Overview Survey – Why We Asked

CEO to CEO’s 9 Growth Drivers/Levers of Emerging Midsized Companies

This is one of the benefits of participating in our research. After each survey, we share the best practices behind our reasoning for asking the questions. Enjoy
— The research & advisory team at CEO to CEO

In your initial survey, we asked you if you thought you were good at each of the growth drivers. You gave us your opinion. In this survey, we asked pointed questions about best practices to determine if we think you are good at each driver. If there is a difference between the two, it points to a blind spot that we will want to research. It could be your blind spot in that you don’t know how good you can be if only you followed all the best practices. But it could also be our blind spot, in that the best practices didn’t work for you, or you’re using innovative leading practices to find success that aren’t known to us.

Driver 1: Recruiting

1. Does your company have a written hiring plan that details all the positions you will need to fill, and when, over the next 12 months? Why do we ask?

The only way to make great hires on time is to have a plan that allows you to start the process on time. If the company hasn’t planned in enough detail, they’ll start hiring when there is pain, and that’s way too late even for the hiring part, not to mention allowing time for a learning curve. What’s more, without a headcount plan, companies can’t even focus on the development of their high potential employees, but that’s the subject of another driver. We ask the question because if there isn’t such a plan, the likelihood of the company achieving best-practices recruiting is low—unless they are intentionally in a very low growth mode.

2. Does your company have a highly attractive employer brand (this is the perception that employees and candidates have of your company before they contact your company) that allows you to draw in the best and brightest people in your industry?

Too many companies think the competition is defined as those who are competing for their customers. If only it were that simple. We all compete for the talent pool, and not just with competitors in our own industry. EVERY company who needs people with similar skills sets to our people is a competitor. Our brand as an employer is crucial since key decisions by candidates are made before they ever think about sending in their resume to us. In fact, the very second they feel dissatisfied with their current job, they wonder, “Is there a better company/boss out there for me?”. That’s the moment you can win if you have a strong employer brand. Their next thought is, “I’ve always heard that YOUR COMPANY is a great place to work….I wonder if they have any openings.” Bingo. Even if it happens later, after they’ve seen your job posting and they ask some friends about your firm—and they hear all good things—another victory. If you answered no, then you are at a big disadvantage to all those who do.

3. Does your company’s outreach to find candidates bring in plenty of excellent candidates to choose from? (Yes, No, Don’t Know)

The best hires happen when we have a choice between several strong candidates. A weak outreach that brings in only one good candidate means we are settling for good enough. And that’s not good enough. I know that when unemployment is low and candidates are hard to find this is a tough order. Its hard. But the best companies are up for the challenge. Most of the time, even in low unemployment times, companies who aren’t getting good candidate selection aren’t following a number of best practices, and there is room for improvement.

4. Is your company’s process for recruiting and hiring fast enough to gain commitment from the best talent before they take other jobs?

It’ll make you crazy! You finally get a great candidate to an interview. But you are too slow and before you can even offer them the job, they’ve taken another one. While there are a few cases where they were just about to accept another position, many companies take weeks to go through the process. We’re all for a diligent process, but speed is critical. We ask this question to see if your company has prioritized the hiring process. If you answered no, likely HR is underfunded, hiring managers are too busy getting the work out, etc. etc. They don’t realize that grabbing great talent is the ONLY way up to the surface!

5. What percentage of all new hires remain at your firm after 6 months?

What’s the point of recruiting and hiring if the talent you bring in runs right out the door? It doesn’t matter if you hired poorly then have to fire, or if you hire well and they run for the doors. Hiring only counts as good if those people are selected well, on-boarded with care, become productive as quickly as possible, and stick around. We ask this question because it signals to us that either hiring or on-boarding is flawed.

