The Role of the Chief Growth Officer
Earlier this week I delivered a webinar to Engineering New Zealand (NZ) members regarding Client Hierarchy and how understanding your client cohorts enables organisations to design their business development or growth strategies more effectively.
One of the areas I covered was in relation to the financials of Client Hierarchies and the human resources allocated to servicing each cohort. This is an important element to consider as every organisation has a limit to resources.
The Return on Investment (ROI) for any activity undertaken, including business development, needs to be demonstrable, otherwise it is a scatter gun approach:
The Partner who has three hundred client coffees a year - highly caffeinated but can’t convert!
The gambler’s folly, it’s a numbers game – for every four proposals we put it in, we will win at least 25%!
More business development people! They just need to hit the pavement harder!
The interesting thing about these (very common) themes is they all have the potential to waste massive amounts of effort and financial resources. Often firms don’t think about whether their existing human resources are being used effectively.
Engineering NZ have a fabulous webinar system, (run extremely well by the lovely Rhys Griffiths) where they can run polls throughout the session. This is a great tool as it enables engagement with participants during the session.
One of the questions I posed was in relation to New Zealand’s Association for Consulting and Engineering Professionals (ACENZ) Business and Market Survey Report (2014) estimate that each Client Facing Engineer (CFE) should generate $174K in revenue per annum. We tested this with the webinar participants (with the caveat this wasn’t a statistically significant group) and found:
25% estimated they would generate less than this benchmark;
65% were on par; and
10% would exceed this industry benchmark.
The webinar participants were primarily consulting engineers. They had a good understanding of the metrics (as you would expect from engineers!) but still a quarter were performing under the industry benchmark.
If we were working with these organisations to undertake a Growth Strategy Diagnostic (the first stage of the process when you work with First Follower): we would consider the following questions:
Does leadership understand where revenue is best generated from, and have they directed the firm’s resources accordingly?
Do the client facing staff have a clear understanding of the level of revenue they are required to generate per annum?
Can people say no to non-value generating work?
Culturally it is the latter that is often the most difficult to address, particularly when the pipeline is light, or the market is contracting. People will accept work to ‘feed the beast’ or ‘keep the lights on’ when in reality:
That work is not building expertise, think low margin system implementation work versus the strategy work your firm is outstanding at;
It distracts the leadership from attracting new high value work;
Your team find it mind numbing, leading to talent attraction and retention issues.
Business development is a strategic function of business. It has the potential to be highly sophisticated when it is evidence based and used to drive the performance of the firm. Your head of business development, or Chief Growth Officer, is part of the leadership of your organisation. They need to be able to challenge, coerce and be confident that growth will occur when the organisation is focused, rigorous in execution and robust in saying no, far more often than you say yes.
This might be painful in the short term. Adjusting your approach to business development, through a structured growth strategy, will cause pain in the short term. But as Ray Dalio would say ‘there is no avoiding pain, especially if you’re going after ambitious goals. Pain + Reflection = Progress.
Ceinwen McNeil is the founder and managing director of First Follower, an international strategy consulting firm which designs and executes growth strategies for professional services. Drawing on over twenty years of business development and client management experience in both the public and private sectors, she founded First Follower to enable businesses to successfully navigate step growth change. Ceinwen’s direct approach, commercial acumen and exemplary stakeholder engagement skills make her a highly sought-after adviser. Visit www.firstfollower.com for more information.
Tune in to Ceinwen’s podcast, the Frank and Fearless, which provides insights for leaders who are interested in growing their businesses and leaning into the wind. Listen to Frank and Fearless here.