Note: This essay has been updated. Please see the update here.
As Dilbert gracefully notes, annual corporate reviews ain’t so grand. There’s something about the arbitrariness of it that makes it feel cheap and disingenuous.
Yet, there’s always a round-up of blog posts at the end of the year where entrepreneurs I admire sit down and go back and review their businesses and progress over the last year. Reading along as Dan Norris grew his business by over 450%, Nathan Barry grew his family and business and Patrick McKenzie poured out the guts of his businesses this year inspired me.
Despite arbitrariness of it, there’s also a natural rhythm to take stock as the darkest day of the year passes and the march to Spring and growth begins again.
However, it’s always felt a tad daunting to have “Plan Next Year of Life” on a to-do list for me. Over the past few years, I’ve evolved a more streamlined process that I find to be useful this time of the year to lay things out for myself as well as Dan, Nathan and Patrick did.
For starters, I like to remind myself of some basic planning philosophies before diving in.
Flipping the Switch – The Value Of A Plan Is In Not Following It
For me, the purpose of planning is that it gives me confidence, clarity and conviction. It is not to create a plan which, come hell or high water, I will follow through on. Sitting down and looking at how many of a product or how much of a service I want to sell creates value for me because I start working backwards to the steps for getting to that number.
How many more do I need to sell each month? What does that mean in terms of increasing advertising spend or doing more outreach? What will my day-to-day and week-to-week actually look like to be at that point?
If I get halfway there and realize it was the wrong goal because the market changed or my values change, that’s fine. I’ll recalibrate. Yet, because it was clearly defined at the outset, I get moving in the right-ish direction and get the feedback to figure out what works and what doesn’t.
I imagine planning as setting up an electric circuit. I used to believe that in an open circuit where the switch is flipped to off, the electric current was sitting at the gap. That as soon as the switch flipped, the current jumped the gap and the lights turned on. As it turns out, the current doesn’t even start moving until the circuit is complete.
The point of planning then is to complete the circuit so the current can start running. Effective planning requires just enough detailed to feel confident enough about will happen along the path to set off walking. While the goal usually (though not always) remains the same, it’s unlikely that once I start getting feedback that I’ll actually walk that exact path.
Especially when I’m planning at the end of the year, I used to feel a real sense of pressure. This is how I’m going to spend the next year of my life!
Once I accepted that I could change it at any time, the planning got both more valuable and less stressful. I still set aside a full day to think things through, but I don’t feel the need to reach any definite conclusions.
Via Negativa Planning – The 5 Hour Rule
I’ll be the first to admit that I have a fetish with planning and strategizing. I get an endorphin kick from planning all the stuff I’m going to do without actually accomplishing anything. Many people I’ve talked to are the same.
The remedy to this for me is to make planning more of a subtractive than an additive activity. While it feels good to add more to-dos and envision all the things I’m going to accomplish. It hurts to cut existing projects and narrow my focus because it usually means I’m going to have some hard conversations and eat my ego. Unsurprisingly, it’s the cutting out that’s more valuable.
As long as I’m doing 5 hours of important, non-urgent work per day and things aren’t moving at the speed I want, then the problem is always prioritization and avoiding hard decisions.
The Formula Fallacy – First Gut then Filters
I spent a year trying to develop a product development algorithm for manufacturing B2B steel products for the hospitality industry. The idea was to be able to scrape a giant database of products then apply a combination of algorithms and heuristics to come up with a list of what the best potential products were to innovate on and bring to market.
“253 points makes popcorn machines the winner!”
After I read Ready Fire Aim, I realized it was a stupid project. Like high level planning, new products may have 200 or more factors behind why they are a good idea or not but you can only articulate and define 20 to plug into an algorithm.
However, just because you can’t articulate it, doesn’t mean it’s not a good idea. Most good ideas can’t be articulated, otherwise someone would have already done them. There are many things for which we simply don’t have words or ways of explaining yet. The Greeks didn’t have a word for blue, hence Homer’s referencing the “wine-drunk sea” in the Illiad. It was blue of course, but he didn’t have a word for that.
The way to get better product ideas is to get the core management team in a room and brainstorm the top three to five options everyone is excited about then apply some basic filters like expected sales volume and time to market. (It’s a good assumption that you’ll sell half as many as you expect and it will take twice as long to get it on shelves). If it all looked good after that process, we would go manufacture the product.
Sometimes our gut instinct was wrong, but an arbitrary algorithm was always wrong.