Driver 2: Developing Talent

1. Does your company document and share career paths that show employees how to progress from one position to the next?

Too many companies of all sizes put their talented employees in this position then wonder why they are disengaged at work. Career paths are simple constructs that tell employees what to do to get promoted and rewards them in smaller steps as they do the right thing. We ask this to see if your company has the discipline to lay out a roadmap for success for your people. Without it, chances are your turnover is higher, your level of employee engagement is lower, and your overall productivity is below par.

2. Does your company have an ongoing mentorship program for all employees who are likely to be promoted?

While we are big fans of smart people, we are equally big fans of experience. Combine the two and it’s dynamite. That’s what mentoring is. Combining the work experience of one person with the energy, smarts and potential of another. Without some formality around this, experience transfer is likely subpar, and engagement will suffer—for both mentor and mentee.

3. Does your company encourage employees likely to be promoted to take available training classes?

There are three basics to expediting the development of high-potential employees. Mentoring (asked about above) is the first, and training is the second. Having talent learn things “the hard way” by trial and error is incredibly expensive. It wastes their time and delivers errors and mistakes that affect customers and many others. Being clear about what skills employees should be trained on and doing it in groups sessions or with the help of an LMS (learning management system) in an organized way is the way to go.

4. Are employees likely to be promoted assigned to special projects for the express purpose of developing broader or new skills?

The third element to developing employees (in addition to mentoring and training described above) is called experiential learning, often called on-the-job training. They experience things that will teach them what they need to know for their upcoming promotion. A common example is a manager who is asked to lead a special project (ex. organizing and leading the company charity drive) that will teach him/her new skills (ex. cross functional work, influencing skills, etc.) since the next career step will require working cross-functionally. One benefit is that high-potential employees learn on smaller projects and prove their ability to work at a higher level BEFORE they are promoted. If they fail or hate it, you don’t have to demote them or fire them—you can gracefully redirect them to a different path in your organization or maybe they prefer to stay where they are (and be a high-performer, not a high-potential).

Driver 3: Team Work

1. Are all members of your company’s leadership team such valuable contributors that you would re-hire all of them knowing what you know now?

This is such a powerful question! We hope you felt the impact if you answered no. If you answered no and didn’t feel it, try this. Repeat: “Knowing what I now know about [say name of leader], I would not hire him/her today.” Then your brain should say back to you, “Then why the $#@& am I keeping [say name of leader] in the company now?” Excuses don’t cut it. The only way to grow an emerging midsized company is with a team that makes it happen.

2. Do members of teams engage in productive conflict in the interest of finding the best possible solution for your company? Productive conflict does NOT include conflict avoidance, feigned agreement, or nasty, hurtful conflict.

Emerging midsized companies thrive when they combine the brains and experience of more than one person. That can only be done with dialogue, and eventually debate (conflict). Leaders have to hash it out with each other. If they have the conflict productively, great ideas and decisions emerge without interpersonal damage. If leaders are too timid to debate or do it with such gusto that they end up hating each other, you aren’t getting the best ideas to work, and your team is dysfunctional. So, your competitor can win instead. Bad.

3. Do peers hold each other accountable for delivering on commitments?

Bosses who hold people accountable by shaking their finger or through punishments isn’t using the best methods to get team members to be accountable. More often they quit. The real trick is…. peer pressure. Teams who have truly committed to their teammates (not just their boss) to get something done are fare more likely to win than those who don’t. And commitment means a commitment to their teammates (not just to the boss). When teammates are prepared to hold their peers accountable (called peer pressure), people redouble their efforts to say focused on the results they made promises on. A big sign that all this is working is when team members hold their peers accountable.

4. Do leaders have enough time to carefully plan for the longer term?

Small companies usually don’t plan. They just run around and react, and it works when small. But when companies grow, having just enough leaders to get the work out isn’t enough leadership bandwidth! Planning and leading are REAL activities which require hours of time. If leaders just don’t have enough time, all the prioritizing and coaching and wisdom just won’t help.

