Last week we discussed the first variable of revenue generation – revenue strategy. In today’s blog we will now look at the second and third variables in the CEO’s Formula.
The CEO’s Formula:
Alignment (Revenue Strategy + Execution) x (Leverage x Structure)
Revenue Strategy+ Execution
Variable 2 – Execution:
Execution is what separates survival and success from frustration and failure. Great execution is a variable that leaders have control over. Leaders have control over how their teams engage, how many hours are worked, the level of training, who is hired and the words that are spoken.
As important as the ability to execute is remember that what is being executed should be spelled out in the revenue strategy so the combination of the first two variables looks like this:
(Revenue Strategy + Execution)
It is the combination that creates profitable results in the market. The better these two are done the greater the result. If one is strong the other gets stronger and if one is weak the other is weakened. That is why they are placed in the formula together and multiplied by the degree of alignment.
Alignment(Revenue Strategy + Execution)
Variable 3 – Alignment:
The alignment variable is always between 0 and 1 with 1 being perfect alignment. So if the revenue strategy is great and the execution is great and they are aligned with each other the result is the largest return possible for the revenue resources investment. Whatever the value the strategy offers plus the results from perfectly aligned execution defines a maximum return on investment. Anything less than perfect alignment decreases the overall return on invested resources accordingly.
When strategy and execution are not fully aligned then the alignment variable is less than 1 and when you multiple the alignment variable times the total possible from strategy and execution the actual return (topline and profit) is decreased by the same percent that alignment is less than 1.
Lack of alignment is one of the major causes for the Cost of Chaos, so focus on aligning revenue strategy and execution.
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