90 Days to Success: Shifting from Yearly to Quarterly Goals

0:00I see the way that a lot of businesses do annual planning. it is a lot like the way that individuals set New Year's resolutions. And if you know anything about New Year's resolutions, you know that in general by February, if not late January, they've all been completely abandoned. And in my experience, most of the businesses that we've owned and operated, most of the entrepreneurs that we work with, their annual plans are generally abandoned by January, February as well. So I would encourage everybody, and we could talk about this, don't spend this next time doing annual planning for this next year.

0:40How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who share their biggest secrets on how they think and achieve success? Grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Dice.

0:58Welcome to another episode of Business Lunch. And today's a snackable episode with Roland where he's going to get into some more tactical strategies that you can start using to live a rich and happy life. If this is the first snackable episode you're hearing, I'd encourage you to go back and listen to some of the other episodes that Roland has put out. And if you want to get notified every time we release a new episode, go to the new businesslunchpodcast.com website, and we'll send you detailed notes along with every episode. That's businesslunchpodcast.com, www.businesslunchpodcast.com. And you can sign up for the free email newsletter where you'll be able to get all the highlights and resources from the episodes.

1:33Hey, everybody. This is actually take two of this episode of Business Lunch because apparently Apple decided to hijack Ryan and make him voiceless. Apple stole Ryan's voice. That's what we're going to call this episode. What do you think? I'm suing him. I'm definitely suing him. Yeah, I can do that. They have$3 trillion or so of value. I mean, they should give you a little bit of it, even just for asking, I think. Well, that's what I always do. Anytime we have a friend, I just had a guy that I know who their business raised about, I think$85 million. And anytime I hear about that, I'm never like, congratulations or anything.

2:09My question is always, can I just have a million dollars? Because the way I see it, they've got a lot. I would like to have, now I intend to do nothing for this, mind you. Yeah, of course. And I'm not, it's not a loan. I'm not going to pay it back. I just want to have it. And so far, nobody's done this. Nobody's done it. But I figure enough times. Yeah. Right? I mean, even if you got, say, a 1 % take rate and you ask 1 ,000 people, that's like$500 ,000. It's at least. It might be like double that even. Yeah. So, yeah. No, that's my goal. I don't know if that's helpful for anybody. We could end the episode there.

2:49Just ask rich people for money. And Casey, they say yes. Okay. It's pretty good. Well, just in case I didn't say it was technology breaks on us. We just lose all our crap. So just in case I didn't say it, welcome to Business Launch. My name is Roland Frazier and my co-host here, Ryan Dice, is joining and apparently has a big lawsuit he's about to file against Apple. But I guess that would be a good segue into that's going to clearly take up some of your next year working on that. my guess is they will not go quietly into that. So, well, let's talk about planning for next year. Other than that money-making scheme of the asking people for money and the getting money from Apple, what do you got going on next year and how do you go about deciding that?

3:45I like talking about this too, personally and business-wise. So let's start with business. So it's interesting that this is the time of the year we're recording this. We're now in early December. This is this is the time of year when companies and entrepreneurs and people start getting very like, let's start thinking about next year. And I got to tell you, I think it's a gigantic mistake. I see the way that a lot of businesses do annual planning. It is a lot like the way that individuals set New Year's resolutions. And if you know anything about New Year's resolutions, you know that in general by February, if not late January, they've all been completely abandoned.

4:30And in my experience, most of the businesses that we've owned and operated, most of the entrepreneurs that we work with, their annual plans are generally abandoned by January, February as well. So I would encourage everybody, and we could talk about this, don't spend this next time doing annual planning for this next year. I think the annual plan is a giant mistake. I think it's a sport. So you think you're more of like a five-year plan? Do it like a five and 10-year plan? I don't like that either. Oh, okay. I think for most entrepreneurial businesses, I think definitely the 10-year thing. It's like, come on, y 'all.

