Forbes Business Council Post: The 2023 Playbook: Revenue, Risk Mitigation And ROI

This article was written for Forbes Business Council, of which the author is a member. The original article can be found on the Forbes website.

By Matthew Gantner, Founder & CEO

We’re living in a time of heightened economic uncertainty. While recent economic data shows areas of promise, businesses are bracing to manage uncertainty throughout 2023. Consequently, I see cost reduction measures—such as layoffs in the tech space—and the reconsideration of investments to ensure businesses achieve growth and efficiency in the years ahead.

This shift is notable in comparison to the business environment of the past decade. Previously, many companies focused on growth at all costs, and now they are challenged by investors and stakeholders to generate meaningful returns and drive profitable growth. I see an emphasis on business fundamentals of revenue generation, risk mitigation and return on investment—all of which are core to the financial health of an organization. (Full disclosure: My firm offers services in these areas.)

Revenue Generation

Today organizations should generate and capture revenue differently. We are in an economic period where they must pivot to sustain and grow. As a result, every employee should be responsible for driving revenue growth and managing costs; companies should review and update their organizational structure with this in mind.

Companies up and down Silicon Valley scaled rapidly following the booming growth periods of the last few years. Companies that scaled for growth—including Meta, Google and Salesforce (paywall)—have had to face the new economic reality and make the hard decision to reduce headcount, laying off qualified and productive employees. If companies scaled to meet prior market conditions, they may later need to announce layoffs, which could cause their organizational structures and costs to turn upside-down swiftly as the market conditions change.

For companies struggling to sustain and capture revenue, the first step is to ensure you know how the company generates revenue and what costs are nonnegotiable for operating your business today and in the future. Once you understand the cornerstones of your business, you can think strategically and objectively about what kinds of pivots may be necessary to enable the company to continue operating at the appropriate scale. For example, are your sales, marketing and customer success functions fine-tuned and acting cohesively? Addressing these areas may result in a period of slower growth and essential consolidation before the turnaround takes off.

Another area that companies can take advantage of is optimizing existing systems or replacing inefficient systems. Technology is not a silver bullet for solving growth challenges; however, it can unlock scale and efficiencies when coupled with optimized processes and trained and motivated employees. By combining people, processes and technology and ensuring they’re working in unison, organizations can help accelerate the turnaround, drive employee engagement and increase customer satisfaction to propel the company through this period.

Risk Mitigation

Risks can present themselves in various forms and pose a potential liability for an organization, compromising its financial and reputational health. Minimizing risk through a comprehensive governance, risk and compliance (GRC) program should be nonnegotiable, as missteps can result in penalties and threats to the business.

When Southwest Airlines and the FAA (paywall) experienced significant system malfunctions, they experienced an immediate reputation hit that could possibly be long-lasting. Routine system health checks could help organizations mitigate the fallout of events like these.

For companies to fully understand the risks to their businesses, it is essential to look at the company from a top-down and bottom-up view. Risk assessments that only look at companies from a top-down and financial view miss critical business areas that impact the risk profile. In today’s environment, it is important to incorporate operational risk assessments. While financial risk has a direct or indirect tie to operational risks within the business, business leaders should also seek out a view of operational risk from those operating on the company’s front line. This insight is crucial to strategic decisions involving financial, operational, regulatory and reputational risks.

For companies operating their risk management process in a spreadsheet, now is an excellent time to evaluate risk management systems that can integrate with critical systems and workflows within your operating environment. By harnessing the organization’s data and defining quantifiable key risk indicators (KRIs) and key performance indicators (KPIs), the business will be able to develop a unified dashboard that provides real-time visibility of the organization’s risk posture. This level of visibility and automation can help organizations see around the corner as they navigate the ever-changing risk environment. In addition, as an organization’s risk tolerance changes, it should create a scalable risk management program to allow for pivots in thinking or modifications to the business.

Return On Investment

As external investment slows and interest rates climb, businesses may no longer have the luxury of carrying high burn rates and spending freely to see what pays off. Instead, they should grow responsibly and be sure that every dollar they spend provides a return that makes the investment worthwhile.

This starts with evaluating the tools already at their disposal and optimizing the systems and processes they utilize. The Altum crew and I see this desire to shed costs on inefficient or unnecessary systems play out in real time.

We are also seeing companies cut ties with contractors and external partners—a move parallel to evaluating software and systems to see if they’re value creators or poor investments. I see this as a sign that leaders are being deliberate in who their service providers are by performing rigorous due diligence and requiring clear guidelines on how their investment provides the return they want. These cuts are not typically a first line of defense for an organization, as outside partners are still and will remain key to their objectives—but those looking to win contracts must prove to be a trusted partner, display expertise and make the value they offer clear.

Ideally, in all economic environments, organizations would strive to have dialed-in revenue operations, risk mitigation measures and an attractive ROI for every dollar they spend. However, today’s conditions make it more important that each of these areas is optimized for a business to remain on solid financial ground, prepare for potential risks ahead and remain at the forefront of its industry.