Top-down, or bottoms-up?
By: Jeff Sinclair
Tags: Product, Product Management, Strategy, Planning, Leadership

Top-down, or bottoms-up?

A fireside chat about Annual Planning @ Atlassian

Today we’d love to share with you a fireside chat with Joff Redfern, VP of Product at Atlassian, covering how Atlassian conducts annual planning, and what the role of Product Management is in this process.

This fireside chat was moderated by Jeff Sinclair, Senior Product Manager for Personalization at Atlassian.

Question: Why is annual planning important for Atlassian’s product success?

If you zoom all the way out annual planning is a way to articulate to our company (and in part, our shareholders, partners and customers) our Vision, Strategy, Objectives and Priorities.

Vision is our dream to unleash the potential of every team,

is our dream to unleash the potential of every team, Strategies are how we navigate the competitive landscape,

are how we navigate the competitive landscape, Objectives (we use OKRs) are how we measure success, and

(we use OKRs) are how we measure success, and Priorities are the projects that help us achieve our Objectives and Strategies.

Question: What does the annual product planning process look like at Atlassian?

We’ve broken annual planning into two parts — strategy planning and operational planning.

The strategy planning happens up front with our ExecOps and Product Leadership Team. The output is a 6-page company strategy written on a Confluence page that outlines “where we play”, “why we win”, and ends with a 3 year financial forecast. We also clearly outline the ~3 top company objectives for the coming year. We spar this work with our board and then move into operational planning.

In operational planning, each product group (kinda like business units) builds out their annual plan and shows how their work will ladder up and drive our company objectives for the year. Each product group is made up of many products and each product is further broken down into smaller teams. Each of our products defines an annual plan that includes strategy, objectives / key results, priorities and financial plan.

The ultimate output of operational planning is two things —

Every product has a detailed product roadmap and financial forecast to the year, The product leadership team determines the final investment allocation each team receives in the coming year. They use the Company OKRs as the north star for their investment decisions.

At the end of the process, all of the Company and Products OKRs are entered into Jira where they are graded monthly or quarterly. And the final step is to cascade a very simple 1 page annual plan throughout the company so all can understand and embrace it.

Question: Is our planning process top-down, or bottoms-up?

As you can see, strategy planning is more top-down and operational planning is bottoms-up.

We have a relatively flat hierarchy within our company so we are always trying to take advantage of the know-how from the teams who are closest to the customer.

Question: What is the hardest part of annual product planning?

Wherever I go the hardest part is always around prioritizing and making smart trade-offs. You are often trading off building features for revenue, customer love, and other corporate priorities that don’t always align simply and cleanly.

Very rarely do you “get your cake and eat it too”

Other hard lessons about planning that I’ve learnt include:

Planning is an art and science. You have to balance your right and left brain.

You have to balance your right and left brain. Focus on the Global optima (company goal) over the Local optima (any one business unit). In fact, you often have to suboptimize the local optima to achieve the global optima. Many companies miss that part and devolve into a “Lord of the Flies” planning cycle amongst leaders.

(company goal) over the Local optima (any one business unit). In fact, you often have to suboptimize the local optima to achieve the global optima. Many companies miss that part and devolve into a “Lord of the Flies” planning cycle amongst leaders. Be courageous. I believe that companies go through many “founding moments” during their lifetime. And those founding moments are earmarked by bold decisions to change their course and plot a new way, a better way. Too often companies let those moments slip by and they pay the price.

Question: How do you think about product portfolio allocation?

Great question. Portfolio allocation is probably the most strategic thing that a company needs to tune up at least annually. If you are not familiar with portfolio allocation you see it used often in financial investing. Your financial advisor will say you should invest in a portfolio of investment vehicles that balance out the trade-off between risk and reward. Invest in stocks which are higher risk, higher reward AND in fixed income securities which are lower risk, lower reward.

Similarly, we have a portfolio of products that fall into 3 buckets — our core products, our adjacent products and our venture bets. Core is where we make our money today, adjacent are new markets that are close to our core businesses but new opportunities for us, and venture bets are seeds we plant today with the hope of a harvest many years down the line.

Some companies have a stated portfolio allocation like Google and LinkedIn who run a 70% / 20% / 10% allocation. Ours is not that systematic but we do focus on all 3 buckets and it’s not too far from those allocations. Recently, we’ve been starting to put more investment in our venture bucket.

Question: Has the process changed this year compared to previous years? Why?

Each year we run a survey after annual planning and then roll those into next year. Some big learnings:

Specify your company objectives for the year up front , otherwise product teams don’t have a global optima to guide them.

, otherwise product teams don’t have a global optima to guide them. Ask teams to do 0-based headcount planning. Ask them to plan the year based on the heads they have now and then have them list additional projects they would do if they had more resources. Rarely does every team get what they want so this makes it simple to see what you’d get with more people.

Ask them to plan the year based on the heads they have now and then have them list additional projects they would do if they had more resources. Rarely does every team get what they want so this makes it simple to see what you’d get with more people. Explicitly call out dependencies. During operational planning we use Jira as a way for teams to request work of other teams. In particular, we make lots of requests to our Platform teams, so it’s key to make sure we understand as many of these as possible during annual planning.

During operational planning we use Jira as a way for teams to request work of other teams. In particular, we make lots of requests to our Platform teams, so it’s key to make sure we understand as many of these as possible during annual planning. Keep it lightweight. Planning is good, but can be a distraction.

A final thought is that we have been discussing moving to two 6 month planning cycles. Each 6 month you would be looking 18 months forward. The downside of an annual plan is that it’s not so agile or responsive to a world that moves fast. Also your teams realistically only have clear line of site on the next 6 months of work and not 12 months. You can interview me again next year to see how we evolved!

Question: What tool(s) do we use to support us during this process? What value do we get from using these tools?

We’re all-in on Confluence and Jira. The value we get is transparency, a single source of truth, ability to slice and dice data any way we’d want to see it, and a whole lot more …

Question: Any closing words of wisdom to share with someone designing their own planning process?

One point often overlooked about annual planning is that different groups inside your company get different things out of planning. R&D, Finance, Sales & Marketing, Recruiting, have a different lens on the same process. It’s like the tale of the 3 blind men describing an elephant but each is touching a different area and therefore describes the elephant in a different way.

For example, the Finance team is responsible for forecasting revenue, the annual budget, and giving shareholders revenue guidance for the coming year. That’s their lens. The recruiting team is trying to determine which teams and locations will be getting additional headcount to ensure they have the capacity to support our growth. That’s what they want.

If you’re designing a planning process this should be your first set of work — who is it for? what do they need? I’ve never met someone who loved everything about their planning process.

Finally, did we get something wrong? Our ideas are constantly evolving as we learn new and better ways of running our company and building product.

We’d love to hear from you.