“Anyone can lead when the plan is working. The best lead when the plan falls apart.” - Robin Sharma
The COVID-19 pandemic has brought on a global crisis triggering governments across the world to undertake a variety of measures. Ensuring the safety of lives through social distancing measures such as lockdowns has set in motion a crisis of another sort - a long drawn economic one. In the bid to save lives, businesses and livelihoods had to be put up at stake. In such times, business leaders are facing a tall task of navigating their organizations towards survival and hopefully growth.
Some advice to tide over exigencies has always been available for founders. In his seminal work, The Hard Things about Hard Things, Ben Horowitz distinguishes a ‘peacetime CEO’ from a ‘wartime’ one, laying down some guidelines for both. However, if you were to speak to any founder now - you would find them vehemently asserting that nothing could have prepared them for something of the magnitude of COVID-19. Unequivocally, the stress of this pandemic for small businesses and startups is intense, to say the least. The slew of measures announced by the Government of India are aimed at giving a lifeline to micro, small and medium-sized enterprises.
At times like these, what does it take to be a founder? What does it mean to be a leader at the helm of affairs of a startup? What does it mean to stare into darkness yet light up hope and passion? How can you remain honest yet inspire optimism? COVID-19 is brutally testing the leadership mettle of founders. Building on some research and close engagement with founders fighting the battle at the forefront, we identify three behaviors of exemplary founder leaders, layered one over the other.
Recognize and Question Assumptions
Our assumptions, simply put, are the rulebooks by which we make sense of the world. As an extension, founders also set up and scale businesses on a set of assumptions. However, a crisis such as the current one rejigs the world order. Changes at the macro, meso, and micro levels are set in motion. Any attempts to understand the situation and to draw conclusions based on pre-existing notions or assumptions is futile at best and destructive at worst.
Great business leaders, in the face of a crisis, are known to draw upon their hidden sources of courage and recognize their assumptions. Exemplary ones question those assumptions and adopt a novel approach that is more suited to the context and the problem at hand.
Around early March 2020, Saisekar Krish, the founder of nanoPix - an image and video processing startup, foresaw a slowdown in business but did not anticipate a lockdown. While unprepared, the founder swung into action. Taking a cue from unprecedented measures like a nationwide lockdown, along with his team, Saisekar undertook questioning everything about his approach to business and the customer. The result - a short-term strategy of using the lockdown period to deepen the relationship with customers.
We enlist a few common assumptions and beliefs that founders tend to foster during a crisis.
- Business survival calls for saving on talent cost first: Talent cost is often the biggest cost head in any startup. Thus, when cost-cutting becomes an imperative, it is only natural to begin by starting with the biggest cost head. Great leaders often cut costs yet let employees go only as a last resort. They often question the binary thinking about saving on talent cost - is the decision about employees a binary one (retaining or relieving the employee)? Can there be a middle path?
- The focus from product design will have to be shifted: During a crisis, the first response mechanism often entails focusing on a survival strategy and cutting experimental costs. However, being wedded to the existing/original product idea could be potentially detrimental. With the markets undergoing a change, how useful is the current/original product? How can product development be made leaner and faster?
- People issues will have to wait: A crisis takes a toll on everyone. It often leaves employees feeling insecure, stressed, and, sometimes, even depressed. A startup’s survival is contingent on both its business and its talent. Assuming that employees will be ‘fine’ while the founder only fights hard to keep the business alive, it could provide fertile grounds for grievances to fester. Exemplary founders often claim that a startup is nothing except its people. Then, can founder leaders really risk postponing paying attention to the team?
- Extensive planning is not possible in a crisis: It is true that crises derail many well-laid plans. It is also true that crises require a novel form of extensive thinking and ‘planning’. In the face of a crisis, founders must think through multiple scenarios for the immediate, medium and long term, while equipping themselves to respond to any scenario. The big question for founders to consider - is the startup equipped to respond to any foreseen or unforeseen scenario?
- Customers have nowhere else to go: In a crisis, particularly like the current one with a prolonged lockdown, it is easy to assume that customers have no other options for service or product. Is this really true? Would consumer behaviors and thus the demand remain the same? Expectations of a shift towards a ‘low touch economy’ are likely to trigger changes in market behaviors. Who are the target customers, in the rejigged world order? What is the value that this customer is seeking?
Recognizing assumptions is an onerous task. But, who said being a founder is easy. In pursuit of glory, we urge the founders to dig into their minds and tease out their fundamental assumptions. For startups, there wouldn’t be another opportunity, such as this, to reinvent and relaunch better and stronger.
