These days, it seems like we’re living in the business world’s version of Billy Joel’s 1989 hit, “We Didn’t Start the Fire.” Inflation, geopolitical tensions, energy shortages, labor shortages, rising employee expectations, rising interest rates, increasing cyber and data risks, unsatisfied investor expectations – the list goes on. As the song says, today’s business leaders are not necessarily creating this economic situation ourselves, but we are responding and leading.
Despite the difficulty, I have seen many business leaders and those charged with management lead well. In fact, based on what we have seen in our client base, I would argue that the glass is half full. Why? Not because we are immune to the many challenges facing businesses today, but because we see resilience, change agility, and innovation in all times and in all industries.
So, what are the top businesses doing today? They simplify it and focus on what they can control. They work hard to increase operating revenues more than they increase operating costs. How? As I talk to CEOs, the similarities between the companies are striking. Many are focused on the following five questions:
1. Am I isolated?
Differentiation includes strategic pricing strategies, changing the value proposition, delivering quality service, shortening response time, making cross-selling a reality, and delivering a unique experience. to the customer. Leading companies across industries are pulling these levers in physical spaces, in digital channels, across platforms, and before, during, and after the point of sale.
In slow-growth markets, sales are harder to come by, so leading companies ask themselves: Why should a customer choose us? How do we differentiate? How can we increase market share? The good news is that driving diversity is completely within a company’s own control, as long as leaders maintain a strong focus on these areas.
2. Am I fit for growth?
The growth during the pandemic that many companies have seen, as well as the expectation for continued growth, has led to a significant increase in the number of people and countless “special projects” started. It also led to delays in the integration of business acquisitions and the delay of some difficult decisions surrounding operating models and standardization efforts. These decisions, or lack thereof, were made when money was cheap and markets were high. Companies don’t have the same luxury in today’s markets.
Profitability growth is a necessity, and it must be self-financed, as investors are unlikely to allow deteriorating margins to finance growth or lack of growth. So, what is one to do? The answer: Get well and fund your own growth. Being suitable and developing self-financing is completely within a company’s own control.
3. Am I spending on IT effectively and at the right level?
Many companies’ futures depend on reinventing themselves in the cloud. This means achieving true customer differentiation – at lower costs.
Yet for many companies, the invention is still far from over, and the benefits of the cloud have not yet been fully realized. If your company falls into this category, this market is likely to demand a reason. In many cases, that reason can be traced back to a lack of management alignment, a belief in a different future, or a lack of execution.
Now is the time to align closely with the executive team and think broadly about how to transform digital capabilities into business growth. This means investing in digital transformation of functions, speeding up management decisions, driving change more aggressively and holding people accountable. The latest PwC Pulse Survey found that 52% of CIOs are looking for ways to incorporate analytics into processes to drive better and faster decision-making, with automation, digitizing legacy infrastructure, and self-service IT seen as top priorities for cost savings and productivity.
Improving the C-suite’s technology IQ and driving better execution is completely within a company’s control.
4. Is my portfolio of businesses too complex?
Companies are moving to the cloud, reinventing themselves, undergoing energy transitions, navigating geopolitical tensions, and seeing the benefits of being a “global enterprise” tested in a broken world.
As a result of these forces, many are questioning whether their portfolio of businesses makes sense. We have seen many large companies carve out certain businesses to raise capital to help fund necessary transitions, such as cloud or energy, or to simplify the overall business to increase the likelihood of a successful invention. Determining what should or should not be in someone’s portfolio is completely within a company’s own control.
5. How can I reduce the risk?
Risk is more abundant than ever. Companies face supply-chain continuity risk, concentration risk in the markets where they sell and buy, energy access risk, and additional risks related to inflation, regulation, outlook on public, data accuracy, security, and more.
A powerful risk function is the name of the game for today’s leading businesses. It starts with an objective risk assessment and a dispassionate and aggressive closing of the gaps. Companies are working to diversify supply chains, to ensure they are not concentrated in certain parts of the world, to automate and outsource, to reduce inflation, and to invest to close gaps. the. Proactive risk management is more of an asset than ever, and companies that successfully manage risk tend to be unstoppable in their pursuit of profitable growth. Successful risk management is within the company’s own control.
. . .
Although it is true that today’s markets have many difficulties, we can still expect winners and losers. Companies that aggressively prioritize and focus on what is within their own control can retain and earn the trust and confidence of their people, customers, investors, and other stakeholders. Likewise, those who do not focus on these areas risk losing the confidence of investors, inviting shareholder activism, and perhaps most importantly, they also risk losing confidence. of their employees, who look to leadership now more than ever. The good news is that each of the aforementioned five areas is highly achievable with the right focus, and each is within management’s control.