1 Dec 23
After maintaining expense levels in 2023, CEOs are planning to increase their investments to accelerate growth—targeting new market penetration through M&A
Despite the uncertain market conditions throughout 2023, most CEOs seemed to have stayed consistent with their value creation thesis, with an even split between those who chose to increase expenses and those who chose to maintain expenses while accelerating growth. More optimistic attitudes toward 2024 will see more CEOs shift towards increasing expenses though, as more companies seek to pursue growth more actively.
To ensure that companies invest in the right places to achieve their goals, we have insights to share from SBI’s latest edition of the CEO Value Creation Pulse. The full report focuses on how CEOs and other C-level executives are planning for value creation in upcoming quarters, as well as the go-to-market (GTM) strategies and tactics that will get them there.
In this third part of the four-part series, we examine how CEOs are planning to shift their focus back towards investing in growth and value creation in 2024.
Value creation emphasis shifting back to investing in growth
SBI measures a company’s value creation thesis on a compass, based on whether their strategy involves increasing or maintaining expense levels, and whether the goal is to accelerate or maintain growth rate. As part of our report, we surveyed CEOs on which quadrant would best describe their organization’s planned approach to value creation in 2024. This data was then compared to past findings from our previous surveys.
Figure 1: SBI’s Value Creation Compass illustrated, with our findings on CEOs’ planned value creation strategies.
Our data showed that there was a significant shift toward maintaining growth rate without increasing expenses in 2023 compared to 2022. But as CEOs begin planning for 2024, we’re seeing yet another shift back to accelerating growth rate with increased expense, returning to levels similar to the 2022 data.
To understand where CEOs would be focusing their investments, our surveys followed up with questions on the growth levers in their organizations and which ones were the most critical. Our findings highlighted these growth levers as the top three seen as most critical to CEOs’ value creation theses in 2024:
- 81% - Optimize GTM model to improve sales and marketing productivity
- 78% - Increase customer retention and decrease churn
- 68% - Boost market penetration and/or expansion
Figure 2: Comparison of growth lever criticality with confidence in companies’ execution abilities.
On the other hand, in comparing this data on the criticality of growth levers with the CEOs’ confidence in their organization’s ability to execute, the findings also highlighted potential performance gaps as perceived by the surveyed CEOs. Some of the biggest performance gaps were in some of the most critical growth levers, including:
- Increase customer retention and decrease churn (18% gap)
- Boost market penetration and/or expansion (14% gap)
- Drive revenue through the most cost-efficient channels (17% gap)
CEOs were also surveyed on whether mergers and acquisitions (M&A) would be a significant part of their organization’s growth plans over the next 18 months, to which the majority—64% responded positively. The main strategic intent for M&A activity for most of the surveyed CEOs was new market penetration, followed closely by customer acquisition and EBITDA expansion.
SBI’s advice for investing to pursue growth in 2024
Based on the insights highlighted in this chapter of the CEO Value Creation Pulse report, SBI has three key pieces of advice to help CEOs avoid pitfalls and seize new opportunities for their business in 2024:
- Be cautious about reinvesting resources into an unproductive commercial ecosystem. Pursue growth in adjacent markets first, or by making role design changes—like shifting more sellers into hunter roles. Avoid reintroducing spend into an unproductive commercial environment.
- Capitalize on any M&A as a quick opportunity to bolster your pipelines. Extend your account-based marketing (ABM) efforts with refreshed messaging and packaging, and don’t hesitate to pursue cross-sell opportunities.
- Carve out dedicated GTM motions for innovations to accelerate revenue capture. Gain alignment on metrics for success and how they will differ from core products and services. Use benchmarks from past and competitor launches to set expectations.
Discover the other three trends and more insights in the SBI CEO Value Creation Pulse, which is available for download. Read the research here.
