With the current outlook of 2024, companies and individuals are hopeful that the economy will start to recover.
The Fed has kept the interest rates steady since July 26, 2023, up until the 5.25% – 5.50% point. The general public expects upcoming rate drops around Q2 this year, easing the global economy.
We saw the stock market recovering in 2023, too – with 25% growth of the S&P index from the beginning of last year. In times of uncertainty, agile businesses survive – and transforming your business based on the market data is imperative.
As a business advisor working with dozens of businesses day-to-day, most executives are planning the 2024 journey and waiting out the first two weeks of the month to reflect on the market trends – consumer behaviors, stock market, and any business contracts discussed in December. And the current outlook is trending positive.
What key areas will leadership teams focus on this year to drive growth and profitability?
I’m outlining the most common strategic initiatives we see in decks, pitching in roadmaps, and discussing in strategic meetings across all businesses in my purview.
1. Strengthen Financial Management
Effective financial management is the backbone of any successful business.
- Startup funding in 2023 has seen the lowest levels over the past 5 years.
- Agencies were going through tumultuous times last year – with ongoing layoffs following the big tech waves of cuts starting in late 2022
- Optimizing efficiency has led to automating roles like sales and customer support – with Google rumored to plan the restructuring of their 30,000-strong ad sales team with cuts on the way
Implementing robust budgeting, forecasting, and cash flow management practices is crucial for ensuring financial stability and driving growth.
According to a survey by the Financial Executives Research Foundation, companies that engaged in advanced forecasting experienced a 10% higher profit growth than those that did not. Real-world examples include companies like Tesla, which managed to turn around its financial situation by meticulous cash flow management and strategic capital infusion.
Effective financial strategies have also been a hallmark of business leaders like Warren Buffett, who emphasizes the importance of disciplined budgeting and forecasting for long-term financial success.
If you feel that Buffett got this wrong, Berkshire Hathaway is currently the most expensive individual stock in the world:
Optimizing these financial practices not only helps in managing expenses and investments wisely but also in securing funding. Investors and creditors look favorably upon businesses that demonstrate sound financial planning and management – especially when VC funding is low and interest rates are high.
Amazon’s early focus on rigorous budgeting and reinvestment into its operations has been pivotal in its journey to becoming a retail giant. Moreover, integrating modern financial tools and software can provide real-time data analytics, enabling more accurate and timely decisions, ultimately leading to sustained growth and profitability.
2. Optimize Operational Efficiency
Enhancing operational efficiency is vital for businesses to stay competitive and profitable. Identifying and eliminating inefficiencies can significantly reduce costs and improve productivity.
On an SME scale, we’ve seen this occurring in different shapes:
- Layoffs also used to decrease the hierarchy, trim down middle-level managers, reduce communication overhead
- Inventory of non-essential tools and services
- Cutting down R&D budgets while focusing on the core value proposition
- Leadership diving deep into the core operating processes – refining integral workflows
- Introducing external subject-matter experts for reviews and audits
Globally, Toyota’s implementation of the Just-In-Time (JIT) inventory system revolutionized manufacturing processes worldwide, significantly reducing waste and enhancing efficiency. Similarly, companies like McDonald’s continually refine their operations to improve efficiency and service delivery, ensuring consistent customer satisfaction.
Doubling down on digital transformation and integrating technology plays a crucial role in optimizing operations. For instance, Walmart uses sophisticated logistics technology to streamline supply chain management, leading to reduced operational costs and faster delivery times.
Optimizing efficiencies leads to higher accountability, higher quality, improved ROI, and even higher employee satisfaction by committed staff members who want to see actual results for their work and collaborate in teams with other performers.
3. Embrace AI and Automation
Embracing AI and automation is essential for businesses to enhance their processes, products, and services. While the AI hype has been through the roof last year, the latest GPT and machine learning tools can significantly improve decision-making, operational efficiency, customer service, and more.
