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Profits should be derived from revenue—not from cost cutting! This is one of the two golden rules given to companies by strategy expert Mumtaz Ahmed, chief strategy officer of Deloitte LLP and author of Three Rules: How Exceptional Companies Think.

Exceptional companies focus on revenue generation and the development of a strong foundation within their organization to generate more revenues as a sustainable competitive advantage. The Revenue Generation Maturity Framework™ developed by The Growth Engine examines 10 critical elements within an organization that impact its ability to improve revenue performance. These elements are like cogs in a well-oiledmachine—free of the rust of backward thinking and other impediments that hinder action, each component seamlessly rotates and sets the entire system in motion. 

 With this article I intend to provide a high-level overview of these 10 critical elements within the Revenue Generation Maturity Framework™. In the coming weeks I will publish a series of articles to go deeper into each of these 10 elements on not only why and how they impact revenue performance for organizations but also how one can go about to improve these elements to improve revenue performance standing.

At the end of this article you will find a link to the self-assessment tool for CEOs and CMOs who are committed to optimizing their revenue performance to understand where you are at in the maturity framework today. Awareness of where you are gives you power to take action and bring your organization’s revenue performance to the next level. Are you ready to take action?

Success Element 1: Strategic Orientation
Strategic orientation is the inclination of a firm to focus on strategic direction and proper strategic fit to ensure superior firm performance. An organization that is strategically oriented focuses on its strategic direction as a continuous process and makes it its long-range vision. Michael Porter in his book Competitive Strategy taught us that a positive relationship exists between strategic orientation and long-term financial performance. By continuously seeking out new opportunities and ensuring strategic alignment, firms that exhibit a robust strategic orientation take action in new markets or product areas in order to generate a competitive advantage, resulting in improvements in revenue growth. A study named Corporate Ideology, Diversification and Firm Performance done by Goll & Sambharya, in contrast, has shown a negative relationship between strategic orientation and short-term outcomes such as sales growth and profitability. To ensure that revenue performance is optimized, it is therefore critical that you thoroughly examine your strategic orientation as a leader committed to generating solid revenue for your organization.

Success Element 2: Customer Profile & Segmentation
Identifying the target market is of utmost importance in any organization. It allows you to create a viable and effective marketing campaign designed to reach the most number of your potential customers with the least impact on your resources, most notably money and time. An identified target market is a clear roadmap to your organization’s ultimate goal: more revenue. Segmentation is a well-known and widely-used marketing practice employed to identify prospects and customers falling under similar criteria in some respect, however differing in others. These similarities and differences allow the customers and prospects to be segmented into distinct groups. Unfortunately, many companies take an overly simplistic a priori approach (which looks at historical data only) and end up with segments that are not maximally differentiated. High-performing organizations take a more sophisticated approach and move their segmentation into more of a predictive model. Is your organization part of this high-performing pool?

Success Element 3: People & Skills
The next critical element to examine is the marketing roles within your organization—the people directly responsible for any and all of your marketing efforts, which include the decision-makers for marketing resources. Depending on the maturity level of your organization, you may or may not have any senior leadership or strategic roles in marketing. Or you may be on the other end of the spectrum with a Chief Marketing Officer (CMO), along with VPs, Marketing Directors, Managers, and Program Managers in place. High-performing organizations know the required marketing skills they need (whether in-house or outsourced) at different stages of their business growth and use these skills effectively to optimize revenue performance. Do you have onboard the right people and skills that drive optimum revenue performance?

Success Element 4: Job Design
You have a compelling product, a clear vision and strategy, well-defined target audiences, and talented people in the team, BUT implementation goes awry! Managers don’t show enough entrepreneurial spirit and they are too slow to respond to customers. Decision making is fragmented and time to market is much longer than expected. You wonder what has gone wrong: “Have I hired the wrong people for the job?”

Great strategy being derailed by poor execution is an all too often scenario. Of course, there are many contributing factors to such failure and people always introduce the possibility of human error. However, one aspect that is usually neglected by top management is the possibility that their organization is actually designed to fail! Key roles that are not optimally structured to support business performance often lead to poor operational and revenue results. It is therefore critical that you ensure that jobs are designed and structured for high performance and aligned with your business objectives. You may not have hired the wrong people for the job; you just got the wrong job for the people you hired.

Success Element 5: Budgeting
A case study done by Kabayaga Bern on the role of budgeting in the financial performance of organizations has shown that budgeting has significant impact. In the study, it was through budgeting firms that the organizations could effectively and efficiently do their operational activities for improved financial performance. Bern also concluded that an organization’s budgeting system played an important role in business management, especially in decentralized firms where a company requires some budget to translate all the company's strategies into short- and long-term plans and objectives. Furthermore, the study has demonstrated that budget is one of the fundamental tools that all managerial levels use to plan and control the firm's activities as well as make the business achieve specific aims and operational objectives.

