How boards should deal with macroeconomic uncertainty

The Aviva Labs advisory board member on how a board can best help its company deal with macroeconomic uncertainty.

Reprinted from Private Company Director magazine

Question from PDC Magazine: How do you think a board can best help its company deal with our current landscape of macroeconomic uncertainty?

Answer: Jump to the Other Side of the Income Statement

Is the board stuck on the expense side of the income statement — costs, risks, tariffs, technology, cybersecurity and supply chain?

They are important, yes. Yet nothing alleviates concerns about macroeconomic uncertainty more than a repeated blast of sales or fee revenue hitting your top line.

More customers, more often, paying more — that’s the cure.

Ask “What does your company offer — or what could they offer — that people will pay ridiculous money for? For an insurance company that struggled to sell accident insurance, it turned out to be telehealth sports psychology coaching for kids to get the competitive edge (with accident insurance included). Patented. No competition.

As board directors, we don’t build products — but we do guide strategy. It’s our job to ensure the CEO has a mandate, a team and resources to pursue breakthrough and, yes, ridiculously profitable revenue opportunities.

Private equity gets this, through economic highs and lows. Initially, they strip out costs and risks. But to exit and cash in they bounce to the other side of the income statement for “value creation.” That’s when people pay them ridiculous amounts of money to invest. Wash, rinse, repeat.

What are your fellow directors’ core skills? Are your committees centering on audit, governance and compensation? Where do you prioritize value creation, revenue generation and product development? The National Association of Corporate Directors reported fewer than 12% of Fortune 500 boards have committees for the latter, and almost all of them outperformed the Nasdaq composite, S&P 500, and New York Stock Exchange composite.

Prospects don’t pay for words like AI, tech, digital transformation, SaaS or strategy, but rather what those words do, which they can’t live without. Let’s help our CEOs shift focus from words and expenses to the “income” part of the income statement for best-in-the-world products (not more features), value creators, and ridiculous, customer-centric revenue growth.