5. Do leaders delegate their work to subordinates so the leaders can have capacity for other work?

One way leaders get more time and bandwidth is by delegating some of their work to subordinates. As companies grow, leaders must do more and more work on long-term projects, and less on short-term work. This is often called working on the business rather than in the business. We ask this question to learn if your leaders have figured out how to delegate yet. Sometimes they want to, but don’t have subordinates capable of doing the work. That’s bad. In other cases, leaders love the lower-level work and don’t want to give it up. That tells you they need a new boss.

Driver 4: Sales and Marketing

1. Over the past 12 months, has your company been winning a steady stream of new clients?

Healthy people breathe regularly. Healthy companies win new clients/customers regularly. It’s kind of like the left leg of a person. Without their left leg, a person will hobble. And a company that only grows from existing customers is hobbling. Companies who do this well must: 1) Know where to find good prospects; 2) compete successfully against competitors; 3) Have a good brand; 4) Have people who know how to sell; 5) Know how to onboard new customers. The next questions checks for the existence of a right leg.

2. Over the past 12 months, has your company been winning increased business from your current customers?

Share of customer is a term we use to assess whether any given customer is giving you ALL their business for ALL the services/products you can supply. For example, if I have 5 appliances in my home that GE could supply, and I only bought 3 of them from GE, they have a 60% share of customer (in my home). We ask this question to determine if your current customers like you enough to give you more work since it’s easier to win work from existing customers. It also tells us that you are not generally at 100% share of customers. Being at 100% share of customer is something to be proud of on the one hand, but means you can’t get more growth from that customer (unless you develop more products and services to sell them).

3. How well has your company documented the sales process for your products/services? A “sales process” details the best way your company wins business.

In most cases, selling should be a repeatable process. Now many emerging midsize firms have never perfected that process (bad) and they certainly won’t have written the process down if they’ve not perfected it. They may have one of two “sales-artists” doing an incredible job, but that can’t be scaled.

3a. Is the sales process used to train new sales persons?

If you say you have a documented sales process (good), then we want to know if it’s being used to quickly develop and train a fleet of new salespeople to drive growth. (Even a few salespeople!) Training is a rare and new thing for emerging midsized companies. Those who do it (in many areas in the company) can grow much more quickly and efficiently.

4. Does your company get a steady flow of qualified new leads? Qualified means they are likely to have interest in your products or services or that you often sell to companies like them.

There is a magical moment when a prospect raises their hand and says, “I might be interested.” If we get a yes here, it tells us that your product or service is needed, that your brand is working, and that your lead generation efforts are feeding eager prospects to your sales team. When good prospects are rare and hard to find, growth suffers. Profits suffer too as you spend more and more time and money finding prospects.

5. If your company decided to grow faster, could your company significantly step up its sales and marketing efforts and bring in significantly more revenues?

This is a summation question that covers many of the prior questions. If your marketing and sales functions are truly working well and you know how they work, and you can control their throughput, then when the time comes to push growth, you’ll know just what to do, and you’ll have confidence that when you do “step on the gas,” your business will accelerate. In many cases leaders thought they had it wired, then tried it, and found the business didn’t accelerate. The only way to have high confidence is to have tried it recently with success.

Driver 5: Market Intelligence Gathering

1. How frequently, if at all, does your company collect primary data about your customers’ or prospects’ perception of your company? Primary data are new data your company collects or that is collected for your company, not existing data previously-collected by others such as industry reports.

You’d be surprised how many years can slip by without a careful program of outreach to talk to (and listen to) what your customers (and non-customers) think of your company. Their perception changes with time. It changes with their experience with your company. It changes with their experience with your competition. We ask because companies MUST know how they are thought of so they can send the right messages to maximize their success.

2. How frequently, if at all, does your company collect data about market conditions other than specifically about your competitors? This includes gaining access to industry reports and conducting your own primary research.

Great companies also regularly collect data about the market in general. Is it growing? Is profitability shrinking? What new technologies are arriving? Every industry has winners and losers, and the winners know where the change is and they take advantage long before the losers notice.