5:07Like, you have no freaking clue where you're going to be in 10 years. Tell me 10 years. Look at what happened in the last 10 years, right? I'm thinking, I don't know for sure, but effectively, you've got crypto. So you've got AI, you've got a pandemic. I mean, you know. That was your big point. Right? Come on. You have no freaking clue. And I get it. You know, a lot of big companies will do, you know, will do this level of planning. They have floors filled with analysts. And guess what? They're still wrong. Now, if you want to create an annual financial plan, because that's kind of what you need to do projections and budgeting, fine.

5:44But I wouldn't recommend doing annual strategic planning because in my experience, the annum, it is too long to be like in any way really predictable, but it's too short to be that meaningful. So what we do, and you know this, we like to do, we like to think out three years. I love the idea of three years because three years is long enough to do something really cool, meaningful. I mean, in three years, you could be a fundamentally different business than what you are today. I'm not saying you can in 12 months, but you can, through the power of compounding, achieve some really, really, really big stuff in three years.

6:23And if you look at like the most private equity companies, they're looking to basically go three to five and three to five. In other words, you know, have a 3x or 5x growth over, you know, three to five years. So we're just going to kind of take the lower end of that generally accepted scale, and we think out three years. And so I do think that now is a time, if you have a three-year plan, to evaluate how are we progressing along that three-year plan? Do we need to make any updates? So that is something that we do around this time. Then what we do is we break the three-year plan up into 12 chunks, 12 90-day sprints, because there are 12 quarters in three years.

7:01And so we never really do annual planning. We are always thinking out three years, three years, three years. And then we're thinking for the next 90 days. So what we are doing right now is we're going to begin the process of doing our Q1 sprint planning. And we just found this to be far more effective. You get a much tighter planning cadence. And if you're meeting and you're doing quarterly planning, then you never really need to meet for the year. So that's kind of structurally how we do that. Your thoughts? I think it's great. I agree with it and have participated in helping formulate it. So, yeah, I like what we do that we ought to do.

7:43I think it's great. Go ahead. Well, I was going to say, and I think that the same does apply. I've now brought this into my personal life as well, because although we would be thinking about, you know, kind of adopted this years and years ago, right? This is one of kind of the core frameworks and structures that we teach at the Scalable Company. I never brought it into my personal life. Still, for my personal life, I would set an annual plan. I would have like an annual goal. And I just found the same thing to be true. As hard as I tried, it just wasn't there. But when I thought out, okay, where do I want to be in three years and follow the same structure?

8:22Okay, what does that mean for each quarter? Look, if you do that and you break it up into quarters, you effectively have a 12-month plan. You do, it's there, right? But now you just get to measure along. So that same process is how I think about it. And so I don't really set annual goals for myself. I set quarterly goals. And I've just found that to be far more effective. I think that's cool. What do you do to monitor? I have a, it's the same planning and meeting cadence that, so essentially the meeting rhythm that we have at our company is, We do three-year. We set a three-year target. What's our three-year plan, right?

9:04And that is going to get looked at about every year. Really, every quarter, we're looking at how we're progressing towards our 12Q plan. And do we need to make any substantial pivots? Sometimes, if you do an acquisition, or maybe you have a sale, or maybe there's a pandemic, look, sometimes you need to modify your three-year plan. It's not chiseled in stone. So you're going to take a look at it every 90 days to get a sense of how are we progressing towards it. but you're going to set your three-year target. In general, you're not going to reevaluate that. You're not going to reset it until, wait for it, three years later.

9:36You are then going to do quarterly 90-day sprint planning sessions. And this is a one day, half day to one day, like we're going to plan this thing out. So I do that every single quarter. I take about a half day to say, what are my habits like? What are my inputs like? What resources do I need to acquire so that I can stay up on my next quarter's goal. I'm also going to do a monthly review. So I'm going to look back on each month and say, did I do what I said I was going to do? What tweaks, if any? And then once a week, I do a weekly check-in. And so on Sunday, I say, what needs to be true this next week for me to stay on track for my quarterly targets and my quarterly goals?

