CFOs are currently facing a challenging economic environment that is hindering their organizations’ ability to meet corporate performance expectations. These difficult conditions include tepid demand growth, higher costs, and limited access to capital. Gartner refers to this combination of challenges as the “deadweight” economy.
The deadweight economy poses several emerging challenges for CFOs in driving profitable growth. These challenges include zero-sum growth, waning pricing power, expensive productivity stagnation, the erosion of institutional knowledge, and a squeeze on bank lending. CFOs must address these challenges to maintain corporate performance.
To overcome these constraints, CFOs can implement three strategies. First, they should focus spending, resources, and efforts on points of differentiation within their organizations. This means prioritizing investments in areas that create unique capabilities and set their organization apart from competitors. Second, CFOs should adopt a capital activist posture to grow market share and secure funding. This mindset involves making capital allocation decisions that prioritize the organization’s strategic goals. Finally, CFOs should drive digital cohesion to realize productivity gains. This involves assessing the interdependencies between digital initiatives and making informed decisions based on that knowledge.
While navigating the deadweight economy may be challenging, organizations that can successfully address these challenges will improve their performance and gain sustained competitive advantages. CFOs can benchmark their approach and learn best practices from Gartner’s expertise in managing these priorities.
Gartner will provide additional insights on addressing economic headwinds at the CFO & Finance Executive Conferences 2023 in London. These conferences will focus on addressing slowing growth, high inflation, talent scarcity, and supply constraints that organizations are currently facing.
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