Well-designed budgeting limits the misuse of funds, facilitates proper allocation of other resources, and therefore, induces financial development which later leads to better financial performance. Exceptional companies have proper planning of funds and keep a keen eye on revenue in their budgeting.

Success Element 6: Culture
John Kotter and James Heskett, in their book Corporate Culture and Performance, describe how shared values and unwritten rules either profoundly enhance economic success or, conversely, lead to failure to adapt to changing markets and environments. Culture is the “what and how” of your organization: how things get done, how things are decided on, what works and what doesn’t, what gets rewarded and what doesn’t, and how performance is rewarded or recognized. Your organization’s strategy must go hand in hand with your company’s culture: Define your strategy and ensure that your culture supports it. The Revenue Generation Maturity Framework™ focuses on developing a revenue generation culture beyond sales and marketing and across the organization because optimizing revenue performance for an organization involves all departments in the business.

Success Element 7: Process
An in-depth study conducted by Vantage Point Performance and the Sales Management Association revealed that 44% of executives think their organization is ineffective at managing their sales pipeline. (The survey included 62 B2B companies, 39% of which had revenue greater than $1 billion and 37%, greater than $250 million.) The companies that recorded massive revenue all had a credible, formalized sales process. This means that their sales team understood the clearly defined stages and milestones in their sales cycle. Exceptional companies have a clearly defined sales process; they dedicate time on pipeline management and make sure their managers are well trained with pipeline management strategies and techniques. How clearly defined is your sales process?

Success Element 8: Technology
CRM, Marketing Automation, and BI Technologies are enablement tools providing organizations with insights about their customers and prospects. These technologies serve to deliver business intelligence more efficiently to both front- and back-end staff, allowing them to serve customers/prospects’ needs better. Technology, supported by the other elements in the Revenue Generation Maturity Framework™, helps organizations to achieve optimized revenue performance. Disintegrated systems implemented in different departments not only hinder the customer line of sight but also create barriers to internal communication and efficiency.
A study done by Nicholas Georgantzas and Evangelos Katsamakas from Fordham University has reported that the improvement of Information Systems integration can lead to superior business performance. Exceptional companies have high standards in their business process management and ensure that the right data are available to the right people, at the right time within the organization to achieve customer line of sight.

Success Element 9: Communication
Effective communication is another critical driver of revenue. It could make or break a company: It keeps internal processes and external interaction with customers, suppliers, and employees smooth and productive. Communicating effectively, internally and externally, at all levels of management has a direct impact on cash flow and revenue. From lower employee turnover to great customer service, and to successful project deliveries, effective communication has immense benefits that are directly correlated with an increase in the financial performance of organizations. Exceptional companies ensure they have well-structured and efficient communication processes and tools, which their sales team has ready access to.

Success Element 10: Reporting
You can’t manage what you can’t measure! To improve your revenue performance, it is critical to monitor relevant metrics on an ongoing basis. Inaccurate metrics lead to incorrect insights that your organization’s leadership looks upon in order to steer the ship into the right direction. Additionally, it is crucial that metrics are relevant to your organization’s revenue performance and understood by key managers across your business. Hence, metrics should be identified and developed in consultation with the entire leadership team.

Exceptional companies rigorously scrutinize their process of setting up metrics and routines for measuring, monitoring, and reviewing information relevant to their goals. In turn, they examine the information they gather against strategy, effort, and performance. Leaders of high-performing companies constantly ask themselves what metric they could track that would provide an early warning system for activities that could impact revenue results.

Optimizing revenue performance requires CEOs and CMOs to take a hard look at the 10 critical elements that impact their organization’s ability to improve performance as set out in the Revenue Generation Maturity Framework™. And through the Revenue Generation Maturity Framework™ Self-Assessment Tool available to you today, you can gain a high-level understanding of where your organization is at and what actions you must take to move your organization to the next maturity level.

Richard Wiseman, author of Rip It Up and Britain's only professor for the public understanding of psychology, once said, “If you want to be more confident or successful, the best thing to do is act the part.” The same principle applies to organizations. If you want to step up and be a world-class company with exceptional revenue performance, you have to take the necessary steps to walk and talk the part. Merely thinking and dreaming about becoming an exceptional company is never enough. Action is what sets success in motion.

If you are ready to optimize your revenue performance, contact The Growth Engine for a complimentary audit to know your revenue performance standing.