10:17And that is the exact same cadence that we follow at the company. So for me personally, I've got a meeting with myself and Emily and I, my wife, We'll meet and have a conversation, typically Sunday evenings, to say what needs to happen this week. We're going to get alignment there. So we've got our weekly check-in meeting. The same thing happens at the company. It just happens on Monday. So on Monday, we do the weekly check-in meeting to everybody get aligned on what needs to be true that week. We do a monthly business review. We do quarterly sprint plans. I follow the exact same cadence personally.

10:52Nice. Yeah, I think that's really cool to apply it that way. I look at it. I have a question. So if you've set a three-year plan now, you set your three-year thing that you want to have happen, are you not extending that by a year each year that you go along? Or are you like waiting for three years and then you're going to do a new three-year plan after three years and this one will just be modified along the way? So you're not kind of redoing a three-year plan based on what you've learned from the past year? How does that work? Does that make sense? Do you understand what I'm saying? Yeah, it does.

11:29Is it kind of a rolling through your plan type thing? Yeah. In general, my preference would be to not have to reset it. So we're going to say this is our three year plan. And it's going to go, let's say, from 2024 until the end of 2026. right that's like that that's what it's going to be and we're not going to look to reset it but at the end of every year or four quarters after we set it to begin with because the other nice thing about quarterly planning is you don't have to wait till december to do it um we give ourselves the option of saying did we make certain assumptions that were so far off that we're either going to dramatically undershoot our three-year target or even better we need to reset this thing because it's now we're essentially sandbagging.

12:11You know, like because of what we accomplished in this year, we need to reset a new three-year target. So you get the option, but I'm happy to do a reset of the three-year target if it's clear that we're going to overshoot it, right? Because we made certain assumptions and we're going to blow past that goal. I really don't like to reset it if I feel like we're not going to hit it because I want that to stay out there, you know, as a goal. And look, if the next year comes along and it's clear that there's no way that we're going to hit this in this time, okay, you've always got the option to reset.

12:44But I would do my best unless we're going to reset it to the high side of leading it as is and doing a new three-year target every three years. I like it. Do you subscribe to what I believe Google's philosophy is on goal setting there as that you really want moonshots? or that you're, I think it's that you should hit that, you should hit the goals like 70 % of the time or something like that. Or are you really focused on, I've got it, I want to hit it. I know we do good, better, best. Is that kind of the way that you handle that or how do you deal with that? Yeah, I mean, I totally love and respect and appreciate what Google is doing.

13:32I've, you know, in my experience, the, it depends on your team and the experience and the maturity of that, you know, of that team. For most of our portfolio companies, we're dealing with, it's not Googlers, right? These aren't people who are, you know, who are necessarily showing up to go and do this, these big moonshot type projects. And they know, by the way, that they're still going to make six figures a year, even if they hit, because Google's paying everybody gobs of money. Most of our people are on some type of variable compensation plan based on us hitting our goals. And so we need to hit our goals.

14:08And there's not an expectation that we're going to hit 100 % of them. But missing 70%, that can be tough from a morale perspective. And it can be tough from an incentive compensation perspective. So typically, we're going to create good, better, best goals. So good is what we believe absolutely positively we can hit based on what we already know to be true today. So it's not a massive stretch on that, right? Yeah, correct. It's pretty much baked in. And so that is good. And good is the minimum accepted standard. Better is we feel like about 80 % of it's baked in. So we're going to need to close that 20 % gap.

14:44We're going to need to close that 20 % gap through new initiatives, through improving the systems and processes that we already have, through the acquisition of new skills, assets, talent, resources. in some way, shape or form, there's a 20 % gap there that we need to close. That's better. And that is what incentive compensation is paid on because we don't pay people more money to just maintain the status quo, which is essentially good. And by the way, good doesn't mean flat necessarily, but good could be, yeah, we think we got five to 10 % growth baked in. Let's just say hypothetically. Yeah.