Make Decisions and Accept the Good and Ugly Outcomes
In the normal times (or peace times, according to Horowitz), making decisions is somewhat easier especially because the outcomes often follow an expected path or there is scope to course correct. On the contrary, in a crisis situation, founders have a smaller window for a response, every decision is critical, and the predictability of outcomes is negligible.
- Make decisions: Freezing in the face of a shock is an innate response built in our brains; particularly under the fear of unpalatable outcomes, founders may struggle with indecision. While a decision could have multiple outcomes with their associated chances of success/failure, indecision would certainly imply failure on the business front in addition to the plummeting of the team’s morale. We agree that in a crisis founders may not have the time and resources to gather relevant data for decision making. However, research affirms that leadership is also evidenced by acknowledging ‘not-knowing’ everything and seeking help where needed. In a nutshell, we urge founders to rise above the fear and not avoid making decisions.
- Making decisions calmly: Shocks from a crisis such as the present could kick up the sympathetic nervous system and ‘automatic’ responses; much has been written about the Amygdala Hijack under a threat. While rational decision making, that requires gathering all the pertinent information to arrive at a decision is often a dream for founders, even in normal times, the need for founders to get into a well-deliberated, rational approach is even higher during a crisis. Nobel Laureate Daniel Kahneman calls this System 2 thinking.
- Decide-Implement-Review-Repeat: According to a recent study, leaders in a crisis need to prioritize swift decisions over precise ones. The System 2 thinking, in the time of a crisis that threatens the survival of a business, also needs to be swift. It is imperative for leaders to continually monitor the outcomes of their decisions and make adjustments in the decision/approach/assumptions, as necessary.
With the first hints of a lockdown, Prateek Sharma and Siddharth Jain, the Co-founders at Heelium, a sportswear startup - realized that their business would come to a complete standstill. They acted swiftly and before a formal lockdown was announced, they prepared the team members for what an incoming crisis could mean for the startup. They shifted in-hand inventory back to the warehouse and reviewed their existing product line, identifying products that could be sold as essential goods, and experimenting with designing new products that would sell during and immediately following the lockdown.
Communicate, Communicate, Communicate, and then Some More
Building on the foundations of adjusting your assumptions and sharpening your decision making, a robust response to a crisis includes timely, transparent, and meaningful communication with employees and stakeholders. While a plethora of technology tools ease the process of connecting with people, founders need to craft their messages and communication strategies well. A few good practices that founders can consider while communicating during a crisis:
- Be honest: There is no other way for leaders to communicate, except with honesty. If you are doing well, say that; if you aren’t, say that. Research tells us that employees who think their leaders are being honest in their communications are more likely to remain engaged and loyal in the long term. We know of enough examples where founders shared the truths about the startups’ deep financial distress with the employees. In almost all cases, we have found employees giving up salaries to help the startup and the founder tide over the crisis.
- Have a sense of purpose: Clearly articulating the organizational vision to the employees is one of the fundamental tasks of a leader. During a crisis, a lack of direction from a leader can leave employees confused. While a crisis is undesirable, it also presents an opportunity to communicate a strong sense of purpose that unites employees and stakeholders towards a common goal.
- Commit to openness and transparency: A culture of openness and transparency is a key aspect in driving creativity, collaboration and teamwork in startups. With people working remotely, the mechanisms of building an open and transparent culture may change. Founders would need to continually share their decisions (easy and difficult), outcomes (good, bad and ugly) and other latest developments, and nurture channels of communication, therefore building a culture of trust within the startup.
- Be compassionate: The COVID-19 crisis warrants a more humanitarian response on various fronts. For leaders, it is even more important to communicate with empathy and compassion as it is natural for employees to feel anxious not only about their health during a pandemic but also safeguarding one’s job during the economic slowdown.
The founders of SuperZop - a B2B2C grocery supply chain using deep tech - Prithwi Singh, Raghu Allada, and Darshan Krishnamurthy, intensively communicated with their entire team to align them on the need to be operational in times like these and what was expected out of SuperZop as an organization. They called each of the 50-60 team members who were needed to work on the field; understanding their travel requirements, risks to family members, and willingness to work amidst the lockdown. The co-founders explained to each employee the reasons to stay operational as a company, the associated risks, and the safety procedures in place before procuring employee consent to come to work.
Being a founder is a full-time job. Being a founder in a crisis are 10 full-time jobs. Recognizing and questioning assumptions, undertaking well-considered decisions swiftly and reviewing them continually, and communicating with the team and stakeholders with openness, transparency and with a sense of purpose constitute a strong leadership edge. We are hoping that this layered lesson on leadership will enable founders to rise above these difficult waters of COVID-19 and emerge stronger.
The path is not easy. Never is. But, there is a possibility of glory and certainty of enormous stashes of learning at the end of it.