The Annual Strategy Planning Trap: How To Stop Fighting Over Budget And Start Focusing On Category Dominance

No one is asking, “Are we winning the category?”

Arrrrr! 🏴‍☠️ Welcome to a paid edition of Category Pirates. This foundational series shares category design principles, strategies, and actionable frameworks to help you design new and different categories. Thank you for reading. And of course, forward this mini-book to anyone who needs to hop aboard the Pirate ship.

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Dear Friend, Subscriber, and Category Pirate,

Every year, companies get caught in a high-stakes game of internal politics. 

It starts with executives gathering around a conference table. The air is thick with tension as they begin to jockey for position. The annual game of jump ball for budget is on! They bribe the CFO for more budget by taking her out to lunch. They compete for an “attaboy” and “attagirl” from the CEO. They collect wins, KPIs, and metrics to prove their worth.

Worst of all, they get trapped in a cycle of short-term thinking, reactive decision-making, and so much radical internal (political) focus that they forget they even have customers.

You can picture it.

Covert exchanges of favors unfold like a backstage drama. (The meeting before the meeting and the meeting after the meeting become the most important meetings.) Teams halt their daily work to build Asana boards titled “2024 Marketing Strategic Plan” that need approval from the CEO. 200-slide PowerPoints circulate throughout departments with words like synergy, alignment, and ROI on every other page. People face off in spreadsheet kung-fu.

It’s a business-themed Squid Game, where survival depends on securing the biggest slice of the budget pie.

This is the “Annual Strategy Planning Trap” in action—a theater of absurdity where the fight for resources blocks the pursuit of category domination. 

This scenario plays out year after year, in a cycle as predictable as the changing seasons. And it consistently leads to the same chaotic dance: budget battles, internal politics, and a collective loss of focus on what truly matters—designing and dominating your category. Fortunately, there's a way out. 

Instead of grappling over budget, you can break free by asking one question:

How do we design and dominate a giant category that matters?

This question highlights the difference between companies stuck in the Annual Strategy Planning Trap and those who emerge as Category Queens. Those caught in the trap base their plans on the past and shackle themselves to outdated thinking, which perpetuates a cycle of mediocrity. The Category Queens, however, look to the future and embrace a category-first mindset that positions them as market leaders.

For instance, our friends Matt Bertulli and Brad Pedersen had already created and dominated the recycled smartphone case category with Pela Case. Had they fallen into the Annual Strategy Planning Trap, they would have found themselves in a Squid Game scenario where marketing, sales, and R&D argued over budget to see who got the biggest slice of the pie as they fought for more share of the smartphone case market. Instead, they got an idea for a massive breakthrough category that continued to solve the problem of waste: Smart Home Composter. Today, Lomi is the fastest-growing new home appliance in 20 years, and the “Smart Home Composter” has earned coveted counter space, alongside toasters, coffee makers, and microwaves. 

Now, think about this: Who could have predicted the massive impact of ChatGPT?

(Certainly not those caught in the trap and tethered to last year's plan.)

The launch of ChatGPT changed the business landscape overnight, making traditional strategies obsolete. It set the record for the fastest-growing consumer application in history, with 100 million users within two months of launch. Almost one year later, Sam Altman (the CEO of OpenAI) announced that ChatGPT had 100 million weekly active users. 

So how did ChatGPT impact annual strategic planning?

A Gartner poll of more than 2,500 executive leaders reported that 45% of leaders increased their AI investments due to the popularity of ChatGPT, 70% said their organization is in investigation and exploration mode with generative AI, and 19% are in pilot or production mode. 

So if your company was in a position to design and dominate the generative AI category (or a sub-category) in 2023, the best annual strategic plan revolved around leveraging AI. You weren’t worried about developing 30 new features to out-pace the competition or rebranding to make your packaging more “modern.” You allocated a majority of the company’s resources to designing and dominating the AI category.

To be a category leader, you have to invest in what makes the most sense for tomorrow.

You have to quit fighting for budget (an internal battle) and start fighting for category dominance (an external battle).

This mini-book is your guide to breaking free from the Annual Strategy Planning Trap. In it, we’ll share why companies fall into the trap, explain how to escape it, and help you pivot to focus on becoming a Category Queen. Most importantly, we’ll share a new framework to help you understand your Category Strategy—and implement it in the coming year.

So grab a drink, ditch the PowerPoint, and let’s dive in.