For example, Netflix uses AI to personalize recommendations for its users, significantly enhancing user experience and satisfaction. Similarly, manufacturing companies like GE use automation and robotics to improve production efficiency and product quality.
The largest volumes of funding in 2023 were allotted to AI startups. Nvidia’s growth was also historical. This would lead to high-quality tools, systems, and services leveraging AI to standardize product quality and cut down production times, limiting the need of overhiring for repetitive functions.
The continuous exploration of new technologies can lead to significant competitive advantages. According to a report by Accenture, AI has the potential to boost profitability rates by an average of 38% across industries by 2035. Moreover, AI and automation can free up human resources to focus on more strategic and creative tasks, driving innovation and growth.
JPMorgan Chase used AI for legal document analysis which saved thousands of human hours even back in 2017, allowing employees to focus on more complex and value-added activities.
4. Strengthen Marketing and Sales Strategies
One recurring conversation in my digital agency and our growth consultancy during sales calls was the exploration of new sales channels and building new marketing funnels.
Over the past few years, many businesses achieved a level of profitability through a mix of organic, referral, recommendations, and listings – bringing a handful of high ticket deals annually with limited need for demand generation or paid ads.
However, thoughtfully crafted marketing strategies and optimizing the sales process are crucial for driving conversions and growth. Understanding the target audience and crafting messages that resonate can lead to significant increases in customer engagement and sales.
A simple DTC example is Coca-Cola’s “Share a Coke” campaign, which personalized bottles with names, and resulted in a 2% increase in US sales after a decade of declining revenues. Similarly, Nike’s targeted marketing efforts, particularly in digital channels, have effectively engaged its audience and driven sales.
Optimizing the sales process is equally important. Salesforce reports that high-performing sales teams are 2.8 times more likely to use guided selling strategies, which leverage data and analytics to inform sales approaches.
Businesses like Zara excel in sales optimization by rapidly responding to fashion trends and customer preferences, ensuring that their offerings are always in demand. While they’ve been leading the charts in their category (along with H&M), other progressive competitors show up – Shein just penetrated the US space, outpacing both leaders in the category.
Effective marketing and sales strategies not only drive immediate revenue but also build brand equity and customer loyalty, laying the foundation for long-term success.
Even unicorn founders like Matt Mullenweg are actively back to blogging – leading by example, providing insights and direction for their communities.
5. Enhance Customer Satisfaction
In the era of limited sales opportunities, prioritizing customer satisfaction is key to business sustainability. A satisfied customer not only returns but also refers others, creating a virtuous cycle of growth.
Studies report that it costs 4 to 5 times higher to acquire new customers than retaining existing ones. Successful enterprise businesses grow through retention and growth – think of Oracle, Facebook, Salesforce, HubSpot. Their stickiness brings customers through the door, retaining them for many years, while companies grow larger and keep upgrading their license plans.
Apple’s commitment to customer satisfaction through innovative products and exceptional service has created a loyal customer base that drives its continued success. Similarly, Amazon’s customer-centric approach, epitomized by its hassle-free return policy and user-friendly interface, has made it a global retail leader.
A study by the Harvard Business Review found that customers whose problems were resolved quickly were more likely to make future purchases with the company. We also see the loyalty incentives in our Shopify portfolio throughout 2023. Investing in customer relationship management (CRM) systems can help businesses better understand and meet their customers’ needs.
6. Empower Data-Driven Decision-Making
Utilizing data analytics is essential for informed decision-making. Insights into customer behavior, market trends, and operational performance can guide strategic choices that drive growth and competitiveness.
One industry leader – American Express, uses sophisticated predictive analytics to identify potential customer churn and develop retention strategies, reportedly saving millions in revenue annually. Similarly, Starbucks uses location data and customer preferences to determine optimal locations for new stores, contributing to its successful expansion.
My engineering teams have been developing data systems for over a decade – trading and analytics tools, store location analytics systems, e-commerce and financing tools, credit calculators, revenue metric auditing tools to support SMEs, publishers, e-commerce companies, financial institutions in the process.
