They told us what is on their minds.
At Vistage Research, we believe research without data is just another opinion. So, as part of a recent Vistage CEO Confidence Index survey of CEOs and owners of small and midsize businesses (SMBs), we asked the Vistage member community, “What are the major decisions you’ll have to make regarding your business in 2017?”
The challenge with an open-ended question like this is that the responses are not easily quantifiable. However, text analytics allows the translation of unstructured text into meaningful data for analysis and comparison. And while not digitally precise, they are directionally accurate and predictive of our members’ intentions. Vistage Research enlisted the services of Dr. Howard Olsen from On-Strategy to perform the text conversion and analysis. Dr. Olsen’s analysis achieved confidence levels of 95 percent on the 1,082 text responses. Individually, the top six major decisions as identified by the Vistage community represented one-third of all responses.
Identifying, recruiting and hiring top talent is a huge challenge. Yet, without upgraded and incremental talent, it’s very hard to grow. Hiring for growth, hiring executives, hiring fast, hiring trade talent, when to hire, how to hire, firing and topgrading talent were among the major decisions Vistage members faced. In addition, several commented on the difficulty of financing new talent and specifically “hiring ahead of revenues.”
Growth is the goal and fundamental challenge of all organizations. It may require adding new people with expanded talents. Growth is a constant when thinking about attracting, closing and retaining customers. It touches on operational decisions related to facilities, expansion and technology. Financial decisions regarding accessing capital, potential acquisitions and investments are also growth oriented. While members viewed growth as vital to their organization, their responses were cautious in their approach, citing concerns such as right-sizing, limiting financial risks, and finding staff that will hold to company standards.
Getting the “right people” in the “right seats” and giving workers the skills and competencies they require to succeed and advance were viewed as essential and mentioned in other categories as well. While the tight labor market makes hiring difficult, it also puts great pressure on organizations to retain and grow the good people they have. With a smaller number of employees, the loss of even one key employee can be a setback to an SMB.
Without customers, there is no business, so a focus on sales is expected. Strategic decisions, such as the evolution of the sales function, customer coverage model and sales structure, must be made as small businesses become large. New products require marketing support, new messages and training for the salespeople as they call on new customers or buying centers and encounter new competitors. Understandably, many members commented on the need to build their sales team, citing concerns such as when to hire, how to find the right people, how to incentivize them and what to do when they don’t meet expectations.
Acquisition (and divestment) strategies were clearly on the minds of many of our members. The financial implications of an acquisition are central to this decision. How much to pay, how to finance and how to integrate an acquired company were themes that dominated the responses. Acquisitions also typically include facilities or other physical assets that need to be evaluated. In addition to acquisitions, members also mentioned mergers and alliances as a way to produce revenue growth.
As part of a broader talent management strategy, succession planning looks ahead to the future leaders of the organization. For some, this becomes a developmental exercise of evaluating and developing existing talent, at all levels of the organization, against future needs. This often connects back to hiring, as the existing people may lack the experience or competencies to take on bigger roles in a larger company. In family businesses, succession planning takes on the additional nuance of passing the business on to the next generation.
We asked Vistage members a follow-on question as part of the same survey: “What are the top 3 areas of your business you’ll invest in over the next 12 months?” Here are the top six answers to this question, representing 28 percent of responses:
This question also moves the analysis from decisions that need to be made about strategy to decisions that need to be made about execution. Getting those right is just as important. It’s said that nine out 10 strategies fail due to poor execution. A successful outcome requires effective leaders who can make and execute critical decisions “better, faster and more consistently” than the competition, according to a Bain & Company study. “Ultimately,” wrote the authors, “a company’s value is just the sum of the decisions it makes and executes.”