3. How frequently, if at all, does your company collect data about your competitors? (choose the closest)

Along similar lines as the two questions above, your company has to be better than the competition to win. If you don’t study the competition, how will you know you are better? Of course, you could wait until you lose many of your customers, but that’s a big mistake. You want to know the whole playing field, including your opponents, so you can make adjustments quickly and stay on top. Colleting data isn’t hard. It just takes some study and discipline and writing up what you find. College interns can even help!

4. How frequently, if at all, does your company develop a “SWOT”, placing your company within the competitive mix and identifying strengths (S), weaknesses (W), opportunities (O) and threats (T)?

A SWOT is a simple tool that helps you take everything you learned and know about the environment surrounding your business and make sense of it. We ask because companies that do this exercise regularly are trying to make smart strategic moves, and that’s a big step. If they do this AND do lots of research, that’s awesome. Most emerging midsized companies don’t.

5. How often, if at all, does your company write reports to summarize all the information collected by the activities asked about in the preceding questions?

I know that writing a report sounds so school-marmish. But writing a report forces the business leaders to process the information and make decisions about what matters and what doesn’t, and to record their reasoning. The very process of writing makes most of us learn the material more deeply. And when its written, we can look back a year later and see if we were right or not, and which of our assumptions held and which were wrong. We’ll get better each year. At midsized, we’re playing a game where millions will be won or lost. It’s worth writing. Writing makes it real.

Driver 6: Growth Opportunity

1. How often in the past two years, if at all, has your company’s leadership looked at acquisitions, joint ventures, or other strategic partnerships to open up new horizons for growth?

Growing a company organically is just fine, but there are strategic opportunities that can turbocharge your growth or the growth of your arch-competitor. We ask if you are actively looking because if you’re not, you’re missing out on some growth and you’re not thinking strategically. It may be smart to pass most of these opportunities as they can be risky, but you won’t know what you’re missing if you don’t look.

2. In the next two years, how much, if any, growth opportunity is there for your company from landing new customers? (A lot, Some, Not much, Don’t know)

Dominant companies can have their growth stunted if there aren’t many more customers to sell to. Other business define their niche very narrowly, and there is not much room left to run. Healthy emerging midsized companies see lots of upside through pursuing new customers.

3. In the next two years, how much, if any, growth opportunity is there for your company from increasing sales to your existing customers?

We love the upside of being able to sell a lot more work to existing customers. They know us, presumably love us, and take less convincing to buy from us. However, if too many of our customer are already sole-sourcing from us and there aren’t opportunities for growth, we’ll be more reliant on new customers. For example, Uber started giving me 5% off, and that was enough to pull some rides from Lyft. Good job Uber. Lyft, are you reading this?

4. In the next two years, do you expect the market demand for the type of products/services your company supplies to increase, decrease, or stay about the same?

Floating on the rising tide is nice. We ask this to understand how much challenge you are expecting from overall market conditions. So if we learned from your survey that conditions are worsening, and you’re not great at selling more to existing customer or landing new customers, well, then, you’re in trouble. And if the tide is going out, it may be time to find another ocean, or to hunker down to survive until the tide changes.

5. In the next two years, how much, if any, growth opportunity is there from moving into new geographic regions?

We ask because this is a common avenue for expansion. This tells us if you are considering it (or can consider it).

6. In the next two years, how much, if any, growth opportunity is there to introduce significantly different products/services from that which you already sell?

We ask to examine another common driver of growth—new offerings to existing customers (or even new customers). Perhaps you are boxed into a niche market but can grow this way.

Driver 7: Data Driven

1. How much, if at all, is your company a data-driven company? Data-driven means you collect data about many business operations and results and use it to make decisions.

At midsized, it gets too hard to run an efficient or effective business without the right data. The founder isn’t making all (or even many) of the decisions. A data driven business collects information about how the business is running and routes it back to the people who should make changes and adjustments to keep the business running well. Guesses just don’t cut it. The bigger a business is when it decides to become data driven, the more work it is to build data flows and systems. Likewise, there is more fat and waste to reduce as well.

