What Are You Waiting For?
by Matt, on 12 May 2020
Our understanding of the COVID-19 pandemic and its impacts has been growing and changing by the day. We know a lot more today than we did when the crisis began coming into focus in February and March.
Depending on what impacts your life most greatly, you might feel as though there’s an end in sight. At a macro level, however, I’d argue we still have as many unanswered questions as we do answers. An end is still far from in sight.
This challenges one of our basic responses to a crisis: waiting for it to pass. We’re very good at hunkering-down – a phrase that our neighbors in Houston will associate with hurricanes barreling across the Gulf of Mexico. Even if the aftermath of a storm impacts the community for many months, we ride it out and then we regroup and support each other as we work to restore normality.
But what happens when the storm isn’t a short-lived event? How do we respond when the impact continues to grow, week after week, and there isn’t an obvious point at which to say, “it’s over,” and begin the clean-up?
In this edition of SPT, we consider the merits and pitfalls of trying to ride out the present crisis and how entrepreneurs and early-stage businesses might best respond.
If you’re going through hell, keep going
That was Churchill, one of history’s most inspiring leaders. When faced by a crisis, we have two choices: to persevere or to quit.
If your business model is no longer valid or you’ve run out of money and are unable to raise more, going out of business might be inevitable. For everyone else, perseverance and that cliched characteristic, grit, will be required in large measure.
But what does “keep going” mean?
When the time horizon is a matter of days or weeks, we’re inclined to dial-back our activities, minimize expenditures, defer projects and investments, and wait for things to “get back to normal”. We lose time, we lose momentum, and we might even lose some team members, but we are willing to make those sacrifices.
When the crisis drags on, we risk losing a lot of time, all of our momentum, and – critically – running out of cash.
We risk looking back a few months later, wishing we had acted more positively instead of hunkering down. We can’t cut our way to growth.
When a crisis threatens everything that’s familiar – work, social, health, general – we feel fragile and vulnerable. We suffer emotional overload. Our reflex is either to find a safe place and go into the fetal position or to find something, anything to do, irrespective of whether it really makes sense.
INVEST TIME IN THINGS THAT ARE LIKELY TO MATTER
I believe a better alternative is to channel our energy and time into things that are likely to matter.
We may not have a clear understanding of what the “new normal” is going to look like, but we can ask questions and challenge our assumptions. We can look for opportunities to reposition our business for greater resiliency and future success.
MIT professor and prolific author on leadership, Hal Gregersen, recommends that we stop, breathe, and think. Then, spend some time brainstorming only questions about our situation. No preamble, reasoning, or answers. It’s a technique he applies to help leaders at all levels get moving when they become stuck.
Asking questions without analyzing or evaluating gives us a chance to shift into a more positive state of mind. Research by Gregersen and others has shown that our chances of finding a solution or moving positively out of a difficult situation is significantly greater when we’re feeling positive rather than negative.
For early-stage and growth-stage ventures, the questions will typically fall into a few thematic buckets:
- Am I still committed to the purpose that underlies my business? If not, has a new purpose has emerged for me as a result of the crisis? Can I pivot my existing venture to pursue that purpose, or should I step back and reformulate?
- Is the vision we have articulated for the business still relevant, motivating, and realistic? If not, time spent recalibrating, reformulating, and recommunicating the vision will help you and your team move forward.
- Has the customer need that our product or service addresses become more or less acute as a result of the crisis? If more, how can you double-down on the opportunity and drive increased customer traction? If less, is the change likely to be transient or persistent? If the change is likely to persist, can you adapt your offering to address a different need or do you need to rethink your entire business model?
- How has our ideal customer been affected? What impact is the crisis having on their buyer’s journey? How have their needs and wants changed? Are they spending time in the same places and on the same media channels, or will you need to meet them in new places – physical or virtual? How does this affect your marketing and sales-enablement activities?
- Are the key assumptions underlying our business model, strategy, and near-term tactical choices still valid? If you don’t know, how might you find out? Time spent reconnecting with your audience and customers will provide critical information on which to base your go-forward plan. It’s a lot easier to test ideas with customers while they are at home with extra time on their hands!
- Which of our resources are going to be most critical going forward? It’s important to preserve resources that will be useful in the future, not necessarily those that have proven useful in the past. You might choose to let go of original team members in favor of newer hires with more relevant skills, or relinquish equipment that was leased or purchased “back in the day” to preserve capital for retooling for the next phase.
- Where can I access information and expertise that will help me restructure and refocus my business? We all need help and guidance, even if those advisors are themselves relying on experience gained before the crisis began. In many cases, finding someone who can listen and ask informed questions is just as helpful as finding someone with specific answers or knowledge.
