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INVESTING TO DRIVE GROWTH
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CEB Middle Market ReportQ2 2013
Strategy executives estimate that poor decision making costs companies nearly half their potential growth rates, resulting in billions of dollars in lost long-term revenue and increased risk of a revenue stall.
Investing to Drive Growth Middle Market Companies Take a Long-Term ViewBy Scott Engler, Senior Global Executive Advisor, CEB Middle Market Mark Clauss, Managing Director, CEB Middle Market
To find out the implications for your function, click on the links below:
Contents
Middle Market Report 1–7
Finance Report 8
HR Report 9
IT Report 10
Legal Report 11
Marketing Report 12
Operations Report 13
Sales Report 14
Middle Market Sentiment 15
Divergence Report 16–17
CEB Middle Market Near-Term Growth Index Scale = 0–5
Building for the Future
Short-term growth pressure eased a bit in Q2 2013 as middle market growth companies focused less on immediate sales and new product introduction and continued a trend toward long-term investment in growth capabilities. The CEB Middle Market Near-Term Growth Index dropped slightly (down 2%) as fewer companies expected to increase sales to new customers (down 8%) and existing customers (down 6%).
Source: CEB, Middle Market Executive Confidence Index, 2012.
Q4 2012 Q1 2013 Q2 20130.00
2.50
5.00
3.473.90 3.82
Neutral
Still, revenue expectations remained strong and the same as last quarter with 72% of companies expecting higher revenue. Long-term investment drivers—such as investment in R&D and capital expenditures—continued to improve in Q2, raising the CEB Middle Market Long-Term Growth Index by 4% (up 5% on the year) as more companies look to invest for growth.
For more on investment, see the Seven Commandments of Investment Decision Making on p. 5.
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CEB Middle Market Long-Term Growth Index Scale = 0–5
CEB Short-Term Growth Indicators
Source: CEB, Middle Market Executive Confidence Index, 2012.
Q4 2012 Q1 2013 Q2 20130.00
2.50
5.00
3.28 3.32 3.46
Neutral
Pulling the Marketing Lever
With the number of companies expecting increased short-term sales dropping, the number of companies expecting to increase their marketing spend (up 27%) and spend on outside ad agencies (up 8%) jumped dramatically, indicating a need to refill sales pipelines.
Higher Q1, 2013
Higher Q2, 2013
Sales to Existing Customers
Sales to New Customers
Revenue
Marketing Budget per Revenue
Dedicated Advertising Agency Employees
0% 50% 100%
91%83%
85%79%
72%72%
21%47%
13%21%
Source: CEB, Middle Market Executive Confidence Index, 2012.
Pulling the Marketing Lever Differences
Sales to Existing Customers: (8%) Sales to New Customers: (6%)Revenue: 0%Marketing Budget per Revenue: 26%Dedicated Advertising Agency Employees: 8%
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Ratcheting Down the Product Pipeline
The decrease in expectations for sales and increase in expectation for marketing spend was coupled with a dramatic drop in the percentage of companies expecting to increase introduction of new products (-23%). Although the number of companies expecting new orders remained at 78%, the number of companies expecting a decrease in new orders dropped by 12%, indicating improvement from pessimism to a neutral outlook. Only 3% of companies now anticipate a reduction in new orders over the next 12 months.
Higher Q1, 2013
Higher Q2, 2013
Introduction of New Products
New Orders
Production
Capacity
Source: CEB, Middle Market Executive Confidence Index, 2012.
0% 50% 100%
82%59%
78%78%
79%70%
67%59%
Ratcheting Down the Product Pipeline Differences
Introduction of New Products: (23%)New Orders: 0%Production: (9%)Capacity: (8%)
Focusing on Investing in the Future
With companies still sitting on high levels of cash, the second quarter of 2013 saw a small shift away from M&A (down 4%) and toward long-term drivers of growth. In addition to increased expectations for R&D and capital expenditures, 5% more companies expect to increase head count, and 11% more companies intend to increase total hiring volume.
Source: CEB, Middle Market Executive Confidence Index, 2012.
