CEOs and CFOs are under increased investor and owner pressure to show profitable growth. Forty-five percent of CEOs rank growth among their top 3 strategic priorities, down from 53% in 2022, while 62% of CFOs put it in their top 3, up from 59% in 2022. 

“Balancing future growth investments and CEO expectations while still tightly managing cost and cash flow is the tightrope CFOs must walk in the back half of 2023,” says Horvat. As such, it’s an imperative to encourage profitable growth through capital responsiveness, which requires the ability to:

• Ruthlessly prioritize projects that align with strategic business priorities.

• Make significant, rather than incremental, changes to where capital is allocated.

• Quickly shift capital away from low value to high uses.

Few companies consistently do any of these three things, but those who do see real benefits, earning, on average, 2.5 points more in economic value added than their peers.