2. How current are your computer software systems (for example, an ERP, CRM, etc.)?

Believe it or not, in 2015 we had a client for an offsite that was running Fortran. The youngest programmer they could find capable of working on their system was 74 years old. (For you young’uns, Fortran is an old computer language that was being phased out in the early 1980s.) Their team of three finally got to retire in 2016 when the company folded. We ask about your systems because new or modern systems give you options for growth (these systems can connect with other new systems), they can be maintained (decreased risk), and they have features that help businesses run better.

3. For all employees, how much, if at all, of your employee performance reviews are based on their performance data vs the perception of the manager?

Employees become much more engaged when they feel they are evaluated fairly. Good data systems provide powerful feedback to employees, so they know when they are going in the right direction or the wrong direction. Data is the antidote to politics. Many emerging midsized companies are far too informal in their review systems and untrained middle managers often cause much damage to morale and engagement.

4. Does data on important aspects of company performance become available at least weekly?

We ask because many companies have operations that require day-to-day and week-to-week management. This is true for all companies – from law firms to manufacturing plants. Getting this sort of data monthly or quarterly means loads of damage has happened before we even realize it. So great systems are returning information to the decision makers with much higher frequency. Ideally, data flows in real time. But that’s too much to hope for in many emerging midsized companies. We’ll cheer if some of it comes back weekly.

5. Does your leadership team use benchmarking data to compare your company’s performance to others in the industry? Benchmarking data often come from industry associations, industry periodicals, or data providers.

I remember in junior high when I ran a mile in 7:47 – like the jet. I might have been proud of that time if I was not being benchmarked against my peers and I was taking up the rear. My point is that we don’t know if we’re performing well without a comparison. We ask this data so we can know how serious you are about performing above average against your peers.

Driver 8: Planning and Governance

1. Does your company annually, or more often, engage your top leadership to assess your corporate vision and strategy, along with your competitive position and make decisions?

We want to know if you are active and formal in deciding what direction your company should go, and the key strategies that will get you there. Doing this annually is a minimum because things change even more quickly. It’d be a shame to run a business well, but on a dead-end mission.

2. Separate and distinct from your strategic plan, does your company have a written operating plan for the year ahead that details which leaders are responsible for achieving specific performance targets and completing specific projects on time?

A strategic plan (where you should go) is different than an operating plan (the details of what to do to get there). Big ideas don’t help unless somebody gets the right work done. We ask about an operating plan to see if planning is specific and actionable. There are many companies who do strategic planning, but never act on their strategies and have a “Ground Hog Day” like experience each year. An operating plan is a best practice.

3. Does your company have a written budget established for each leader who has spending authority?

Budgeting isn’t really about restricting spending. The power of budgeting is that we tie resources to results and drop that into the lap of managers who get work done. For example, “Yes, you can spend $30K per year on your employees, but we expect X level of output.” That’s empowering. Much more powerful that the boss approving 10 people to be on the team. Many emerging midsized companies are just getting started on budgeting, and we want to know how far along you are.

3a. Is their spending compared to budget at least quarterly?

If you are doing budgets (congrats), are you delivering data/feedback at least quarterly, so those managers can know how things are going and make course corrections? Doing budget annually isn’t very effective. We want managers actively adjusting how they spend to produce better results.

4. On average, over the last 2 years, how often, if ever, does your company bring the leadership team together to discuss what isn’t going well and to make decisions about what to do differently?

Management must be active! We want to know if management is working as a team and working to fix problems as soon as they are visible. This isn’t the boss’s job. At midsized, the team is running the business to hit their planned results. Normally we like to see some weekly meetings (for very tactical adjustments), some monthly meetings (higher level operational decisions) and some more strategic quarterly meetings.

5. How likely or unlikely is it that your company’s core business plus its stated strategies and goals will be effective enough to grow revenues at 8% per year (while earning a profit) annually for the next five years?

