And we’re back for everyone’s favorite time of the year 🥳 More meetings than we all would like to nail down next year’s plan and goals, endless number of spreadsheets, so much fun! Meanwhile, it’s the closing blitz for the CRO with large accounts negotiations, discount approvals, legal/procurement cycles, and exec escalations to land 12/31.
Similar story for the CPO/CTO (peak traffic, high-stakes releases, budget-impacting architectural calls before year-end), CHRO (carrier decisions, new payroll system roll-out), and the rest of the C-Suite.
Everyone knows the importance of it, but it pulls leaders into spreadsheets and meetings exactly when they should be doubling down on year-end execution.
Annual planning has long been the backbone of organizational alignment. It’s a chance to set strategy, allocate resources efficiently, and align the company around a shared mission. But in the age of AI, where forecasting, scenario analysis, and data refreshes can happen in real time, many leaders are asking:
Do we still need an annual plan?
The answer is both yes and no. Annual planning isn’t disappearing, but AI is fundamentally reshaping its role, cadence, and purpose. What’s dying is the rigid, spreadsheet-driven ritual of old. What’s emerging is a hybrid model: a baseline annual plan, continuously updated through AI-powered insights.
For the purpose of this newsletter, AI will be short for AI applications and augmented workflows used during the planning process. Let’s dive in!
🧐 Why Annual Planning Still Matters
Despite AI’s disruptive potential, several core reasons keep annual planning relevant:
Investor & Board Expectations
- Boards, investors, and lenders still demand an annual financial roadmap. Compensation structures, capital raises, and governance models depend on having a baseline operating plan. Without one, exec teams lose a shared definition of success.
Compensation & People Programs
- Salary adjustments, equity refreshes, and bonus programs are tied to annual cycles. Employees expect predictability and stability, something AI can’t replace.
Strategic Alignment & Tradeoffs
- Annual planning forces cross-functional leaders to pause, align, and negotiate. It’s the one moment where the C-Suite sits down to reconcile competing priorities. This is less about numbers, more about building accountability and a “North Star” for the year.
Regulatory & Compliance Requirements
- In regulated industries and public company contexts, annual forecasts and board-approved budgets remain non-negotiable.
🤖 Why AI Challenges the Annual Planning Cycle
AI doesn’t eliminate planning; it removes the need for static, one-time planning:
From Static to Dynamic
- AI enables rolling forecasts and continuous recalibration based on live market signals. Plans are no longer “set in stone”; they are “living documents.”
Speed & Accuracy
- AI automates variance analysis, reconciles data across systems, and runs dozens of “what-if” scenarios in minutes. This shortens cycle times from months to weeks, while improving forecast precision.
Business Conditions Shift Faster
- In markets disrupted by AI, customer behavior, pricing, and competitive dynamics evolve quarterly, sometimes monthly. A 12-month budget drafted in Q4 may already feel outdated by Q2.
Cost of Iteration Collapses
- What once took analysts countless hours, nights and weekends (data gathering, spreadsheet work, reconciliations) can now be automated. This makes real-time course correction practical, not aspirational.
🙆 The Human Element AI Cannot Replace
While AI handles the tactical and analytical heavy lifting, the human role grows more strategic:
Asking the Right Questions
- AI generates answers; leaders must frame the right questions, tradeoffs, and risk tolerances.
Interpreting Insights in Context
- AI spots patterns; executives must interpret what they mean for competitive strategy, customer experience, and long-term bets.
Building Culture & Trust
- AI can recommend reallocations, but only leaders can manage the human implications, from morale to compensation to cultural resilience.
Decision-Making Under Uncertainty
- Machines model probabilities; humans decide which risks are worth taking.
🚀 The New Planning Paradigm: Hybrid & Continuous
The future is neither “annual planning only” nor “continuous planning only.” It’s a synergistic model:
Annual Plan as the Strategic Launchpad
- Sets the high-level strategy, capital envelopes, and people programs. The plan functions as the “baseline contract” with investors, employees, and the board.
AI-Powered Rolling Forecasts
- Monthly or quarterly refreshes that update assumptions dynamically. Continuous monitoring of revenue, spend, and headcount variances.
AI-Enabled Assumption Tracking
- Automated alerts when key inputs (pipeline health, attrition, cloud costs) deviate far enough to trigger a re-plan.
Human + AI Collaboration
- AI accelerates scenario modeling, benchmarking, and anomaly detection. Executives focus on judgment, strategy, and storytelling, the irreplaceable leadership layer.
Implementation Catch Up for Leaders
- Not using AI in your planning process yet? Don’t worry, I’ve got you covered 😉
- Follow me on LinkedIn, and I’ll be posting examples of quick-win implementations for the most functional leaders over the next few days and weeks.
♟️ One Last Thought
As the saying goes, “garbage in, garbage out”. It’s even more true in the age of AI. Take an honest look at the quality and reliability of your data and don’t force AI onto your planning process for the sake of following a trend. Your team and the board are depending on you to put together a plan that sets the company up for success, and everyone needs the confidence to own it. Prioritize that outcome, with or without AI.
