You have seen the dire warnings about the imminent recession. According to the Duke CFO Survey, 70% of CFOs believe it will happen by the end of 2020. According to the Conference Board, CEO confidence reached the lowest point in a decade last October. It is clear it is a matter of when, not if, a recession will occur.
As your team pivots from planning to execution on the 2020 revenue plan —what adjustments do you have to make when a recession strikes?
If you are still revisiting and adjusting your 2020 annual plan, download our “Making Your Number in 2020” report that outlines the four-step planning process that the top 16% of companies use.
Choose the Right Organic Growth Lever
Market-leading CEOs have a go-to-market strategy centered around one of the following growth levers:
- Market Expansion. Capture new revenue in a growing market.
- Market Share Gain. Capture revenue currently going to your competition.
- New Market Entry. Capture revenue by entering a new (to you) market.
Understand Current Conditions
Market-leading CEOs have implemented a commercial cadence that ensures ongoing functional interlock and provides leading indicators of success, as well as early alerts on possible challenges. These CEOs also assess their commercial teams and benchmark their capabilities vs. competitors and peer companies in other industries. This provides insights on the capabilities of their team, which they use to prioritize which organic growth lever to pursue. Lastly, their commercial teams collaborate to clearly understand how their customers will respond to recessionary pressures and develop strategies for this changing environment.
Reimagine the Go-To-Market Strategy
In a recession, you lose the market expansion lever. Most industries will have flat or declining revenue. It is important to understand how much you’ve relied on market expansion to fuel your growth. Have you been growing revenue at or below market growth? If so, your commercial leadership needs to shift to new sales and marketing motions.
Between the remaining two, the market share lever is the first one to assess. How to a) go on offense to win and b) go on defense to protect your share as competitors target your customers? Now more than ever, you should invest in gathering customer and market insights. Understand what customers and prospects are seeking now (which likely differs from what they seek during booming times) so that your commercial leaders can position and deliver the right solution that is the first preference among buyers.
If you are a market-leading company (among the 16% at Level 4 or 5 in the Revenue Growth Maturity Model), new market entry – into new verticals, geographies, or adjacent industries – can be an attractive option. If your team has the right capabilities, you need to develop a go-to-market strategy to enter a new market in a recession.
Reallocate Commercial Spend
In a recessionary environment, the allocation of people, money, and time is even more vital, as these become increasingly scarce. Market-leading CEOs will dynamically adjust and, in some cases, completely shift their go-to-market strategies to succeed in this new environment.
Launch a Focused Revenue Growth Program
Market-leading CEOs have an execution-focused mindset. In a recession, you can’t afford any missteps. If you are making transformational bets, you must safeguard against incrementalism – your team will be executing a new motion that will feel uncomfortable. A formal program can ensure everyone stays on-track.
We have found that the most effective way to do this is to launch a Revenue Growth Office, which ensures the following:
- Accelerated Operating Cadence. Standardized meetings with clear recurring agendas that move at a rapid pace creates the needed tempo and rigor. Executive sponsors and accountable owners come together to maintain momentum and remove roadblocks.
- Established Rules of the Road. Everyone agrees on how progress will occur and will be measured and tracked, leaving no room for ambiguity.
- Maintains a Single Source of Truth. No more hiding behind methodology or withholding of information. RGO drives transparency, visibility, and accountability.
- Reinforce the Need for Change. Transformational change is tough as you push your team to their limits. RGO communication will reinforce the “why.” Recognizing and rewarding positive outcomes will inspire the team to keep pushing.
By doing some homework, now you can go to the board with a plan (before they ask) and set your company up well to meet the inevitable downturn.
- Identify and choose the best organic growth lever based on your organization’s capabilities.
- Employ a data-driven process to identify the bets and place accordingly.
- Deploy a revenue growth program that ignites the discipline to make your number.
Get started by taking the Revenue Growth Maturity Model diagnostic, which will help you:
- Benchmark your organization’s baseline and capabilities.
- Uncover the gaps your organization needs to address.
- Begin to develop a game plan.
In mid-February, SBI will release its quarterly research report, which will describe the innovative strategies that market-leading CEOs are undertaking to prepare for the next recession. To receive an early release of the report, complete the RGMM diagnostic.