CEB Long-Term Growth IndicatorsPercent Change in Companies Looking to Increase Expenditures Over Q4, 2012
R&D Expenditures
Number of M&A Deals
Capital Expenditures
(4%)
0%
4%4%
(4%)
3%
CEB Production Indicators
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Impact of Poor Decision Making on Company Revenue GrowthGrowth Rates in Percentage Terms, as Cited by Respondents
Strategy Executives’ Perception of the Importance of Accelerating Their Company’s GrowthPercentage of Respondents
Investing in Growth
Although more midsized companies are investing to drive long-term growth, the quality and speed of investment decision making continues to sap performance. Strategy executives estimate that poor decision-making costs companies nearly half their potential growth rates, resulting in billions of dollars in lost long-term revenue loss and greater risk of a growth stall.
Executives are failing to act swiftly to meet their companies’ strong appetite for growth.
Despite a clear growth mandate, companies are confronting group brain lock when it comes to making growth decisions. Although 96% of executives cite growth acceleration as important, only 28% of companies believe they are able to swiftly make and act on growth decisions.
n = 79 strategy executives.
Current Revenue Growth Rate Possible Revenue Growth Rate
Source: CEB, Growth Survey and Corporate Strategy Board Analysis, 2012.
0.0%
6.0%
12.0%
5.8%
11.1%
Source: CEB, CEB Strategy Leadership Council Growth Survey, 2012.
n = 80 strategy executives.
3.8% Not Important at All
96.2% Important
0%
380%
9,620%
27.7% Inaction Is Not
a Problem
Source: CEB, CEB Strategy Leadership Council Growth Survey, 2012.
n = 79 strategy executives.
Strategy Executives’ Perception of the Level of Inaction at Their CompanyPercentage of Respondents
Only 28% of companies believe they are able to swiftly make and act on growth decisions.
72.3% Inaction Is a Problem
Strategists estimate that companies lose almost half their growth potential through poor decision making.
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Poor decision making is the result of poor processes and incentives.
Executives’ eyes for growth are bigger than their ability to stomach the associated risk that comes with non-incremental growth bets. Dr. David Rock of the NeuroLeadership Institute studies decision making of individuals in threat and reward states. He found that most business environments inadvertently promote a threat state, which encourages self-focused thinking.
CEB looked at threat–reward state research in combination with work from Nobel Prize–winning researcher Dr. Daniel Kahneman (author of Thinking, Fast and Slow) to help companies see how they can influence decision making. Dr. Kahneman found that executives fall prey to cognitive thinking biases, such as the anchoring effect where decision making is tied illogically to a select piece of information. When companies operate in a constant threat state and fail to put in place processes that force effortful decision making, the success of growth bets and investments is at risk.
Reward State
Encouraged Behavior:Unprincipled Risk Taking
(e.g., misaligned, uninformed growth bets)
Encouraged Behavior:Innovation
(e.g., growth bets that lead to significant shareholder return)
High Return Investments
Threat State
Encouraged Behavior:Survival
(e.g., protection of personal/team resources)
Encouraged Behavior:Incrementalism
(e.g., risk-adjusted project prioritization to meet minimal payout requirements)
Low Return Investments
System 1: Automatic System 2: Effortful
Individual Centric, Low Critical Thinking Decision Making
Organization-Centric, High Critical Thinking Decision Making
Companies need to remove threats to executives for perceived mistakes to create a reward state and put in place processes that force “effortful” thinking to eliminate biases.
CEB research found that some companies encourage decision making in a reward state by removing punitive outcomes and encouraging principled risk taking. Still other successful companies use processes that eliminate innate biases and force holistic approaches to decision making. When combined, they form a powerful prescription for overcoming brain lock.
Testimonial
“Clearly the threat or avoid response is not an ideal state for collaborating with and influencing others. However, this response is the default situation that often occurs in teams.”
David RockNeuro Leadership Institute
Testimonial
“Executives can’t do much about their own biases… But given the proper tools, they can recognize and neutralize those of their teams.”