When I catch myself trying to rationalize why a decision is a good one even though it feels wrong, that’s pretty much always sign that in six to twelve months I’ll regret having made it. I have a very detailed, very well thought out 5000 word Evernote document rationalizing all the reasons a project I spent the better part of six months working on was a great idea. That’s now filed away right next to the post mortem I wrote at the end of those six months.
With those general principles out of the way, here’s the process I use at the end of each year. It’s a mish-mash of questions and processes stolen from other people and injected with a little of my own stuff that I’ve found to be the most effective.
1. Get Perspective
I like to re-read some of my favorite books in December to get perspective and listen to some of my favorite big picture stuff. Alan Watts has been a go to for the last couple of years and I re-read The Fourth Economy and Antifragile this year, two of my all time favorite books.
I also like to start thinking about things in advance. What are the major, big picture that I want to devote a lot of thinking to when I sit down? I’ll generally toss these into an Evernote note starting in early December knowing that I’m going to block out time to think about them at the end of the month.
How much time? A full day. I leave the computer at home head off to a cafe with a notepad and pen. Since I’m loading attempting to load my entire life up into my mental RAM, I don’t want to have to rush it. I suspect taking a few days off before doing it to get some extra brain space would be even better but I’ve never managed to make that happen.
2. Define Key Roles and Goals
I usually break my process it down into 4 roles:
- Business
- Health
- Relationships (Personal)
- Relationships (Business)
Of the areas I’m going to consider, I do like to think about which ones are more important or less important. Personal relationships, despite being something I set out to work on last year, is an area that I came up on pretty short this year. When someone asked me what I do for fun in Austin, I came up with a big “uhhhhhhh?” which isn’t a terribly healthy answer. I was a less-than-stellar roommate when I was living with people (sorry about those dishes!), because I tend to get caught up in my own head and don’t pay enough attention to keeping things tidy so that’s something I’m prioritizing (again).
For each of the roles, I’ll go through and answer the following questions.
- Name the Key Role – What’s the identity I’m trying to achieve? If you name the role well, the rest is just gravy. I try to come up with an evocative and emotional phrase for the goal. Ie. “I am the Ultimate Human Weapon” is more useful than “I am Healthy” and “I am a New York Times Best Selling Author” is more useful than “I am a writer.”
- What would I do tomorrow if I had no momentum and couldn’t fail? – While this is never true, projects do have momentum and momentum is tremendously valuable, I always prime myself with the knowledge that I don’t “have to,” “need to” or “should” do anything. It’s entirely a question of consequences and opportunity cost. To quote Peter Drucker, “There is nothing so useless as doing efficiently that which should not be done at all.”
- Take stock – Where am I? This is where I start to incorporate momentum.
- What went well? What were three things I did right and should do more of next year?
- What went badly? What were the biggest mistakes I made? Why didn’t I achieve what I set out to achieve?
- What can I stop doing? What are the three least valuable things I’m doing? What am I doing to avoid the Resistance?
- The Goal – Where do I want to be 1 year from now? – “If I am reading this a year from today, and I am looking back over the year, what has to have happened for me to feel happy with my progress? I try to “think 10x” about this. Where do I really want to be in one year but I’m too embarrassed to say it out loud? It’s hard to fail completely at something. Getting halfway to something 10x bigger and better is fifty times better than getting all the way to something 10% better. The danger isn’t failure, it’s succeeding at something too small, however you define small. Intellectually and emotionally engage yourself with the best possible outcome to make sure it’s worth doing. If this doesn’t get you excited, pick a different goal
- Clearly Define the Criteria for Success. This should be quantifiable or a knowable event like make $100,000 in personal or write a New York Times Bestseller. There should be no room for judgement as to what success looks like.
- Pick one to three Key Performance Indicators (KPIs) for each role. One is best but three is a hard maximum.
- Clearly Define the Criteria for Success. This should be quantifiable or a knowable event like make $100,000 in personal or write a New York Times Bestseller. There should be no room for judgement as to what success looks like.
- The Why – Why do I want to be there? What’s the importance? – The goal isn’t important, it’s what it lets you do. The why is also what gets you to emotionally commit so it has to be big, vibrant and clear. I try to be completely honest with myself. If it’s a vanity based thing that gets me excited, I’ll say that. Going through the Why section will typically force me to go up and edit the goal if they don’t feel properly aligned. It’s sort of like doubling the price on a proposal before sending it (also a fun exercise), I have to go back and make darn sure it’s justified given I’m planning on spending a year working on it.
