The Growth-Drive Hot Seat

George (00:00)
Hi, this is George Sandman. I'm the founder and CEO of Growth Drive. Growth Drive is the number one bestselling business advising platform. And let's talk about executive roles, accountability, and how they're linked to growing profits and value. So if you're a business advisor, listen up. This is for you. First, let's start with roles. There are really four roles inside an organization or four.

There are four broad accountability categories inside an organization. And those are the executive, the finance, operations, and revenue. And let's look at the fundamental role of the person leading that. Now, they may show up as a CEO or CFO, but they could also show up as an operator and a VP of finance or a controller. But there are things that in a best in class operation we expect to see.

The fundamental role of the chief executive officer is to maximize shareholder value within the context of the business's vision and mission. Think of the implications there. We'd better define that vision and mission. Finance, the fundamental role of the chief financial officer is to maintain accurate and timely reporting on financial performance and capitalization and to have a financial strategy in the context of the strategic intent, right? Strategic intent where they want to take the business.

Now operations, the COO, their fundamental role is to create and execute actionable, efficient, effective, and sustainable, actionable, efficient, effective, and sustainable processes that directly contribute to achieving strategic intent. And fourth, but by no means least, the chief revenue officer, the revenue area. And that fundamental role of the COO is to maximize revenue growth and profitability.

through the sales, marketing, and customer success teams in support of executing the business's strategy. See how these all line up? Now, let's look at them individually. Why do they matter? How do they relate to transferable price? The CEO, you cannot have a business that has high value and is dependent on the CEO for smooth operation.

put another way, the business needs to be immortal and go on to greater glory after the founder or CEO has left. And the CEO cannot be a bottleneck, an operational bottleneck, a revenue bottleneck, et cetera. Okay. Effective senior leadership. Finance. High transferable value or price in an &A transaction is dependent on buyer confidence. So

If you look at it this way, there's looking backwards. We need to have a, think of a file full of accurate and credible reports, budgets, forecasts, actual performance against those forecasts. And a CFO is a strategic role that needs to predict cash and capital needs going into the future. Okay. Very, very important role. Operations are the chief operating officer.

How do they impact price? Well, high transferable value depends on a group of individuals executing processes to generate profits.

How about operations? Well, high transferable value depends on a group of individuals executing processes to generate profits. And this comes down to documented, repeatable, scalable processes. And this comes to, we want to get into high quality and repeatable, right? That's the name of the game. They also need to be documented. Think of the COO as being accountable for the operating manual for the business, okay?

Revenue, CRO. Well, if I'm buying a business, right, if you think of the private capital markets, they want to have high confidence that the business will continue to generate revenues and profits going into the future and nothing happens until you sell something, right? So the chief revenue officer needs to make sure they're great sales process, a good marketing engine.

high recurring revenues and a diversified client base. And we'll get into these in detail. So here they are.

You

Inside the growth drive methodology, there are 24 growth driving objectives and those growth driving objectives can be assigned to or given primary accountability to each of those four functional areas. You see them listed here. The executive is primarily accountable for having an effective senior leadership team, a strategic culture to having a strategic vision, mission, plan, and capacity to execute that there's a defensible market.

that the legal house is in order, that the brand is strong, and brand is the outward manifestation of culture. That is why brand belongs here and not in revenue, as some people would mistakenly argue. And when it comes to getting ready for monetizing value, having a business story, that the business story is written in words and numbers from inception.

Finance. The financial role has financial reporting processes, budgets, and accurate and credible reports. We need to have a binder of boxes, files, a document room in which we have highly credible, irrefutable proof of past performance that makes future performance credible. Okay, does that make sense? The business should be operating at margins at or above the industry norm in a large market growing

faster than its competitors and ideally have data on market share and be able to demonstrate best case scenario that you have the highest percentage of market share. now quick comment. The CEO and the CFO have seven primary accountabilities. The COO and CRO have five. Put this in perspective. What's operations primarily accountable for?

And remember, primarily accountable because if more than one person is accountable, no one is accountable. So primary, sole, singular accountability for the COO is SOP, standard operating procedures, that there are people who are productive and loyal. People productive and loyal, this gets into KPIs on performance and the things that make sure that there is low turnover.

people hiring and training. How do we bring people on board, find the right people, make them productive quickly? High customer satisfaction. Customer satisfaction is driven by delivering on the promises made to the market by sales in a way that delights our customers and innovation. CRO, Chief Revenue Officer, sales process, marketing process, high recurring revenues, because this...

really comes down to the sales team and the customer success team working together to make sure that we are delighted that our customers are buying from us again and again, a broad customer base, meaning we have a thousand customers, not one and unique products and services. This goes to the product management function, creating products, defining products, product and pricing strategy. That would be coordinated with finance.

actually teased the next concept, which is if there is primary accountability, there is also collaborative accountability. Let's stop for a sec. The SLT is collaboratively accountable for the whole ball of wax, for all 24 of the growth driving objectives. However, they have dominant or underscored collaborative accountability in certain areas. You can see them

call that here. So the CEO should be able to look to operations and revenue for support on a strategic culture. A strategic culture is a can -do, will -do with KPIs. Summarizing there. They get support from finance on strategy, right, and have them making sure we have the capital for strategy. And on the business story, so remember the business story in advance of an &A transaction is written in words and numbers.

