What sets CEOs of high-growth companies apart in 2021? Much of it comes down to focus and conviction.
As part of a several-month investigation into how high-growth companies navigated the pandemic and how they are planning for 2022, SBI Research interviewed more than 15 CEOs, ran several advisory board meetings, and surveyed more than 100 commercial leaders. The findings revealed some important differences in both strategy and execution when comparing high-growth companies to their peers.
The High-Growth Approach
The best CEOs embraced a highly focused and disciplined management approach centered on 3–4 well-defined growth bets to outperform their peer set during the pandemic. Discipline enabled their organizations to pivot go-to-market (GTM) teams quickly, tightly align resources to key products and markets, and execute and iterate efficiently.
When we looked at the management approach these leaders pursued across 2021, we saw six key themes emerge, some of which will extend into 2022 (see the chart further below):
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Doubling Down on Winning Products.
High-growth organizations were 33% more likely to prioritize a narrow set of high-demand products and markets than their peers and 2.3 times more likely to focus on deepening penetration into existing markets. These companies all followed a similar playbook: they evaluated how their solutions stood up to major demand shifts and then zeroed in on those opportunities, with few distractions or hedges.
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Accelerating the Innovation Roadmap.
Entering the uncertainty of 2021, high-growth companies tended to pull forward innovation opportunities aligned to post-pandemic demand shifts. As one example, a software company in the wellness space pulled forward the launch of a video product, enabling its users to engage customers virtually. Another CEO shared, “Once we realized we were in good shape financially, we began to accelerate progress against our product roadmap. It was all about tech development, tech debt, and marketing, ensuring the market was aware of our innovations.”
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Minimizing Distractions from Near-Term Growth Priorities.
It was also interesting to see what high-growth companies didn’t do at the onset of major disruption. They were much less likely than their peers to spend time deprioritizing, sunsetting, or divesting products. While it may seem counterintuitive, this finding reflects leading CEOs’ tendency to focus as much energy as possible on what drives growth, protecting their firm’s most precious commercial and product resources from distracting initiatives and underperforming products.
As companies flooded their core markets in 2021 and now consider how to extend their growth runs, greater tolerance for risk and more expansive bets feature in most leading CEOs’ 2022 growth plans. To support these bigger, braver growth bets, we saw a few commonalities:
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Commitment to Organic Growth.
While most companies surveyed plan a mix of organic and inorganic growth, top performers are placing relatively higher bets on organic levers, expecting 77% of 2022 growth from organic bets (on average) versus 70% for average-growth companies. Unpacking organic growth a little more, high-growth CEOs are shifting slightly from the safer bet of deeper market penetration to put greater focus on business-building bets, increasing focus on new product introductions by about 20% and maintaining focus on bets such as new market development. As one example, several CEOs shared efforts to monetize data and insights generated from their software platforms.
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Commercial Capacity Aligned to Growth Strategy.
Compared to their peers, high-growth leaders are more aggressively investing in go-to-market capabilities to ensure their teams can adequately support the year’s growth initiatives. Specifically, the top three functions where high-growth companies plan to outspend peers include Sales, Marketing, and Product; planned investments for G&A functions (e.g., Finance, HR, IT) remain very similar across all companies surveyed. Further supporting the go-to-market focus, several high-growth CEOs also shared that they have upgraded marketing leadership in the past year, seeking CMO talent with demonstrated abilities in digital marketing, closed-loop demand generation (from lead generation to bookings), and thought leadership.
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Emphasis on Digital Marketing and Digital Selling.
A deep dive into sales and marketing budget breakdowns was also insightful. Across the 14 sales and marketing capability areas explored, digital marketing and digital selling represented the biggest gaps in planned budget increase between high- and average-performing companies. With buyers who aspire to navigate a purchase as independently as possible, and in-person events a distant memory, winning companies recognize the need to make permanent changes to their GTM approach. Dedicated resourcing for digital marketing and selling enables targeted demand creation at the top of the funnel and accelerates lead progress toward virtual experiences that make it easy for buyers to gather information and interact with products. If executed well, these interactions can also support seller productivity, not to mention generate rich buyer data, arming reps to tailor their customer interactions.
In addition to comparing growth strategies and execution plans across high- and typical-growth companies, our research revealed four key risks facing all companies as they plan for next year. To learn more, click here for our full report.