Daniel KahnemanAuthor, Thinking, Fast and Slow
Behavioral Innovation Matrix
Source: Kahneman, Daniel, Thinking, Fast and Slow, Farrar, Straus, and Giroux: New York, 2011; Rock, Dr. David, NeuroLeadership, 2013.
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0%
30%
60%57%
17%
50%
11%
43%
17%
36%
6%
Business Problem Framing TechniquesPercentage of FP&A Teams Rated “Effective,” March 2012
Greatest Impediment to Taking Swift Action to Drive GrowthPercentage of Respondents
The Seven Commandments of Investment Decision Making
CEB found seven practices companies are employing to drive principled, risk-adjusted, long-term growth decision making and execution.
1. Reduce the Threat of Failure
Delink project and personal success measures to minimize the negative fallout of exit decisions on employees. Partner with the HR function to adjust weights assigned to performance criteria, reward good decisions rather than good outcomes, and remove penalties for executives if projects are killed due to exit triggers.
2. Document Underlying Assumptions
Be explicit and clear about the assumptions that underpin your growth bets, including financial returns, potential risks, and economic factors that are necessary for each project to deliver a high ROI and to support a possible disinvestment decision if projects fail.
3. Pressure-Test and Prioritize Assumptions
Stress-test assumptions to improve the quality of proposals. Test assumptions at multiple milestones as new information validates and invalidates original assumptions and revise plans. CEB research shows that high-performing finance groups influence good decision making by partnering with the business and challenging and prioritizing underlying assumptions.
4. Create a Framework for Rational Decision Making
Most decision-making processes resemble a congressional debate with personal biases, fear, and power plays dictating outcomes. Alter the decision-making process to reduce biases and harness executives’ natural desire to thoroughly and dispassionately evaluate options and criteria at each stage. Companies that spend more time creating a rational process ultimately save time with fewer rounds of debate, generating quicker consensus and getting action. Couch every decision in the context of decisions about the ultimate goal, and highlight the consequences of delays in decision making.
Develops Hypotheses About Business Problems
to Test Through the Analysis
Redirects Poor Business Assumptions
Identifies Known and Unknown
Variables
Brainstorms Scenarios
for Business Consideration
n = 70 heads of FP&A.
n = 70 strategy executives.
Source: CEB, Business Analytics Benchmarking, 2012.
Source: CEB, Business Analytics Benchmarking, 2012.
0%
20%
40%38%
32%19%
11%
Difficulty Making Decisions
Unable to Execute on Opportunities
Growth Opportunities Are
Not Apparent
Lack of Funds to Invest in Growth
Top Four Ways High-Performing Finance Teams Impact Business Decisions
■ Identify Known and Unknown Variables
■ Develop Hypotheses About Business Problems to Test During the Analysis
■ Brainstorm Scenarios for Business Consideration
■ Redirect Poor Business Assumptions
Strategy executives cite difficulty making decisions as the number one reason for failure to take swift action.
If you’re not explicit about what the assumptions are that underpin your initiatives upon launch, you will have great difficulty knowing when to adjust, kill, or escalate investment dollars and obtaining executive consensus on those decisions.
Lowest Performing FP&A Teams
Analytically Mature FP&A Teams
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Relative Time Value of Decision Making in the “Old Normal”Illustrative
Q: Of the growth projects in your current portfolio, what percentage should be shut down?
Relative Time Value of Decision Making in the “New Normal”Illustrative
5. Establish Escalation Triggers and Exit Triggers
Explicitly document escalation and exit triggers at each stage of the project execution to help executives make rational decisions about the project’s future as assumptions are proven and disproven. Leading companies value timely escalation investment and disinvestment as much as initial investment decisions.
6. Track Project Cost, Progress, and Assumptions
Review the strategic and financial assumptions and implications on an ongoing basis to keep decision making relevant to current environmental changes.
7. Highlight Resource/Growth Trade-Offs to Enable Adjustments
Executives believe that on average 13% of projects in their growth portfolio should be shut down and capital reallocated to other opportunities. But companies fail to shift resources adequately mid-stream. This issue leads to a sunk cost mentality that steals resources from possible growth bets because executives fail to feel the long-term pain from missed opportunities. Leading companies regularly report out on the trade-offs between money spent on current growth initiatives and as yet unfunded growth initiatives to encourage rational, growth-focused decision making.
