Leading Your Startup Through C.R.I.S.I.S
This is an interesting time in our history as we are facing a global health crisis. The COVID-19 pandemic has greatly impacted our way of living, the startups we nurture and depend on, and the outlook of the global economy.
In this episode, Roland explains his framework on how to lead your startup through a C.R.I.S.I.S. which will help you navigate your startup during these uncertain times.
Hello startup founders. These are challenging times. Many of you have contacted
me worried. Worried about the very survival of their startup. Worried that
they’re doing the right thing by their employees, their customers, their
suppliers. Worried if they’re even focused on the rides, way off, bringing their
startup through this crisis.
So I thought I had to collect a few tips and levers that help everyone around
the world leading this startup, do better in leading their startup through a
crisis. The acronym I found for it is, that it’s very simple. It’s C-R-I-S-I-S.
So I see these six buckets (1) communicate, (2) reassess reality, (3) Instruct
your people to sustain the business, (4) inspire action, and then (5) spot
Let’s go through this one by one. Now I will be doing detailed videos for each
of them in the coming days. So for now, this is just a key overview. Please stay
posted for any more detailed videos and tools that we’d like to add to this.
First of all, this is very counterintuitive to many founders.
Why communicate if you don’t know what to say yet? Well, it’s exactly because
nobody knows what to say. What to think in those days, people have a craving to
see their leaders, and even if you don’t quite know what to say, connecting with
people, sending out a daily video, even if it’s just 90 seconds, is so crucial
for people to see that their leaders are as worried as they are, that they’re on
top of things.
Be visible every day.
Answer some questions where you can, or if you cannot, just be honest and say
why you cannot. Be clear about what you know and what you don’t know and set up
a crisis team so it is not just you alone trying to solve everything, but did
you have people that are all on top of the questions that you will face and the
answers that you must give.
Now, once you have that basic infrastructure of communication and a crisis team
in place where you really want to start reassessing reality. My recommendation
is to start with the customer value assumption. Are you still providing the same
customer value to your customers? Still have to earn the same amount of money to
keep your business model flowing.
That results in cashflow projections in these challenging times, I recommend a
minus 25%, a minus 50%, even at minus 75% scenario just to have all bases
covered. What are the truths that you have to give up on in some of these
scenarios? So what parts of reality have you really reassessed? And then to what
trigger points does this lead?
So can you then derive from the news? Okay, if this happens, this means, well,
he used to have to switch to that particular scenario.
Give people clear instructions
So while you reassess, it’s important to also give people clear instructions.
This is not a time when people look for big consensus-seeking exercises. They
just make them feel insecure.
They want to get instructions and want to get on with it. So try to do the
immediate no-brainer actions, especially those that help to get the company out
of the danger zone and try to give everyone something to do, even if it’s not a
big thing yet, and a big project that’s not ready yet. Make sure that everyone
has something to do, something to contribute so that they can at least feel
secure and safe.
Sustain the business
This is probably the one I get the most questions about. Do you need a layoff,
for example? Well, my advice is your cash flow projection will tell you, and I
also recommend that you only bite the bullet when you have to. There are many,
many different alternative actions that can help you save substantial costs
where you can avoid a layoff, and if you can afford it, it’s often better,
especially in a startup situation where a layoff may actually destroy a lot of
the credibility you have with the employee base.
If you do have to do a layoff, then target one time and done. So cuts a little
bit deeper than what you really need. Do it now so that you don’t need another
one a few months later.
Preserve the core of your business model, your core competence, your passion,
and your economic engine, and then also make sure to differentiate by function,
which functions are more crucial for short-term survival versus others. And then
also by levels. So make sure that proportionally higher earners, the
higher-level hierarchy gets affected more than the front line.
Now after that’s done and you’ve gone through the difficult phase, it’s time to
start inspiring again. And my advice is really to start small, take care of
survivors, but also take care of victims, have them access your network, and
recommend them to people.
And while the overall economy, being down may make it very hard for people to
find a job right away. If we do get that V curve after the virus spread is
starting to subside, it may actually be a connection you make today. It gets
people another job in three months’ time or six months time.
So offer some products for free, especially to those in need, such as schools
that have suddenly started to work remotely and highlight hope and heroes. Hope
in the sense of snippets of good news that you see, especially if they’re
fact-checked and heroes, those people within your company that do the day-to-day
groundwork and keep doing it.
Those are the best to highlight. So stay small. stay inspirational. Finally,
refocus on the purpose of the company. What was the real reason you started this
business in the first place before you started thinking of your next round and,
the profits you would be making at some point in time? Refocus on what were you
actually trying to change in the world. And can you still do that with fewer
people or a more focused team?
Once you have that inspiration going again, I think it’s time finally to start
spotting new opportunities. So there may be opportunities in new kinds of
business. In certain areas that have become less crowded in new segments that
have become available in the market.
So start pitching your own team before you start going outside. Use it to
sharpen your unique basis, small. So rather than expanding it, stay very focused
because you have a more focused team now and benefit from a buyer’s market. So.
It is now a market where suddenly a lot of people are offering their services
A lot of people with real estate to offer, other big assets are pretty desperate
to get you to buy into it. So you can. Benefits from a much more attractive
And finally, there may be opportunities for consolidation. So not every
competitor will be on top of things as much as you are, and therefore, some may
be looking to be acquired. So many, you can go out of business and there’s
market share to be one. So spotting opportunities.
In the last phase of this crisis model, I do recommend you wait with that until
you’ve gone through all the other phases. So this is primarily a linear model to
go through but of course, all the time you want to keep communicating with your
team, be physical every day.
Answer questions, be clear about what you know and don’t know, and keep that
crisis team in charge.
So I hope this helps. We will be publishing somewhere detailed Videos on each of
these points in the coming days, but in the meanwhile, please reach out to me if
you have any questions. I offer some free coaching to startup founders who every
day are in need of somebody to talk to. So just reach out and book a slot with
me and I hope to hear from you soon.
Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.