The CFO should be provided in the numbers portion. Finance gets to lean on the CRO for margins, right? Let's make sure that we're not discounting. Listen, the refuge of the weak salesperson is the discount. Operations gets to help people productive and loyal from the CEO, same for hiring and training. And then they get support from the CRO when it comes to customer satisfaction, right? We have to be telling the truth.

to the market so that when operations delivers, it aligns. CRO looks to operations for a sales process, marketing process, obviously those are gonna have some SOP characteristics. And then for high recurring revenues, we're gonna be getting some support from the CFO. All right, so primary and collaborative accountability. Imagine being able to communicate this to your client, communicate this to the senior leadership team.

and what it'll do so that when we look at and we focus on the things that CEOs understand when we're trying to win an engagement, get involved in strategic planning or leading execution of that plan, how do we boil this down? How do we say who is going to have primary accountability for each of these areas? And ladies and gentlemen, we've just defined it for you. Okay, each of these can be assigned to a senior leader.

Now, how does this play out? You might be wondering, how does this play out inside growth drives, clarity, strategic capacity analysis? And it plays out very nicely. Now, imagine you're sitting with a client, you're talking to them about, they've said 62 % of the time they're gonna tell you they wanna grow their business, 21 % that they want operational freedom, and 17 % of the time you'll hear that they're preparing to sell.

How does clarity help assign primary accountability? And it does better than that in these areas. Well.

In the first dimension of the three dimensions of business growth, here they are. Your executive in making the business, let's say that we have a senior leadership team or that we have at least a group of individuals who are helping the founder move the business forward. Look at how these roles are attached in the first dimension. The first dimension of course is creating predictable profits and cashflow. We have very well distributed. And in this, think of this, if you look at this chart,

And you think of these eight areas, the, the, the CEO is primarily accountable for effective senior leadership. And imagine a Monday morning meeting where we're only focusing on these eight areas. These eight growth driving objectives. And the executive is saying, okay, COO, VP of operations, director of operations. how are we doing? you know, here are your two areas, revenue, two areas, finance, two areas. I'm sorry. Ops has three. So.

This is, and if you imagine smaller companies where a lot of the ops function sits with the CEO or the, you know, they have the moniker of CEO, they may not be operating as such, but they are, imagine how this plays out. This plays out in the market, right? And you're able to say, huh, here's how we're gonna allocate responsibility. Now in level two and in the execute guidance module, you can get the steps.

the literally guidance for increasing profits and value. What are we going to do to get each of these areas from partly true to we collect and use customer satisfaction data? And we provide the guidance there. Second dimension of growth, predictable, sustainable growth. Now the CEO has a bit of an expanded role because we're getting into strategy, right? And strategy sits on the CEO's desk. We also have ops finance.

and revenue represented equally. And then the third dimension of growth as we are now, the fundamental role of the CEO is to maximize shareholder value. So it shouldn't be a surprise that the CEO has primary accountability for four of the eight growth driving objectives and the CFO for three with revenue, making sure that we have a broad customer base. Okay. It's not that the COO doesn't have any accountability here.

but they've already done their work, right? Operations has done the heavy lifting in creating predictable profits and sustainable growth.

What if we could keep score? What if you could sit down with a senior leadership team and say, Hey, here's how you're doing in each of these areas. you have primary accountability CEO and you're scoring a 47 and a 46. This is the second dimension, right? 47 and a 46. And what if we said you, you need to get each of you need to get your functional areas up to a 70 and in execute guidance, we can give them the steps. Now you don't boil the whole ocean at once.

We can put this in a project, a planned project, in which we're running sprints to increase strategic capacity in each of these areas and thereby increase the strategic capacity of the business as a whole. Now we have a score on each of these functional areas. Incredibly powerful.

And uniquely, Growth Drive's platform calculates the return on investment. So we are going to assign a value to this work. So when we say, you know, getting a strategic plan in place, this has a potential value of $1 .3 million for this business, 700 ,000 of which

would be discounted out of a final deal. These are done on a weighted basis and allocated across the 24 growth driving objectives. But the bottom line here is that there's an ROI for doing this work. Why would we increase the score? A lot of reasons. One of which is that our price to earnings ratio is getting hit. And we need to change that. So how do you take a business that's

at 1 .7 million of net income is worth 3 .4 cause they can only enter two times multiple and get them up to being able to command a price of $20 million. You sit down with a senior leadership team and you get the SLT to understand who is accountable for what. When then we assign a when we define success. The success is defined. The rocks are defined inside the growth drive methodology and process.

So we're defining the rocks and the KPIs, giving them to the senior executive and say, do this by X date. Imagine running a project like that. Imagine the power. We're taking the guesswork out. We are not getting into the, what do we think? We're saying, here's what best in class businesses do. Here's a due date to emulate those behaviors. Let's go, let's go. Let's take the guesswork out of it. How does it play out?

Well, we have a strategic capacity score. And that strategic capacity score has a direct impact on the transferable value of the business. And this is communicated in reports that we can hand over to our clients.

to our collaborative advisors, to COIs, a lot of use cases. So if I sound like I'm passionate about it, it's because this is playing out beautifully for your colleagues and for the clients they serve. So this is a process. We start with a CEO clarity, then we bring in the senior leadership team and build a strategic plan. That strategic plan has many of the elements that we just discussed.

We take it out on the track and we say, right, you're accountable. And every Monday we're going to meet and we're going to talk about this accountability. You have questions, we're happy to help you. Scan this QR code. You can register, save, book a consultation. We have the tools, the training and the support to get you up and running and to make you successful. We are committed to your success. So if you'd like to learn more, let us know.

We're here and happy to help. Thank you and have a great day.