Time0 63 9 12
Rel
iab
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of
Stra
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ic P
lan
Minimum for use by business
Time0 63 9 12
Rel
iab
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of
Stra
teg
ic P
lan
“Course Correction”
13% More Than 20% of Projects
20% 11–20% of Projects
30% 1–5% of Projects
37% 6–10% of Projects
n = 70 strategy executives.
In an economy with little to no tailwind, companies no longer have the luxury of funding under-performing initiatives at the expense of growth opportunities.
It’s not a question of if you will have to make adjustments to your plan, it’s when and how. If you’re not tracking your progress, the answer to either question will be difficult to ascertain.
Source: CEB, Business Analytics Benchmarking 2012.
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Fu
nct
ion
al
Cu
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ates
Len
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Sta
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cces
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Middle market finance departments are focusing on strengthening strategy development, improving business performance management to drive execution, and building processes and capabilities to increase the impact Finance has on business partner decisions.
■ Strategic risks account for five of the top 10 risks facing midsized companies.
■ Fewer than one in three companies believe their teams consistently derive business insight from data.
■ Only 5% of the data Finance provides is viewed as helpful by the organization.
Developing and Executing Growth Strategy ■ Reorient yourself as a strategic advisor, create a process that forces choice, embrace
risk as a core element of business performance management, and manage the strategy, not the business.
Improving Business Performance Management ■ Build an integrated business performance management approach to drive outcomes
and action. ■ Select metrics and build dashboards that link to value drivers.
Building Effective Business Partnering and Analytics ■ Focus FP&A activities on providing insight that challenges outdated business
assumptions.
Streamlining Budgeting and Forecasting ■ Increase process efficiency in budgeting and forecasting activities. ■ Focus on improving management reporting, operating reviews, and other business
insight–focused processes.
The Top Four Areas CEB Is Helping Finance Executives
(30%)
10%
50%
(30%)
10%
50%
(2%)
21%
(29%)
(19%)
27%
42%
18%
Middle Market by Function
FINANCEPercent Difference of Companies Expecting Increases Over Decreases in Each Area
Source: CEB, Middle Market Executive Confidence Index, 2012.
To find out more about CEB Finance Leadership Council, click here.
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Ave
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Hea
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■ Employees reporting to managers who are effective at manager-led development have 25% higher performance levels, 40% higher retention levels, and 29% higher commitment levels than employees reporting to managers who are ineffective at development.
■ Great Global Leaders are almost three times more likely to hit their three-year performance goals and lead teams that have both 12% higher levels of discretionary effort and a 13% lower risk of attrition than average leaders.
■ Business leaders believe that just 35% of organizations are effective at talent management.
■ “Building a culture of innovation” is a priority for 54% of senior R&D executives.
Improving Manager Capabilities ■ The most effective managers set clear and measurable goals for their direct reports
that link to organizational goals.
Sourcing New Talent ■ Prioritize requests based on the potential sourcing value to the organization, and
engage hiring managers in sourcing activities.
Building Bench Strength ■ Executives must identify future-focused competencies and enable leaders who are
both achieving current results and capable of leading the future of the organization.
Driving Functional Efficiency ■ Identify the critical connections across talent management activities to improve
collaboration, efficiency, and effectiveness of key talent management processes.
Enabling Innovation and Adaptability ■ Create a clear mandate for innovation, encourage risk taking, and work with
leadership to support development of new ideas.
The Top Five Areas CEB Is Helping HR Executives
0%
40%
80%
0%
40%
80%
70%
22%
75%
33%
13%
32%38%
HR needs to think beyond individual role performance and consider how to enable efficient workflows across functions to manage talent effectively. The enterprise’s need to align the workforce to strategy and manage a growing employee base is fueling a need to upgrade HRIS systems.