- Do we have enough cash to survive? If your runway (remaining cash divided by monthly burn rate) is less than six months, the answer is probably not. Although fundraising is absolutely still possible, it’s likely to take longer than before and the depth of questioning by investors is likely to be greater. Hint: if you’ve developed solid answers to the preceding seven questions, you’re likely to be in a strong position.
ACCELERATED CHANGE OR CHANGES EVERYTHING?
It’s tempting to think that a crisis “changes everything”. In reality, many of the changes we’re seeing at a societal and national level were happening before the crisis began. Some of those changes have been dramatically accelerated, and that acceleration may be permanent.
Forcing almost the entire population to stay at home has fueled a huge substitution of online solutions for in-person activities. A significant – and perhaps surprising – number of people have embraced remote working. This challenges the default assumption that white collar jobs take place in a centralized office.
This has enormous potential ripple effects, some of them highly beneficial (think reduced commuting and environmental impact) and others that will create great upheaval (think empty office buildings and shopping malls).
As an early-stage or growth-stage company, the accelerated trend toward online product research, evaluation, and purchasing is highly significant.
As we’ve written elsewhere, we believe at least part of that shift will be permanent, moving potential customers away from analog channels – such as trade shows or in-person presentations – to spending more of their time online.
Research has shown that new habits take 60+ days to develop. It’s usually cited because people give up too soon and return to old behaviors but, in this case, people are already well on the way to developing new, sustainable habits in the ways they work, shop, and play.
Businesses of all sizes should be reviewing and accelerating their digital strategies, building and engaging their online audience, and repurposing marketing budgets from in-person activities to digital investments.
Other important, accelerating trends will include the reconfiguration of education, the localization of manufacturing closer to the point of consumption, and the need for transparent, trustworthy sources of information.
Think about the macro trends that influence your market, your customers, and their behavior. For inspiration, we recommend flipping through the Tech Trends Report available free from the Future Today Institute. We also like Mary Meeker's Internet Trends Report (this link is to her coronavirus trend report released in April).
Then, build your business with those trends in mind.
Learning curves are something with which we’re all quite familiar. We start out from a position of naïveté – lacking awareness, knowledge, and skills. Over time, we learn and grow, practicing and developing our skills. We pass an inflection point and our progress accelerates, zooming up the steep section of the traditional “S” curve until we approach mastery and our learning flattens off.
Unfortunately, when a crisis comes along and shakes up the world, our levels of knowledge and proficiency suddenly go down in the context of our new reality.
Going backwards down the learning curve is uncomfortable! What we assumed would be a one-way journey turns out to be painfully reversible.
Leaders must practice humility and admit what they don’t know. Leaders who are afraid to change and re-learn get in the way of progress.
Assessing which of our skills and knowledge are portable to the post-crisis situation is a critical step. Then, we can choose whether to invest our efforts in reclimbing the learning curves that we’ve worked our way up before or in transitioning to new learning curves that will equip us with more relevant skills for the future.
BANK STRATEGIC VALUE IN LIEU OF REVENUE
While many of us will experience a reduction in new and ongoing business while our customers are affected by crisis response measures, we can still generate value.
By proactively directing your efforts to reviewing and tuning your business fundamentals and strategies, you can emerge from the crisis period as a stronger, more resilient company that is better aligned with new realities.
Is there a danger that such an analysis will be premature and require re-work in a few months’ time once we have an even clearer picture? Yes, of course. In reality, very little is constant.
Businesses should be revisiting these key questions on a regular basis even when skies are blue and there’s no crisis in sight.
Making productive use of mid-crisis time, rather than burying our heads and waiting for it to pass, is simply a trigger for us to perform a thorough review now.
Importantly, we must find ways of capturing – or at least, recognizing and acknowledging – the value this creates for our business.
It’s not easy to quantify resiliency. It’s an invisible characteristic that only gets tested and measured when a crisis hits, and a lack of resiliency is exposed.
The fragility that is now apparent in industrial, pharmaceutical, and food supply chains was present before COVID-19 came to visit, but we didn’t recognize or acknowledge them (although I suspect it will emerge in the fullness of time that alarm bells were being rung but getting silenced in the relentless pursuit of profits).
It’s also not easy to quantify the solidity and future value of your strategy. Modeling future scenarios – for example, by examining how intersections of the accelerating trends we discussed earlier might impact your success – is a great way to think “future-back” and proactively stress-test your approach.
Whatever approach you take to counting the strategic beans, the human benefit of doing something rather than nothing cannot be understated. You and your team should feel good about making productive use of your time while others are hiding in the basement.
You might uncover something fundamentally valuable that kickstarts your business and sets you up for disproportionate success as the world returns to work.
So, what are you waiting for?