to do it and complex that will be.

I think one of the biggest challenges is that although we have a notion this is happening we often land up pushing initiatives that are still not Defined. Which is truly a shot in the dark.

As a whole we need to be clear at what level of maturity any given initiative is at and equally be strict in not trying to move forward something that is yet unclear. Except of course stating that you’ll be moving forward on discovery processes.

It’s also hard to pick up something that is completely unknown and define it properly in 1–2 months, so why do teams insist on doing that every planning cycle? Because they want to create impact or show innovation? Maybe…

Which brings me to my next point.

Be clear and honest

This is kind of my go to point for almost everything. Why? Because it’s something we generally have a very hard time doing.

Everybody wants to be sure we’re building the right things. So let’s make sure we understand what everyone is building, right? But how hard is it to pass context to someone with zero context and hope they will understand completely?

In most cases, I’ve seen many people or teams being honest with others about the complexities they are facing or will face.

Where I’ve seen more difficulty is in being honest with themselves.

For example, if you’re looking at the work you’ve planned and you’ve accepted it’s a stretch goal, but you’re pretty sure you can do it if all goes well and everyone is on board.

But you haven’t accounted for all the surprises, bugs and unknowns. Also, you’ve assumed that everything will go off like clockwork. I have never seen any complex initiative go exactly as planned.

So now, the teams start talking about capacity planning reduce uncertainty, but if you’ve ever done capacity planning, you know that there are generally only two outcomes to that conversation:

  1. Your plan is totally off and you realise that halfway through the year
  2. There is no space for any adaptability and work becomes about business as usual. (BAU)

We need to be honest about what we know we can deliver and what we have no idea about. But at the same time we have to set a strategy and it’s the role of the leadership group to understand where we’re going with things and what we may need to reach it, even if we’re only certain about what we can produce in the current quarter.

Final thoughts

Trying to align everything during planning is already hard enough as is. It’s up to us to reduce any extra complexity by working together with other teams in the organisation to understand what each needs and why.

  • What would happen if we didn’t provide certain information or provided different information?
  • What is needed to make the decisions that need to be made?
  • Are we being honest about the maturity level of what we’re discussing?
  • Are we being honest about what we can do?
  • Are we able to calculate the ROI of the work?

Each organisation may need different approaches to the these challenges, but the baseline principal is that all of us want to make sure we’re building the right product, the right way and that we’re making enough money to keep everyone employed and the machine running.

We often forget that, in our pursuit to be product-led or profit-led. We forget that finance, business and product are all part of the same team and want the same things.

We just want to approach them in a different way and have different ideas about how we can achieve those goals.

It’s hard ask, but some teams need to be more flexible, while others need to be less.

I would love to hear your thoughts on the topic! Please share if you can.

Originally published at https://hugofroes.substack.com on December 6, 2022.

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Hugo Froes

// Leading Product Operations at OLX Motors EU // Helping to make better products — Co-founder of @uxdiscuss with @whitingx