- The How – How do I get there? Specifically, what dangers do you have now that need to be eliminated, what opportunities need to be captured, and what strengths need to be maximized? What does the day-to-day life of someone that has already achieved this goal look like?
- This is the wire I’m wrapping around the Earth so I can start in motion. I know it’s going to change so I just write down the first things that come to mind, no pressure to predict the future. I tend to linger on dangers that need to be eliminated. For me, this is the most important question. The more I’m able to systematically, ruthlessly eliminate non-essentials, the more I’m left with what’s actually worth doing.
3. Convert into Visualizations
The final three questions get converted into a note that I incorporate in my morning ritual to visualize and prime myself every morning.
I’m always hesitant to write about this woo-woo, feed your subconscious stuff. It’s definitely not my background, yet anecdotally it definitely gets me pumped up at the start of the day and focused. The fact that it’s been so broadly talked about for so long by so many people indicates to me there is Lindy Effect value.
Visualizations also gives me a sense of definiteness and confidence much like planning. Moving confidently in a good direction is exponentially more effective than moving cautiously in the perfect direction. Or as Patton said, “A good plan violently executed now is better than a perfect plan executed next week.”
Here’s a finished example of my business role from last year. I re-jiggered it halfway through the year after I quit my job/switched projects. I failed to hit my KPI. Yet, getting part of the way to something bigger than all the way to something small still feels like the right decision.
I inject as many emotionally charged words in there as I can. The 4th Economy, The Resistance, Fuck Yes or No, Grit, and 10 times all have deep significance to me.
Role: I am a 4th Economy Entrepreneur
Goal: I own a location independent, 4th economy, publishing business. It creates freedom and wealth in my life, the lives of my team, and the lives of our customers through meaningful work, meaningful relationships, vibrant health and interesting experiences.KPIs: $8,333 in Monthly Income.Why: Creating the 4th economy is the change I will create in the world. It’s the social and economic revolution that I will foment. I want to run businesses that creates more freedom, wealth and meaning in my life and the lives of those I love. I want to run a business that lets me to travel the world and write.How: I confront The Resistance everyday and channel it into doing meaningful work. I move slowly and deliberately and do one thing at a time feeding my mind messages of abundance. Every day, I execute ruthlessly with unrelenting grit and determination. I think 10x. When confronted with a problem or opportunity, I think how can I 10 times this? What would a brand do? I take risks – I act boldly to get what I want with authority, poise and self-confidence. I focus – I say Fuck Yes or No to new opportunities. My business does not require me to run it – I am a creator and connector. I spend all my time on sales, marketing, managing, hiring, and business systems creation. I under promise and over deliver – We aim to provide 10x value to ourselves and our customers. We have a culture built around transparency, integrity, and grit. I esteem grit and character to confront and overcome harsh truths.
Last Updated on July 30, 2019 by Taylor Pearson
Matt Gelgota says
The Patton quote. Great trading volleys with you over dim sum, Hong Kong-wise. Next time over tacos in Austin. Thanks as always. I’ll be thieving from your process outlined above over the next couple days.
Taylor Pearson says
Pleasure is all mine! See you in Austin.
Thomas Howard says
Great template! Really liked the inclusion of the Dan Sullivan question.
Care to share any goals for this year?
Taylor Pearson says
Yea i geek on Dan Sullivan’s stuff pretty hard. Great frameworks. I wrote this before sitting down to do my actual review so I didn’t include it. The short version is probably “write more!”
Thomas Howard says
What of his other works do you recommend?
Taylor Pearson says
The Unique Ability Book and 10x Talk Podcast are my main exposures to him. He drops a lot of his coaching frameworks in the podcast that I’ve saved in Evernote.
Brian says
Great stuff Taylor–found your blog through TMBA and come here for the condensed perspective. I tend to shy away from the cliffs-notes and blogosphere in general, but your articles are a good place to come for the mindset I hope to cultivate by reading most of the same books.
In my experience, >50% of the fuel provided by an annual review/dreamline/whatever is derived because I set out the template for it myself. Yes, I steal some of it from Tim Ferriss and whoever else has a good process in place, but following my gut for questions that hold me accountable usually works better than someone else’s exact formula, even if it’s a great one. Sounds like you experience the same thing.
Taylor Pearson says
Hey Brian.
Haven’t ever heard anyone describe it as condensed perspective, but I like it and will be stealing it for future marketing material – thanks 🙂
Agreed on finding your own questions. As I’ve started writing more, I’m much more acutely aware of how important language and verbiage is for me and staying motivation so also like to do a fair bit of customizing.
MastermindJam says
Excellent framework. Thanks!