Middle Market by Function (Continued)
HUMAN RESOURCESPercent Difference of Companies Expecting Increases Over Decreases in Each Area
Source: CEB, Middle Market Executive Confidence Index, 2012.
To find out more about CEB Human Resources Leadership Council, click here.
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(20%)
10%
40%
(20%)
10%
40%
4%
34%
(12%)
24%
(4%)
Dis
cret
ion
ary
IT-
Rel
ated
Cap
ex
IT H
ard
war
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xpen
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IT S
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Co
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ltan
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Sp
end
IT M
ain
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E
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Middle Market by Function (Continued)
INFORMATION TECHNOLOGY
■ Seventy-six percent of employees report a significant increase in time spent working with data and information.
■ Sixty percent report exchanging information with 10 or more people on a day-to-day basis.
■ Sixty-one percent of employees do not believe the support they receive from IT enables them to be fully productive.
■ Only one in five global IT leaders are effective at delivering value to the organization.
Instituting End-to-End IT Services ■ Package the technologies, processes, and resources across IT needed to deliver a
specific business outcome.
Creating Strategic Roadmaps ■ Drive consensus, bridge gaps between strategic plans and operating plans, and
coordinate IT planning across multiple organizational units and technologies.
Enabling Business Partner Responsibility and Coaching ■ Equip business partners to make better IT investment decisions and more effectively
manage IT projects.
Supporting Knowledge Work ■ Equip teams within and beyond the IT organization to collaborate, work globally, and
generate insight from data.
Focusing IT Investment on Critical Business Capabilities ■ Define services through business capabilities, and manage and measure services
based on business outcome.
The Top Five Areas CEB Is Helping IT Executives
IT executives are prioritizing business outcomes over assets, enabling the organization to make IT decisions, and focusing on end-user output. Ultimately, IT is moving into a more consultative role to the business to influence decisions and help the organization understand how the pieces fit together.
Percent Difference of Companies Expecting Increases Over Decreases in Each Area
Source: CEB, Middle Market Executive Confidence Index, 2012.
To find out more about CEB IT Leadership Council, click here.
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Middle Market by Function (Continued)
LEGAL
■ Eighty-five percent of legal executives tell us that managing information risk is a top priority.
■ Less than 50% of survey respondents train employees on the company’s records management policy, and one-third do not train employees on appropriate e-mail use.
■ CEB research indicates that legal executives worry most about:
— Growth of unstructured data,
— Cloud computing,
— Remote access to information,
— Employee negligence and misconduct, and
— Personal devices in the workplace.
Improving the Consistency and Speed of Commercial Contracting ■ Improve consistency and speed by selectively involving Legal where it can most
impact risk and by simplifying agreements and processes for faster deal making.
Building or Improving Corporate Compliance and Ethics ■ Capture key risks across the enterprise, develop an employee-friendly code of
conduct, and create effective monitoring and reporting capabilities.
Developing Business Partnership Skills ■ Understand business partner needs and expectations, build credibility, develop
influence, and align to business goals.
Managing Information Risk ■ Gather realistic input by incorporating power users, design practical employee
programs, and enable risk-informed decision making.
Educating Business Clients and Employees on Legal and Compliance Risks
■ Design end user–focused compliance training and communication by engaging stakeholders and enlisting their support to drive accountability.
The Top Five Areas CEB Is Helping Legal Executives
General counsel need to speed up execution and support growth by understanding business and technology risks, educating business clients about risk-informed decision making, and ensuring a culture of compliance and ethics.
To find out more about CEB Legal Leadership Council, click here.
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Marketing Budget per Revenue
Dedicated Advertising Agency Employees
Customer Loyalty
Middle Market by Function (Continued)
MARKETING
Marketers can get more brand “stickiness” (brand intent, follow through, recommendation, and repurchase) by investing in strategies that simplify consumers’ purchase decision paths as opposed to investing in strategies intended to drive engagement with the brand. On average, customers progress nearly 60% of the way through the purchase decision-making process before engaging a sales rep, which means Marketing is now playing a key sales role by informing the customer earlier in the process. Marketing analytic skills are at a premium as well.
