Keeping a business focus on key drivers is a high priority for all CEOs and Directors.
As the books are closed at the end of the year, you can reflect on your company’s performance for the past twelve months. Trends can be seen in how the business is operating, and it is a time for CEOs and Directors to review, digest and plan for the year ahead or to complete the ending of your financial cycle in the coming months.
At this time of year, the strategy execution and business focus review is important. Has marketing delivered to plan? Have sales delivered to the plan? Alternatively, is there even a documented plan in place at all that demonstrates the requirements of strategy implementation and the measurements for that plan?
Your priorities and focus will determine how well the company operates and how it responds to the market. How you lead the company influences people’s decisions and priorities within their roles. As CEO, you have many different priorities and probably a list of issues that need to be dealt with. You are facing numerous questions that need answers while at the same time keeping a keen eye on where the business is heading.
Most CEOs I meet have a similar list of overarching priorities in how they operate. It will depend on the size of the company and your relationship with it. A mid-market CEO is typically a director of the company and may hold the title of managing director. Some are hired CEOs with a board of directors that are the original owners.
For the mid-market company, the top concerns are ranked:
- Cash flow
- Sales and marketing
- Family employees
- Individual net worth
The mid-market CEO’s focus on customers causes them to devote a tremendous amount of time to key customers as they are often the lifeblood of the company. This focus draws them into the day-to-day business operations as they are involved in tenders, meetings, customer issues, and operational demands to meet customer needs, which often sacrifices the necessary time required for ensuring the performance of sales and marketing – the vehicles that deliver the strategy.
The secondary level of focus is on cash flow, although related to sales is considered different. It is another chasm I see CEOs drawn deeply into holding many internal meetings. If sales are underperforming, then the cash flow is problematic, and it drains time working out how to keep the business flowing. Again, the delivery of strategy is lost, and cash flow becomes a day-to-day fight for survival in some instances.
For many CEOs, their priorities are out of order with the demands of the business. Focusing on customers and cash flow is short-term thinking and will deliver single digital growth if any at all. They are important, but there are resources in the business that should be carrying that load for you. The sales force and the finance department. Those leaders should be managed to perform those functions freeing up your time to focus on the real drivers of the business.
Where you, as CEO, best served using your time is keeping a keen eye on strategy – the direction you are travelling – and ensuring all the requirements are being met through sales and marketing. They hold the key to the strategy, and when they perform, most of the other priorities will be managed effectively in the business. You will be working on the business through effective reporting.
The key drivers that hold the key to revenue and profit most likely fall into these categories. You need to be asking these questions yourself:
- Did you reach your new customer acquisition targets?
- Did you retain your most important customers?
- Have the new products achieved traction in the market?
- Are marketing and sales aligned to delivering greater growth at a lower cost?
- Have you reduced the direct and indirect costs related to sales and marketing?
- Is your sales leader delivering over-sales goal results – consistently?
- Is your marketing leader delivering high ROI on their budget?
- Can you check off the strategic requirements as fulfilled to date?
If you are focused on these points and can answer yes to them all, then your business is travelling well, and the cash flow and customers will be taken care of by quality business unit leaders. If you cannot answer yes to all those points, then you have a set of priorities that need to be addressed and resolved why they are not being achieved.
A point to remember is that cash flow is the derivative of booked order sales being made. Consistent cash flow comes from consistently booked orders. As most CEOs know, the profit is made in the last 20% of sales goals being achieved. Therefore, you must not accept any performance that is less.
CEOs that are focused on these key drivers are the ones that are producing 50-80% more profit than their counterparts. The focus fulfils the needs of all other business requirements.
If your company is not executing strategy timely to plan, and sales goals are missed, it is time to undertake a growth capability review to ascertain exactly why and establish an action plan for the months ahead. Taking action now can see a change in the company’s performance in 90-120 days and get you back on track to where you should be.
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