Annual Operating Plan

• Budget — operating and capital spend allocated by team or initiative for the year. Set through a mix of top-down targets from Finance and bottom-up asks from each team, reconciled before the plan locks — see Top-Down vs. Bottom-Up below.
• Headcount Plan — the people behind the budget: new hires, backfills, and where roles move. Usually the most contested line in the whole plan — every initiative wants net-new headcount, and there's rarely enough to fund all of them.
• Priorities Cascade — the ranked list of initiatives that actually get funded this year, pulled straight from Strategic Planning's Winning Aspiration and OKRs. Not everything that's strategically "nice" makes the cut. This is where ambition meets a finite budget.
• Calendar & Milestones — the planning season itself, plus the checkpoints through the year where the plan gets checked against reality. Most companies run planning in Q3/Q4 for the following fiscal year, then revisit at the mid-year mark if the landscape has shifted — see Adjust on Strategic Planning. Amazon's well-known OP1/OP2 cadence is this same two-pass idea by name: OP1 sets the detailed plan in the fall, OP2 refines it in the winter before the fiscal year starts.

A narrative write-up of where the org or product stands often travels alongside the budget ask in this same planning season — but that status narrative is Strategic Planning's cascade restated for a budget conversation, not a separate artifact. See Strategic Planning.

Top-Down vs. Bottom-Up

The two ways a budget actually gets built. Most real plans are some blend of both:

• Top-Down — leadership sets a target first (flat headcount, 10% opex growth) and teams plan within it. Faster, but risks setting a number before anyone's checked whether it's actually enough. Zero-based budgeting — building every line from zero instead of last year's number — is a stricter version of this, used aggressively by 3G Capital at Kraft Heinz and Anheuser-Busch InBev.
• Bottom-Up — each team builds its own ask from what it actually needs, then those get rolled up and reconciled against what the company can afford. More accurate, slower, and almost always needs a top-down number to converge against — otherwise the asks just add up to more than the company can spend.