Companies that leverage data effectively can enjoy significant advantages. A survey by PwC found that highly data-driven organizations are three times more likely to report significant improvements in decision-making. However, it’s not just about collecting data; it’s about interpreting it correctly and turning insights into action.
The pioneer in video streaming Netflix employs a data-driven content strategy that has not only helped in retaining subscribers but also in creating hit series that attract new ones. New shows are based on feedback, watch times, reviews, reports, re-watches, and tagged across different segments, genres, styles to identify new series to launch or acquire.
Big data solutions (from data warehouses through comprehensive analytics and BI tools) can identify bottlenecks and inefficiencies in processes, paving the way for continuous improvement. Businesses that prioritize operational efficiency often enjoy higher profit margins and a better competitive position.
For instance, a study by Bain & Company found that companies that excel in operational efficiency enjoy as much as a 15% increase in their market share.
7. Build Resilience and Agility
In an increasingly volatile business environment, building resilience and agility is crucial for survival and growth.
Developing contingency plans and enhancing risk management practices helps in preparing for potential disruptions. For instance, during the COVID-19 pandemic, businesses with strong contingency planning, like Samsung, were able to quickly adapt their operations and supply chains, minimizing the impact on their business.
Fostering a culture of adaptability is also essential. Companies that can quickly pivot in response to changes in the market, like IBM’s shift from hardware to cloud and services, are more likely to thrive.
A McKinsey study found that resilient companies tend to perform 20% better during crises than their peers. Developing a mindset of resilience and agility not only helps in navigating challenges but also in seizing new opportunities that arise from change.
8. Engage with the Community
Engaging with the community through Corporate Social Responsibility (CSR) initiatives can enhance a company’s reputation and strengthen its brand. For instance, Patagonia’s commitment to environmental sustainability has not only positively impacted the planet but also attracted a loyal customer base that shares its values.
Supporting local businesses and engaging with stakeholders can also lead to mutually beneficial partnerships and enhanced community relations. This works both internally (team motivation and culture development) and externally (networking, partnerships, PR, even sales opportunities down the road.)
Let alone the post-pandemic draught of events that’s picking up quickly as individuals need to connect, brainstorm, and partner up together.
According to a study by Cone Communications, 87% of consumers will purchase a product because a company advocated for an issue they cared about. Engaging with the community demonstrates a business’s commitment to more than just profit, building trust and goodwill among consumers and stakeholders alike.
Microsoft’s various community initiatives have bolstered its image as a socially responsible leader in technology. Under Satya Nadella, the company transformed from a bad corporate behemoth to a beloved leader in various communities – thanks to great leadership, strategic acquisitions (LinkedIn, GitHub), integration of AI snippet search & code generation through GitHub CoPilot and VScode features simplifying the developers’ lives, and hundreds of microevents.
9. Monitor and Adapt to Changing Market Trends
Staying informed about industry trends, competitor strategies, and consumer preferences is vital for adapting business strategies and maintaining competitiveness.
Great leaders are known to spend at least an hour a day studying or reading – many reaching 5-6 hours daily in their later years as their businesses become more independent.
I’ve shared my newsletter archive covering 20+ email newsletters tracking down industry events, macro news, marketing strategies, strategic business opportunities, reading through 150+ newsletters every single week. I keep myself up to speed with podcasts and audio books as well, follow industry leaders and media sites on social network, and participate in several Slack communities for business and growth.
Companies like Amazon and Netflix are renowned for their ability to adapt to market trends and innovate continuously, contributing to their market leadership. Monitoring changes in the market helps in anticipating shifts and adjusting strategies accordingly, ensuring that the business remains relevant and competitive.
10. Invest in Leadership Development Training
Investing in leadership development is crucial for building a strong organizational culture and driving business growth.
Providing training and development opportunities helps to overcome the most common business challenges globally.
For example, Google’s “Project Oxygen” identified key behaviors of its most effective managers and used those insights to improve the quality of management company-wide, leading to improved team outcomes and reduced turnover.