We ask this to check your level of confidence. Do you think you’re doing enough things right to grow profitably? If you’re unsure if you can win, what do we need to do to become certain that you can? We want you to play to win, not to play to survive. If you’re unsure, we suggest doing some strategic planning and research to either find a path to winning or shut it down quickly so that you lose less. Hey, there are many jobs and companies out there—why not own/work for one that can win?

Driver 9: Financial Capability

1. Are your company’s financial statements produced within 20 days after the end of each month?

Having solid financial statements available quickly means you can adjust quickly to make the business perform better. You won’t win an award for 20-day turnaround, but at least it’s not horrible. Ten days is much better, and 5 days will get you a pat on the back.

2. Do your company’s accounting records statements provide accurate financial input you need to manage the business?

We’ve just started working with an engineering firm that doesn’t track direct costs (hours spent on each job) or utilization (how much of each engineer’s week is used on billable projects). Their tax returns are accurate, so no one is going to jail. But how can they run their business well? One engineer could be way too slow, but they wouldn’t know. Another could be doing too much non-billable work (like being on Facebook) but they wouldn’t know. The accounting department must collect and supply information that is detailed enough to run the business better.

3. Do the leaders who report to the CEO know how to interpret the accounting records and financial statements?

As business grow into midsized, all the top leaders should be able to read financial statements and fully participate with the CEO in making top-level decisions based on financial input. When a company is midsized, leaders shouldn’t rely on the “ok” from the CEO. They should be at his/her side deciding together the right course of action.

4. Do the leaders who report to the CEO understand how their actions influence your company’s finances?

Every action in a business affects the financial statements. For example, if the business is struggling to make bank covenants (assume liquidity covenants), every leader must know what actions to take or not take. For example, how will leasing vs. buying a piece of equipment affect that covenant? We ask because without this level of understanding, the team goes back to small business mode—ask “Mom or Dad” if we can do it, then do what they say. That’s not the kind of leaders who drive growth at midsized.

5. In the past year, has your company generated enough cash flow from operations to allow management to execute their more important projects?

It takes a certain amount of money to win in every business. We ask to learn if you have enough of it to win. It’s a huge risk to try and tackle a market that requires $100M in investment when you only have $25M. Many established businesses produce enough free cash flow to grow the business, and we’re asking if you’re one of those. If not, we’re hoping you have access to a pot of gold—see our questions below.

6. If your company were to need to access more capital either through debt or equity, is it well positioned to do so?

Using other people’s money is one way to get the cash you need to win. We want to know if you are bankable or attractive to investors. If you are a strong enough company to qualify, that’s good news. Of course, when you need someone else’s money (because you’re in trouble), you often can’t get it. Can you blame them? If it looks like you are going to lose, who would put in their money?

7. If your company were to need to access more capital either through debt or equity, would your company’s ownership allow it?

If your company is strong enough to get access to other people’s money, would you be willing to take it? It always comes with strings attached. Many people would rather slow growth down than accept the potential headaches that come with borrowing money. Things like personal guarantees, investors on the board telling you what to do (or suing you). We ask because some companies need to have the financial wherewithal of others to win the battle they have chosen, and we want to know if you’re open to that (if you need it).

8. Do the owners leave enough cash in the business to allow it to grow?

Some businesses that produce lots of cash (awesome) find it all gets pulled out by the owners. That could be an extended family, a corporate parent or private equity firm that controls the business. It’s their right to do so. But it may starve the business and affect how much it can grow. We just want to understand your situation.

We hope these reasons explain enough about why we asked these questions, and help you think more about the changes that could make your business mightier.

If you have more questions, don’t hesitate to reach out to us at office@ceotoceo.biz. We are experts at helping emerging midsized companies grow. We will also be sharing more information about best practices for those who participate in the detailed surveys for each growth driver. We are rolling these out over the next few years. Stay in touch. We will also be publishing fresh articles and thoughts from our research regularly.