How Business Leaders and CEOs Can Navigate Their Companies Through a Difficult Market

Growth at all costs is out. 

A year ago, companies were prioritizing aggressive expansion. Today, the market has shifted and so too have boardroom conversations. 

CEOs are working to balance growth with revenue. 

In a recent episode of The Run Revenue Show, Alex Atzberger, CEO of Optimizely, joined Clari’s Andy Byrne and Kyle Coleman to talk about the role of top executives in a down market, the Rule of 40, and much more. 

Here are key takeaways.

Lean into the Rule of 40

An overlooked metric is resurfacing for many CEOs. 

It’s called the Rule of 40. 

Simply put, the Rule of 40 challenges company leaders to look at their growth rate and their free cash flow. Together, these figures should add up to 40% or higher. 

Why are CEOs reaching for this metric right now? 

As Clari’s Andy Byrne puts it, “The Rule of 40, fundamentally, is about building a durable company.” By focusing on the combined output of growth and profitability, CEOs are better equipped to navigate a low investment, high volatility market. 

Ready to adopt the Rule of 40?

Start with a department by department review. Map the spend of each department against a percentage of revenue to see where there’s opportunity to tighten up.

Master your revenue process

An increased focus on revenue means an increased focus on process. 

Begin with these high-impact areas.

Spot and prevent revenue leak

The revenue you’ve worked hard to earn, but haven’t closed yet. This is your revenue leak. 

And it’s a big deal. 

Clari Labs research estimates companies lose 14.9% of revenue every single year. In a down market, that won’t fly. 

Optimizely CEO Alex Atzberger has two pieces of advice for leaders looking to address revenue leak:  

1. Shorten your review cycle. Instead of having the board look quarterly at trends and pipelines, meet once a month. This allows the whole team to move quickly on any action items. 
2. Dive deep into your pipeline. During review cycles, dig into the details to see how your pipeline is aging, how it’s converting, and how it moves across the funnel. Beyond that, look at predictability over a longer time horizon. 

Encourage revenue collaboration

How is your company collaborating to drive revenue? 

At many companies, the board doesn’t have line of sight to revenue-driving activities. They simply see rolled up metrics. 

This leaves them: 

• Unaware of team-level processes. 
• Unable to assess collaboration dynamics. 
• Unequipped to encourage deeper connections. 

To address this information gap, reach for more details on the collaboration efforts of your revenue teams. Then, take proactive steps to boost engagement. 

Enforce revenue governance

What is your company’s revenue backstop? 

In a tighter market, Clari’s Andy Byrne is seeing more focus around governance. “Boards are trying to control the outcomes, the behaviors, the accountability. More discipline. In this environment, more rigor around how they’re running revenue.”

The ultimate goal: Move from revenue leak to “full revenue precision.” 

To build predictability into your business cycles, establish a clear set of revenue governance principles and ensure team members adhere to them. 

Make data-backed decisions

Art versus science. 

For most of sales history, revenue leaders didn’t have access to reliable data sources. Even as technology exploded, issues with system compatibility and data scrubbing left many leaders to rely on their gut. 

In today’s market, revenue teams have no more excuses. 

Data is readily available and companies are investing in systems across every level. This enables revenue teams to be scientific. To leverage advanced tools, like Machine Learning, to improve their forecasting and decision making. 

For the most important aspect of any business, this is a game changer.

Optimize your board meetings

The company board is the brain trust of your organization. 

And yet, many board meetings don’t take full advantage of the available expertise. This is a missed opportunity to address critical business issues and act swiftly. 

Andy Byrne, CEO at Clari, shares three tactics to optimize board meetings: 

1. No surprises. Set board meetings up for strategic dialogue. This means giving board members time to review, prepare, and come ready to discuss. 
2. Two topics per meeting max. To keep decision-making focused, limit the number of topics that can be discussed at any given meeting. This leads to increased focus and targeted outcomes. 
3. Counter points. Lastly, ask board members to provide counter points for any decision. By viewing decisions through a worst-case lens, the board is better equipped to take big, bold action. 

Get everyone on the same page

The best teams work as one. 

In business, this requires every executive and department head to have a clear picture of their responsibility and impact, as well as the direction of the company. 

So for example, Alex uses a pre-board meeting ritual to bring his team together. This gives him an opportunity to connect with his department heads and organize the discussion. It also ensures each member is aligned on what the team is bringing forward. 

Andy uses a similar tactic. He asks department heads to craft an essay in advance of the board meeting. Their essay serves as a calibration point for the team, as well as a chance to share mission-critical information with the board. 

Harness the “superpower” of your board

Board meetings are great. 

But what’s happening in between? 

Alex and Andy use the term “superpower” to describe the unique skill sets that make up a company’s board. From finance experts to seasoned operators, a well-constructed board can be a tremendous asset. 

The key: Pair a consistent cadence with an always on approach. 

Make sure there’s connective tissue and a continuous dialogue with the board so you can leverage their superpowers at the right moment. 

Alex leans into his board to tackle the pivotal work of customer acquisition. From defining a crystal clear Ideal Customer Profile (ICP) to balancing net new business with existing business, Alex reaches for advice from board members who can offer perspective. 

Andy navigates the complexities of M&A with his board members. From the acquisition stage, working to vet prospective companies, through to the all-important integration, Andy grabs insights from those who have been there before. 

Profitability + Revenue

The market is changing. 

Growth is no longer the only metric on the block. For companies to thrive in this down cycle, CEOs need to establish a balanced focus and well-oiled processes. 

The roadmap:

• Lean into the Rule of 40
• Reach for full revenue precision
• Lead with data-backed decisions
• Get the most out of your board

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Ready to master your revenue process? Take the revenue Leak assessment to benchmark your current opportunity and start driving results today.