WASHINGTON, DC – MARCH 11: (L-R) Rep. Stephen Lynch (D-MA) and Dr. Anthony Fauci, Director, National … [+]
“It’s not so much a question of if this will happen anymore, but rather more a question of exactly when this will happen and how many people in this country will have severe illness.” So warned Dr. Nancy Messonnier, of the Centers for Disease Control, about the looming coronavirus crisis on February 25.
Now, less than three weeks later, it’s past time—for all of us—to go into crisis mode. That includes leaders of startups. In fact, it’s particularly true for startup leaders, whose companies likely lack the resources that established enterprises can mobilize to see them through the storm. Startup leaders who take a wait and see attitude do so at their peril—and the peril of their employees, everyone’s families and the business itself.
That doesn’t mean panic, but it does mean prepare. Here’s how:
Abandon budget accountability and business-as-usual delusions. No forecast has any value or validity—we are in uncharted territory. Any attempt to hold individuals or teams accountable to existing budgets and project schedules will call the legitimacy of your leadership into question.
Think survival, not strategy. This is not the time for strategizing or doing long-term planning, which require the ability to forecast the future with some degree of confidence. Strategy will be dictated by whatever is necessary to keep the company afloat until the crisis abates.
Keep your eyes on the prize. Though your ability to strategize will be severely limited, that doesn’t mean you can’t aim at some general goals beyond survival. In my time as a startup leader, I experienced three deeply disruptive crises: the bursting of the dot.com bubble, the shock of 9-11 and the global financial meltdown following the collapse of Lehman Brothers. In all three cases, the startups that came through the crisis with the most intact infrastructure and healthy bank balances went on to dominate their markets. (Amazon’s post dot-com dominance provides a prime example).
Prepare for a two-front war. You’re facing two crises at once: the crisis of widespread business disruption that threatens your enterprise and the health crisis that threatens the well-being of you and your employees. Double existential crises are extremely rare. You must look out for the health of the business and the health of your people.
Put people first. The health of your people takes precedence over the health of the business. Nobody signed up to put their life—or the lives of their loved ones—on the line for the company.
Chair two parallel crisis teams. One team should work to keep everyone healthy, dealing with who should work remotely and how, monitoring for signs of contagion and taking steps to control it. The other team would be responsible for positioning resources to keep taking orders and delivering resources to continuing customers and then determining what resources should be furloughed. Having the leader chair both teams keeps them aligned.
Meet daily. The crisis teams need to meet with greater frequency than the frequency with which conditions are changing. In today’s situation that means anything less than daily meetings will make the ship seem rudderless. Make the meetings succinct and sharply focused on how to respond to newly accumulating information.
Practice maximum flexibility. In what is likely to be a very fluid situation, with conditions changing daily, you need to position company resources to be responsive to all developments so that you can quickly determine appropriate next steps. Personnel in each function of the company should huddle (virtually or by keeping an arms-length distance) at least once each day to share critical new inputs and to adjust their processes accordingly. For example, which suppliers can no longer be counted on and how can these supply uncertainties be mitigated? Or, where is revenue being impacted the most and how to shift—or furlough if necessary—resources to maintain positive cash flow?
Communicate candidly, comprehensively and widely. Otherwise well-intentioned startup leaders in crisis situations are often tripped up by their failure to communicate. Every stakeholder, whether an employee about to be furloughed or a supplier in trouble, needs to understand what’s being done to preserve the company and how efforts to do so may impact them. The leader cannot do all this communicating alone and lead two crisis teams. One or more people responsible for communication should sit in with both teams. You’ll know that they are succeeding when all stakeholders can describe how and why the company is responding as it is.
Above all, be honest. No hedging, sugar-coating, making false promises or withholding information. All stakeholders must be able to trust that you are telling them the whole truth and nothing but the truth. Widespread crises always threaten to fray social bonds and precipitate a destructive everyone-for-themselves response. (Think of the hoarding of surgical masks that is already occurring.) Trust is the most important—and fragile—of those social bonds.
It’s in times like these that great leaders make their greatest impact. And in so doing create commitment and trust among their followers. When is your next crisis meeting?