15:17And then the best is industry growth, right? Like if the industry is growing at X percent, you should at least sit there. It's kind of like inflation. If you don't do that, you're not keeping up, you're falling behind. Exactly. So that's good. Yeah, that's good. If we did nothing else except for what we're doing, we should do this because you don't just get to stand still, right? Running is staying in place when you're in business. The question is, are we just kind of casually strolling along? Are we at a jog or we had an outright sprint? And so then best is if all the stars align, we believe that this is the upper end of what's even possible based on that.

15:54And that just kind of gives people a range. And I found that a range is really, really helpful. And we could say this is kind of what we're generally shooting for. And what we do for the quarter is we're going to have a good, better, best for revenue. We're going to have a good, better, best for profitability, profit margin. And then just about all the key initiatives, all the input goals that we set. So all the KPIs, they're also going to have a good, better, best associated with them. What we publish though, and what we measure against is the better goal. So better is the true goal, but good and best give us that range of reasonableness that everybody understands that we're shooting between.

16:35I like that. Yeah. So I like that. I think that's a really, really good and helpful description for folks. So hopefully you guys find that valuable. For me on the personal level, I am much, much more granular. So I'll set my targets for the end of the year, and then I'll chunk back monthly, weekly, and daily. And I will check them daily. And so I'm really on top of being sure that I know where I stand. So I know if I'm falling behind and and then I have to make the decision is, you know, am I going to stick to that? Or was I overzealous? Because I am fairly zealous when I'm setting those those goals.

17:21But but it really helps the the and I'll typically pick a focus. So I have my relationships, which would include friends, family, spouse, children, down to that level of kind of what I want to have happen there. I'll have professional development down to categories of content that I want to consume on what basis to financial down to what each different stream of income is going to contribute that month. And then I'm checking that weekly so that I don't fall behind on that. And then if I see something going out of line, if there's anything I can do about it, there There were, gosh, July, August were tough, tough across the board in all but one of the revenue sources that I've got.

18:21And then it's like catch up time. So I'm going to double down here. But if I double down here, I only have so much effort and time and resources. So is that going to take away from this? And do I want to let that get off track or am I going to reset? So I find that to be really helpful for me. And I do it with no software. I just do it on the Notes app in Apple because I find that I'm in there all the time. I don't have to learn software to do it. It's very easy for me to set 12 months of targets across all the different categories that I have personally and professionally. And then I just look at it every month.

19:02And then I replace the target with the actual as the month comes. So that's telling me also, it's like, so as I have the data, you know, did you do these things, you know, then I can put what I actually did, which then lets me go back and look at the months before. I probably should keep what the goal was, but I'm pretty clear on what those are at that point anyway. So that, I don't know if that makes any sense or helps or adds any thing to anybody out there. I'm the same way. Yeah, I was, I'm the same way. Like, I don't use any sophisticated tools. It's in Notion. because I'm, I mean, I use Notion a lot, but it's the same.

19:38It's just, it's just, it's notes. There's no like fancy software or anything that's, that's going into it. And, and yeah, I've got a column for what, what the goal is and what the actual is, and then it populates the gap. So the, the goal does stay there. And so, yeah, it's just literally, it's two columns instead of one. So I'm not removing anything, but it's all manual inputs. There's no, like, I'm not using any fancy, you know, you know, Apple apps or anything like that. Are you mostly tracking? So for your goals, are they like inputs? Are they lead measures? Are they outputs? Is it a combination of the two?

20:15What are you typically measuring towards with respect to those goals across those different categories? I'm measuring, I guess it's different based on the goal, but But what I'm really focused on is what are the daily things that I need to do to advance me towards the goal? And how am I doing on accomplishing those specific daily things, which hopefully 90 days into doing whatever it is becomes a habit. Because that's what I really got thrown off on the pandemic. It just obliterated so many of my habits that I had established. And I've had a really hard time getting back to them because of the up and downness of the, you know, of the recovery out of the pandemic.