Percent Difference of Companies Expecting Increases Over Decreases in Each Area
■ Sixty-two percent of shoppers search for deals online for at least half their shopping trips.
■ Analysis of customer data shows there are only two significant drivers to change a customer’s direction: teaching customers about their own business and providing them with compelling reasons to act.
■ Information volume is rising 60% per year, and 71% of CMOs feel unprepared for this data explosion.
■ Forty-three percent of marketing spend is wasted.
Understanding Customer Buying Behavior ■ In the consumer space, decision simplicity is the most important element of the
purchase path, and it drives stickiness more than long-term brand affinity or engagement.
■ Most B2B companies struggle with delayed sales engagement and stalled deals. To push customers through the purchase funnel, Marketing must tailor to distinct customer purchase needs and use key channels to build deal momentum.
Reshaping Customer Buying Criteria ■ For content marketing to “win,” suppliers must do more than produce thought
leadership. They must teach customers something new about their own business and motivate them to take immediate action.
Fusing Multiple and Emerging Communication Channels ■ Build a clear, consumer-centric, strategy-led planning approach.
Building the Marketing Team of the Future ■ Too many marketers are looking for agile marketers who are analytically savvy, can
make quick decisions, and have digital prowess. These individuals are rare, and even if you can find them, they often underperform. Hire “focusers”—marketers who can filter out noise, resist distraction, and never lose sight of long-term goals.
Harnessing Data for Focus and Decision Making ■ Building data streams and gaining insight from them doesn’t need to be an all-or-
nothing exercise. Chances are the data your company already collects could be used to improve marketing strategy and execution.
The Top Five Areas CEB Is Helping Marketing Executives
Source: CEB, Middle Market Executive Confidence Index, 2012.
0%
12%
24%
0%
12%
24%21%
16%
5%
To find out more about CEB Marketing Leadership Council, click here.
www.executiveboard.com
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Cap
ital
E
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s
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s
Intr
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N
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Middle Market by Function (Continued)
OPERATIONS
■ Only 35% of executives believe their S&OP process is even somewhat effective.
■ Each year, the average company spends 25% of the value of its inventory just to hold it.
■ Only 37% feel that Operations’ KPIs align with overall corporate objectives.
■ Functions that have a higher proficiency with metrics drive performance by 24%.
Optimizing Sales and Operations Planning ■ Communicate the value of a standard, global planning approach. ■ Clearly align stakeholder roles and responsibilities back to measurable planning
activities, and implement a repeatable framework that balances enterprise standardization with local flexibility.
Ensuring Strategic Alignment ■ Evaluate business assumptions, assess customer strategies, and communicate desired
strategic position internally and externally.
Revamping Inventory Management ■ Understand the true drivers of inventory costs, and strategically plan around them
to create sustainable lower costs.
Increasing Metric Focus ■ Clearly link Operations’ metrics back to corporate and customer objectives, evaluate
and filter metrics’ key performance drivers, and build living scorecards and dashboards tailored to day-to-day decision making.
Transforming the Procurement Function ■ Balanced, mature project portfolios that include initiatives to drive cost structure
transformation and product and brand enhancement deliver higher value and are driven by three core functional capabilities: idea quality, execution ability, and selling ability.
The Top Five Areas CEB Is Helping Operations Executives
Operations executives are focused on finding and strategically aligning operations to support growth. Midsized company executives at leading companies are fine-tuning processes for efficiency, rethinking design, and working closely with Sales to manage inventory and drive expansion.
Percent Difference of Companies Expecting Increases Over Decreases in Each Area
(20%)
30%
80%
(20%)
30%
80%
18%27%
54%
27%
(11%)
75%
65%
75%
0%
56%
Source: CEB, Middle Market Executive Confidence Index, 2012.
To find out more about CEB Operations Leadership Council, click here.
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(10%)
35%
80% 73%
61%
(10%)
21%
59%
Middle Market by Function (Continued)
SALES
Sales New Customers
Sales Existing
Customers
Average Sales Cycle
Reliance Discounts Incentives
Sales Head Count
The best organizations are focusing on building a sales culture that allows for higher performance and retention levels and the ability to attract top talent. Companies have widely adopted the Challenger sales model and are now actively working to upgrade their team’s ability to drive customer behavior through insight.