Fostering a strong employee culture is also vital for retaining talent and driving performance. Companies like Adobe have seen significant benefits from investing in their employees, including higher productivity and creativity. Recognizing and rewarding employee contributions also boosts morale and engagement.
One example is Southwest Airlines’ culture of employee appreciation and recognition which has been central to its reputation as a great place to work and its success in the airline industry.
11. Foster a Culture of Continuous Improvement
Encouraging a mindset of continuous learning, experimentation, and improvement is crucial for adapting to evolving business needs and staying competitive.
Progressive startups are known to apply rigorous agile processes with weekly sprints and daily huddles, along with other quick touch events to stay afloat, move fast, and pivot quickly. Companies that have become too comfortable in the late 2010s and early in 2020 are struggling to compete and progress in a changing environment with ongoing wars, recessions, a pandemic, rate hikes, and other surprises we’ve been served lately.
Companies like Google and Meta used to allot time on personal projects or R&D initiatives internally – but that effectively stopped early in 2023. Now, employees are expected to contribute more proactively within the revenue-generating initiatives of a business – leading to increased productivity during less competitive hiring times.
Continuous improvement not only applies to products and services but also to internal processes and strategies. For example, Toyota’s kaizen philosophy of continuous improvement has been integral to its operational efficiency and quality. Encouraging employees to seek out ways to improve their work and the business as a whole fosters a proactive and dynamic organizational culture.
12. Communicate Effectively with Stakeholders
Clear and transparent communication with employees, customers, investors, and the community is essential for building trust and aligning stakeholders with the company’s vision and goals.
Big tech employees are still struggling to handle what happened while hundreds of thousands of skilled workers were fired over the past 15 months. Shopify alone made a firing spree in December right before the holidays. Trust is now impacted as global corporations that never led layoff rounds in 15 years turned the page in the past year.
As an angel investor, I’m always wary of what’s going on with my own portfolio. This is why I advise my startups to be more transparent and send at least quarterly (if not monthly) updates with current financials, highlights/lowlights, team changes, and anything else that needs help or assistance. I like doola’s example:
During crises, companies like Johnson & Johnson have maintained their reputation by being transparent and responsive. Effective communication ensures that everyone is informed and engaged, contributing to a cohesive and motivated workforce, satisfied customers, and supportive investors.
13. Seek External Guidance and Support
Consulting with advisors, mentors, and industry experts can provide valuable insights and help address challenges effectively.
Many successful leaders, like Bill Gates, have emphasized the importance of mentorship and external advice in their success. It’s both a hiring strategy (hiring R&D experts internally) and a strategic executive growth mechanism that hundreds of thousands of executives apply.
I work with 2 advisors myself on a retainer, bouncing ideas back and forth, aggregating industry data, applying their growth frameworks and polishing weak areas I need to continuously work on as a leader. Even after 20+ years in business, leadership requires iterative improvement – which is why the best athletes in the world also need coaches.
If you want to explore consultancy fees, I’ve discussed that in my consultancy pricing guide.
Whether it’s navigating complex decisions, entering new markets, or innovating products, external perspectives can provide fresh insights and guidance.
14. Celebrate Successes and Learn from Failures
In tough times like these, don’t forget to reflect on what went wrong – and cherish the small wins on the way.
Recognizing and celebrating achievements motivates employees and reinforces successful behaviors and strategies. Analyzing setbacks to identify areas for improvement is equally important.
Companies that foster a culture where failures are seen as learning opportunities, like SpaceX, are more likely to innovate and succeed in the long term. Celebrating successes and learning from failures not only drives growth but also builds a resilient and positive organizational culture.
In retrospect, being a great leader is a challenging journey with ups and downs. And in the past few years, most companies went through solid downs for continued period of times.
But those who persevere and survive now will remain to see the next stage of the business evolution. With limited competition, great brands win the trust and respect of their prospects – and show themselves as reliable visionaries to future applicants seeking great leadership on top.