Why Top Talent is the Key to Every CEO’s Profitability Imperative

Why Top Talent is the Key to Every CEO’s Profitability Imperative

Is it Time to Shake Things Up?

By Jim Jonassen
Founder, JJA Venture Search
In the pendulous cycles of startup and emerging growth tech investment, greed has clearly swung to fear. Financing rounds are tougher to close and valuations are rapidly coming back down to earth. Ugly term sheets, 11th hour re-trades and VC as well as strategic acquirer walkaways are becoming commonplace and are a byproduct of the new normal.
B2C boards that reveled in “soft metric” growth in the form of eyeballs, followers or downloads and B2B investors who cajoled CEOs to stoke the burn in order to get to scale are suddenly demanding a path to profitability now, not later.
This urgency around sustainable business is essentially a “profitability imperative” and it requires CEOs to shake off the hangover of easy money and low-bar growth mandates and embrace “forgotten” concepts such as cash flow and sustainable growth. The path to profitability must be forged from these six essential elements and metrics:

  1. Product: Accelerate the roadmap by reprioritizing what you know existing and prospective users truly want to lubricate sales and get retention where it needs to be.
  2. Revenue: Monetize as you productize. Features that once drove audience, reach or eyeballs must now generate dollars.
  3. Biz Dev: Find new distribution channels/partners and build an ecosystem that generates revenue while you sleep.
  4. Marketing: Rethink each campaign and scrutinize the metrics of your conversion funnel to optimize acquisition and conversion. Get sales the good
  5. Sales: Make certain your hunters are killing and farmers are harvesting. Time to truly assess sellers and leadership. Rip apart the pipeline and review every key account/territory.
  6. Analytics: Supplement the “profit imperative” with a “measurement mandate” that requires each key function to measure, analyze and optimize what they do.

Talent Punches Your Profitability Ticket
In times like these, the most successful CEOs view the future through a single lens: Their org chart. They know from experience that talent wins both profitability battles and the war for sustainable growth.
Sure, SWOT analyses, war-gaming and other such drills can be useful. But they’re no substitute for examining each level of the org and asking yourself whether you have the absolute best people – especially in leadership roles – while making sure they all feel surrounded by the same.
Regardless of the goal or metric, focus on the right leaders that will give you the best shot at defining your path to sustained profitability — and getting it done.
Like most leaders, you probably have some B Players you’re hoping will become A’s. You’ve hung on to legacy folks who’ve been through a lot together and you’ve been building a bench of young talent looking to develop them into top performers. But unlike a pro sports team, there is no such thing as a “rebuilding year” in your line of work.
Three Ways to Tighten up the Crew
Might this be impeding your path to profitability? The answer may be “yes” and the next two years will be a classic bend in the business cycle where winners are forged while the soon-to-be road kill sit on their hands.
So it’s time to take inventory of your team and take action where there’s opportunity to get top performers in place and focus on the metrics that matter most. In other words, it’s time to shape-up.
Here are three things you can do now to tighten your ship and improve (or achieve) profitability:

  1. Perform a market assessment of leaders and key contributors in core functional areas (see above) versus those at the market leaders in your competitive set. Then take action. Terminate, promote and recruit to make real change.
  2. Focus on concrete objectives that will deliver profitable growth (i.e. ship new features faster; monetize more of your offering; shorten the selling cycle; put your solution into a partner’s bag; decrease acquisition costs or stem churn)
  3. Determine the core metrics that matter. These won’t come from a book or a blog. They come from seasoned and scarred Advisors who have successfully built sustained market-leading companies. Pick up the phone and recruit them to join your Board, Advisory or become part of your “kitchen cabinet”. If you don’t ask, you won’t get!