Percent Difference of Companies Expecting Increases Over Decreases in Each Area
Source: CEB, Middle Market Executive Confidence Index, 2012.
Driving Sales Transformation ■ Empower reps to sell to an empowered customer who is capable of learning what to
do on his or her own.
Getting in Early and Shaping Demand ■ Shape demand by teaching customers where they learn by executing four critical pre-
funnel selling activities.
Creating More Precise Sales Force Segmentation Models ■ Ensure your teams and resources are aligned appropriately to hit growth goals.
Building an Insight-Selling Organization ■ Enable your teams to replicate Challenger™ behavior through different-in-kind
messaging, talent development, and sales process.
Partnering with Marketing to Move up the Decision Chain ■ Help reps reduce cold-calling time by generating leads using social media.
The Top Five Areas CEB Is Helping Sales Executives ■ The best organizations are building a culture that allows for higher performance and retention levels, not to mention better ability to attract top talent.
■ Although customers are spending again, the way they are buying has changed. They are more informed and do not contact suppliers until they complete nearly 60% of their purchase process.
To find out more about CEB Sales Leadership Council, click here.
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INVESTING TO DRIVE GROWTH
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Note: Totals may not equal 100% due to rounding.
Lower No Change Higher
0% 50% 100%
5% 57% 38%
8% 64% 28%
5% 72% 23%
11% 60% 29%
23% 46% 31%
58% 38%
22% 39% 40%
47% 31% 21%
18% 43% 39%
7% 42% 51%
66% 32%
32% 53% 14%
Energy Costs
Value of USD
Economic Growth: US/Europe
Interest Rates
Consumer Confidence
Inflation
Major Nonenergy Commodities
Foreign Competition
Economic Growth: Emerging Economies
Access to Credit
Government Spending
Unemployment
4%
2%
North America 97%
Europe 24%
Asia/Australia 21%
Central/South America 7%
Where do you anticipate growth in revenue?
Sentiment Indicators
Middle Market Sentiment
Among the macro-economic factors affecting Middle Market, more middle market executives see the dollar strengthening (up 13%) over the next 12 months and government spending weakening (down 8%), which will moderate inflation and reduce unemployment.
Middle Market is far more focused on North America than large enterprise and much less focused on Central/South America and Asia/Australia.
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INVESTING TO DRIVE GROWTH
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Middle Market Divergence Report
Higher Lower
Revenue 8% (7%)
Cost Pressure (4%) (2%)
Head Count 23% (15%)
Revenue Industry 5% (6%)
Finance Department Budget
G&A
Number of M&A Deals
Average per Employee Health Care Cost
Average per Employee Total Compensation
Average per Employee Training Spend
Total Hiring Volume
HR Budget
Benefits (Health)
Benefits (Other)
FINANCE
Where Middle Market Is Different
To fuel growth while improving efficiency, Middle Market is diverging from larger company expectations in terms of revenue pressure, cost pressure, revenue expectation for industry, and notable head count, where 235 more midsized companies are anticipating growth than large enterprise.
Where Middle Market Is Forecasting More Growth Than Large Companies in 2013
In addition to those four areas, Middle Market is expecting significantly bigger increases than larger companies in the following areas:
HR
Difference Between Percentage of Middle Market Companies with Higher/Lower Expectation and Percentage of Large Enterprise Companies with Higher/Lower Expectations in Each Area
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INVESTING TO DRIVE GROWTH
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Middle Market Divergence Report (Continued)
IT
MARKETING
REAL ESTATE
IT Software Expenditure
IT-Related Consultant Advisory Spend
Number of Work Spaces
Real Estate Vacancy Rates
Green Initiatives (LEED)
Marketing Budget per Revenue
Dedicated Advertising Agency Employees
SALES
Sales New Customers
Sales Existing Customers
Sales Head Count
New Orders
Production
Labor Costs
Capacity
OPERATIONS