Master 4 financial strategies to outperform peers

Over the past decade, the pursuit of corporate growth has faced unprecedented challenges from pandemic shocks, to supply chain disruptions, inflationary pressures, and geopolitical instability.

Traditional business models that focus on scale and market share expansion have proven increasingly tenuous. Today’s CFOs and executive leaders stand at a critical inflection point: adapt to a rapidly evolving economic landscape or risk stagnation.

Gartner analysis shows there is a group of around 100 companies that have already made this transition. Spanning most industries, but most notably in the consumer discretionary, industrials, and information technology sectors, they excel in revenue growth, profit margin expansion, and return on invested capital (ROIC).

Over the last decade, these efficient growth companies have delivered a 51 per cent premium over industry and revenue peers in total shareholder return (TSR). In contrast, their control peers and other non-efficient and non-control companies delivered mediocre to no shareholder value, at -2.76 per cent below the industry average.

To differentiate themselves, top growth companies align four interlocking financial strategies that drive company-wide performance. Rather than pursuing siloed, component-based approaches, they treat liquidity, cost structure, Selling, General, and Administrative (SG&A) expenses and debt as interconnected levers.

1. Cost-conscious liquidity management

Finance leaders manage their cash conversion cycle (CCC) strategically rather than responding tactically to events. This can often mean accelerating payments to critical suppliers during crisis moments (e.g., COVID 19 supply chain shocks) to ensure continuity or preferential terms. While this results in a longer CCC, it is a calculated trade-off that delivers structural cost advantages and supply assurance.

For example, a luxury sports car maker accelerated payments during the pandemic to protect its distribution network. By deploying cash strategically, the company safeguarded its distribution ecosystem and ensured operational resilience at a time when supply volatility was high.

2. Cost structure differentiation

By redesigning cost structures disproportionately toward differentiated capabilities, growth companies reduce the cost of goods sold (COGS) without compromising value. Structural transformations, such as divesting high-cost operations and consolidating manufacturing footprints, unlock scale efficiencies.

For instance, a global paints and coatings company streamlined its product offerings and divested non-core businesses, reallocating resources to high-value products and profitable growth. This enabled it to maximise volume from a smaller base of raw materials in a constrained supply environment.

Crucially, this strategy also included divesting non-core businesses, such as its overseas architectural business, a domestic aerosol business, and a thermoplastic road marking business, which did not align with the strategic focus on high-value products and profitable growth.

These actions were instrumental in reallocating resources away from complexity and toward differentiated capabilities that improved working capital and drove sustained cash flow.

3. Zero-based SG&A redesign

High performing firms look beyond incremental cost-cutting by reimagining SG&A operating models to drive structural efficiency and sustainable cost compression from the ground up. Through zero-based design, they achieve sustainable cost compression and structural efficiency.

A major human capital management solutions provider exemplifies this approach, optimising workforce layers and embedding technology-driven efficiencies, resulting in significant annual savings and enhanced client experience. Central to this transformation was a workforce optimisation program that streamlined management layers via a “spans and layers” exercise.

Combined with procurement initiatives, these efforts delivered approximately $150 million in annual run-rate savings in a year, demonstrating the potential of a shift from incremental cost-cutting to a structural redesign of SG&A.

4. Intentional debt deployment

Organisations achieving efficient expansion consistently maintain lower Total Debt-to-Equity ratios than non-efficient companies. This is because they tend to function with higher operating margins and predictable cash flows that enable them to self-finance a significant portion of strategic investments.

However, low leverage does not mean no leverage. Efficient growth firms treat debt as a strategic lever that can be used to pursue growth investments that are beyond the pace of organic cash generation.

For example, a multinational beverage company was pursuing a series of growth initiatives relating to supply chain optimisation and digital platforms. Despite strong cash generation, it intentionally increased debt by over a billion US dollars, primarily through a senior bond issuance, which was then deployed to maintain financial discipline while continuing to fund these growth initiatives.

Building the foundations for success

In today’s volatile operating environment, efficiency is no longer a tactical exercise but a leadership mandate. The next phase for CFOs and executive teams is a cross functional effort to understand cost drivers across SG&A and COGS.

They must also identify structural changes that build resilience and deliver sustainable efficiencies.

FP&A teams should rigorously evaluate trade-offs between short-term liquidity needs and longer-term efficiency gains. Treasury should reassess debt levels and capital structures to redirect funding toward initiatives with durable returns.

Organisations that embed these strategies will be better positioned to navigate uncertainty and build foundations for efficient, sustainable growth in an increasingly unpredictable world.

Vaughan Archer is a senior director analyst in Gartner’s finance practice.