In the generic definition, annual objectives are simply the company’s goals for a calendar year. In most cases these goals should target a degree of improvement.
In a Lean organization, however, there’s a much more specific definition for annual objectives. It is a key component of policy deployment. Strategies are turned into three to five-year breakthrough objectives. The current year’s goals are stripped off of these breakthrough objectives and become annual objectives. Most annual objectives should be frontloaded, meaning that the majority of the gains should happen sooner rather than later.