No one saw the pandemic coming. Just one year ago, the spread of COVID-19 brought the economy to its knees in matter of weeks, testing CEOs like never before. No matter your job, company, or industry, the COVID-19 pandemic took us all by surprise. And as a result, every 2020 forecast and strategic plan got tossed in the trash as businesses moved first into reaction mode, then to survival mode and finally, into the recovery mode.
For the first time in nearly a year we can see beyond the pandemic with a sense of optimism and a desire to get back to growth in 2021. There are still more hardships ahead in the near term; we will continue to learn to live with COVID-19 for many years as it moves from a pandemic to an endemic. But the ever-expanding distribution of vaccines brings the promise that we will emerge into a new reality in the second half of 2021.
Analysis of our Q4 2020 Vistage CEO Confidence Index survey revealed optimism of CEOs of small and midsize businesses in regards to their plans and prospects for the year ahead. While there are still many significant issues to be dealt with as we transition to this post-pandemic reality, CEOs are focused on reigniting their growth engine to capitalize on the coming economic surge. To optimize this opportunity driven by pent-up consumer spending, expanding business investment and the reopening of all facets of our economy.
Entering 2021, CEOs reported that the revenue impact of the pandemic and changes in cash reserves had stalled in the 4th quarter as anticipated winter and then post-holiday COVID-19 spikes occurred. While near-term economic optimism remains low, the increase in confidence shows that SMBs expect the broad distribution of the vaccine to have positive impacts on their business. This is evidenced by the Q4 2020 CEO Confidence Index returning to near Q4 2019 levels, which is significant as it was believed that 2020 would be a breakout economic year. In preparation for growth, 64% of CEOs reported plans to increase headcount, well above the 55% from last year; a key indicator of growth expected in the year ahead.
Decisions, investments and challenges for CEOs
The major decisions facing CEOs reflect an uncertain economy, offset by a confident mindset about their business. The top area of focus for SMBs is on securing talent required to scale, but more broadly focused on decisions about how to power up the revenue engine to be ready for the positive economic climate ahead. In our analysis of over 4,200 responses about major decisions, the top 10 decisions reported by CEOs include product & pricing, market development, marketing and sales all targeting the growth engine.
Top investments mirrored the same priorities. For the fourth year in a row technology topped the list of investments, followed closely by hiring. Traditionally 45% of technology investments are focused on customer relationship management applications; when combined with other top ten investments to support marketing, product/pricing and sales, its clear CEOs are investing for growth.
When asked about the biggest leadership challenges, CEO’s responses reflect the pressing remnants of today’s COVID-19 crisis. Maintaining morale emerged as the most significant leadership challenge faced by CEOs as everyone has been exhausted by restrictions, working from home and zoom fatigue, compounded by personal impact of COVID-19 on friends, co-workers and family. Keeping the workforce engaged, motivated and focused on the task at hand while preparing for the future is a prerequisite for leaders that want to power up for growth.
Compounding this leadership challenge is the need to increase hiring while maintaining and building culture, for some with a remote or distributed workforce. For certain industries, challenges include managing an ongoing work-from-home model coupled with deciding when, how or if they will bring people back to the office. All are difficult challenges to address that unfortunately have no best practices from the past for leaders to leverage.
CEO Projections 2021
Our latest research report — CEO Projections 2021: Reigniting the Growth Engine — reflects our analysis of data captured from over 1,500 CEOs as they looked ahead into 2021. We interpret and analyze the major decisions, key investments and most significant leadership challenges that were reported in the Q4 Vistage CEO Confidence Index survey conducted in early December. As we learned last year, the crystal ball is not always reliable. However, as we move into this time of transition to a space where we can once again freely engage with each other, CEOs have expressed optimism that a better world awaits.
Being positioned to capitalize on the recovery requires that leaders focus on preparing their company to expand in advance of a growing economy. This starts with their organization’s ability to scale for growth. The sales function is the growth engine for businesses, engaging with customers and connecting with prospects. As customers see an acceleration of business activity, they will begin to invest in their growth and will look to your business to help. At that time, it will be your sales team that will provide customers with the solutions that will help them grow, and in the absence of a solution, customers will seek alternative sources from competitors. Now is the time to rethink, rearm and re-motivate your sales team. This starts with a world-class sales system that will power your sales team and ignite your growth engine for 2021.
The lesson of 2020 was that anything is possible. For those CEOs with the courage and foresight to capitalize on the impending growth surge, the time is now to reignite the growth engines.
Source: Joe Galvin, Vistage