SBI's Annual CEO Growth Survey provides you with recent insights on how growth CEOs are preparing for a recession. While these headwinds are not the first of many challenges CEOs have had to face, the collective data show that whether a first-time or veteran CEO, preparation is key in developing and executing growth plans for 2023.
Recommendations we have at this point:
Get clear on your growth plan, not just your cost-containment plan
CEOs learned lessons navigating the economic headwinds presented in 2020, and most admitted to ignoring signs of decreasing demand. This year, CEOs maintain a tone of cautious optimism. Nearly two-thirds of CEOs admit to having developed contingency plans for their businesses. 65% reported taking explicit financial or budgetary actions to prepare for an economic recession in late ’22 or early ‘23. However, their plans are overly focused on cost reduction instead of defending growth bets or reallocating expenses to maintain growth in the face of recession. Knowing where to redirect investment to capture revenue will separate the winners.
Use caution in being too agile — focused organizations weather economic headwinds better
Comparing last year’s CEO survey results against this year’s shows CEOs have a more cautious growth posture with more hedging in growth options and less strategic clarity. Our interviews confirm this trend, with the word “agility” frequently attempting to mask strategic uncertainty. While maintaining a hedged, or agile, growth approach may feel like the right posture, it’s often indicative of CEOs operating on their backfoot with slow decision-making and obscure focus during periods of economic uncertainty. In our one-on-one CEO interviews and SBI’s CEO Growth Advisory Board meetings, we found those who committed to a plan through the initial uncertainty of 2020 far outpaced the growth of those who elected to “wait and see” or adopt a more agile growth posture.
Evolve your value creation plan and related growth levers now, not later
CEOs driving near-term, durable growth, even through a potential recession, will focus on a small set of growth imperatives related directly to their value creation model. Achieving each of these growth levers requires different growth imperatives ranging from productivity enhancements to business model evolution. SBI helps CEOs dimension their value creation models across 4 distinct quadrants by asking the following questions:
- Create GTM operating leverage: If current GTM spend is in line with best practice but delivering insufficient growth, what are the primary productivity levers that can be pulled to create growth quickly?
- Invest in GTM for growth: If there is tremendous future growth potential, where should investment bets be placed to generate outsized growth?
- Approach revenue model shift: If the revenue model is in transition, or needs to be changed, how can the transition be approached without increasing cost or delaying growth?
- Maintain growth with less GTM spend: In instances where the growth of the asset is acceptable, but the costs are above peers and best practice, how can GTM cost be reduced without disrupting the current growth trajectory?
Collectively, participants agreed CEOs need to drive near-term, durable growth with relentless execution. In the face of economic uncertainty, CEOs must remain focused and committed to their immediate growth plans and avoid reactive decision-making that will result in lost market share to more proactive competitors.
In the upcoming weeks, SBI Research will share full insights from the recent survey of CEOs, operating partners, and independent board members in a series of reports. For a deeper understanding of the survey results, connect with our team.