20:58And certain things were able to move ahead significantly while other things got completely disrupted, including just as an example, they moved all of the, number one, there was no gym that I work out in for a long time. then they moved all of the machines outside i work out generally in the morning early so now the outside machines are covered with dew every morning and you have to yeah you know it's like it put friction into all these places that friction did not exist before and i had the habit and then i got disrupted and then by and then they didn't put the aerobic stuff out there you know it's just like that kind of stuff um measuring what you're doing daily to create that habit is really, really important.

21:46But I got knocked for a loop on that. I'm just like really just getting back into all of that across the board, I think at this point. Can you give me an example or give everybody an example of what you're talking about, the three different things?

22:01When you say the three different things, you said, are you measuring lead? Are you measuring? Oh, so yeah, it's really, it's actually only two things. Basically, are you measuring lead measures or lag measures. So lead measures would be the inputs, lag measures would be the outputs. So a lead measure for fitness would be, did you work out today for at least 30 minutes? It's all, it's all lag is what's your weight or, you know, what's your body fat composition? Same like revenue is a lag measure, but you know, did I make this mini sales call would be an input kind of thing. One of the most meaningful books that, um, that I read in, in that helped me across business and everything else was, I think it's the four disciplines of execution that talks about leading and lagging indicators and things like that.

22:47So to me, everything is a lead. Uh, it's never been, uh, well, I hope I hit this goal. You know, you just go along and then you're like, oh, well, I didn't hit it. Guess I'll set it for next year. That to me is the new year's resolution dilemma, right? I can't imagine that that works except by luck for anybody. You've got to know what are the things that are going to cause the result that I want and work on the causal things, not the resulting thing. Yeah. You have to acknowledge that you're going to set it. Yeah. So it's both. I mean, to a certain extent, it's, I want to know, So from a fitness perspective, I might have a goal weight.

23:29From an income perspective, there's an amount of income that I personally want to generate. From a business perspective, there's an amount of revenue that we want to grow to. Those are all lag measures. And I do think that you need those because that's the goal. Like that's the thing that you're moving towards. That's where you're going. That's the North Star, right? Correct. And so we need that. But I think the question that must be asked, and this is where a lot of people, whether it's business or personal, you've got to ask the question, what is it true today that must be true to create the circumstances under which this just happens automatically, right?

24:01And that's the piece that not enough people ask. And then you say, okay, well, because look, if you haven't done that today, if it's not true today, then, and the answer isn't, well, we just need to give it more time. Sometimes all the circumstances are there. You're doing everything you need to do. You just need the benefit of time. That is sometimes the case. It's rarely the case in any business, right? If you want to achieve a new growth target, it's rare that you can say, no, no, we're doing everything we need to do. And if we just keep doing what we're doing, we're going to hit it. If that's the case, I would argue you set your goal too low, you know?

24:35Yeah. So asking the question, right? What changes do I need to make? What sacrifices do I need to make? What trade-offs do we need to make? So I can't have this anymore. You know, we can't make this investment in this. You've got to say what must be true that isn't true today that's going to enable that. Turn those into input metrics, input KPIs, or habit goals is another thing that people would say on that. So now we're going to start doing this every day, or we're going to make sure we don't do this every day. And then I think you've got to check in monthly, quarterly to see, are we doing what we said we would do?

25:13Yes or no? If no, then start doing it. if yes you are but you're not progressing towards the result you got the wrong inputs and that's where like the monthly business review comes into play i like it well we would love to hear what you guys are doing uh out there as well if you've got any insights or thoughts or things that are working for you please let us know and you can let us know on the socials for uh for business lunch or either of us on our normal socials uh whatever is working best for you We're curious if you found this helpful, please share it with a friend. And Ryan, thank you for being here today and we'll see you guys next time.