Business Survival
Business survival is the number one priority, as the world tangles with the unfolding COVID-19 pandemic and the associated human tragedies. About a year ago I wrote an article titled Entrepreneur Rule 1: Survive. It’s my most read blog post by some way and receives traffic both here on my website and on Medium and Thrive almost daily. I suspect that’s because it identifies with the turbulence that business people deal with more often than one would imagine. I’ve received a lot of emails from entrepreneurs identifying with my journey. The theme of the article is that the road in early-stage business is not straight and managers need to be adaptable. They need to survive first and foremost, even if that means radical changes in direction. The first rule is to survive.
One of my mentors said to me in January “expect chaos”. His reference at the time was because having grown our business rapidly in recent years, we were looking to continue to keep growing at a very strong rate. And of course, the power of compounding makes growth at the same rate even more challenging. He was encouraging me to examine all aspects of the organisation and environment and to act.
Two months later, chaos. Not the expected chaos, as COVID-19 was a blip on the edges of our consciousness at the time. But chaos all the same. The type of chaos that pushes business survival to the top of the agenda. The effect of the pandemic was seen in our small business in China and then our Italian business was hit hard. Watching the effect of the virus spread west towards our core UK market and our US market focused the mind. The good news is that trade in China has picked up again and the bad news is that the white water is now readying to crash on our home shores.
Rapid Collapse
Businesses in all sectors have very quickly been hit and the dominoes are falling one after another. Firstly airlines and the travel industry have been decimated. Then the lockdown has affected all retail businesses, with non-food and non-healthcare businesses shutting shop. Many for the last time I suspect. The knock-on effects are immediate and profound and ripple up the supply chain with retailers, online and traditional, cancelling orders. Shuttered restaurants not needing their fresh food supplies. Tenants not paying landlords.
As well as a health pandemic, this is an economic pandemic, as businesses lay off staff. These unfortunate staff no longer consume goods and that hurts businesses. Those lucky to retain jobs are spending more cautiously. Even the businesses that are still open find their revenue prospects heavily damaged. Governments and central banks across the world have moved quickly to support people and businesses and that’s encouraging. I find the press stories picking holes in the measures very negative. They have reacted quickly and with substance. Asking them to have covered off every factor and every constituency in days in perfect fashion is unreasonable.
Short Term, Then Long Term
As a business person, I’m planning for this to be a long-term issue, the effects will last not only months but years. I can imagine the macroeconomic damage will need addressing over a decade or more. I understand acutely that human tragedy is the most important concern now. But we also have to prioritise business survival. We have to look after our health and that of our families and staff, but we also have to remember our place in the economy and what jobs mean to our staff and what our business means to our investors. For after all the work of investors results in us being able to retire with a pension. It’s not all about the cliched evil capitalist image that can be lazily associated with the word ‘investor’.
But before thinking about the long term, the short term. A team coming together quickly to look at two areas: how can we preserve jobs across the business; and ensure we have enough cash to get through the year? A plan was developed quickly. What if revenues drop to X? Do we have enough cash? The answer was ‘yes’ – if we make these substantial adjustments to planned investment and overhead.
Then we went further and said ‘if we can survive X but the revenue drops to Y, then what?’ Another round of planning and yes, there’s a way through. Then even further, another hard pressure test. Is business survival possible? Again, yes, providing we make these moves.
That was our first couple of weeks work, can we get through this if X, Y and Z happen? Yes. At present, the business is in shape, but of course, there’s a wave of destruction heading our way. As our dear colleagues in our Milan office can attest.
The next statement sounds odd, but the next move was to get back to work. A plan gave us a focus and allowed us to organise. But we need to run at full speed for as long as possible, and it’s easy to be trapped into thinking the business survival planning phase is the business.
Communication, More Than Ever
With a plan in place, time to communicate. Staff need reassurance. The business needs all staff to participate in executing the plan. Good communication needs to be an hourly and daily activity at the moment. Reassure, execute. Reassure, execute. Try and keep the team bonded, try to keep morale up. We have around 80 people across a lot of functions now entering their third week working from home and it’s not easy. Confinement and lack of human proximity start to affect morale and effectiveness quite quickly, it’s very clear.
Practically a number of activities are in place, using Microsoft Teams. Everything from a company-wide presentation to all 147 staff in all countries, to small group meetings, both formal and informal. People are showing great initiative and we had a home workout session led by one of the team on Friday.
We are a vertically integrated business with a factory and supply chain. The operation is still working, although for three weeks we have had our own distancing strategy in place. Thirty-minute gaps between shifts and cleaning processes at changeover time. Manufacturing and fulfilment and logistics operations kept separate. And all the time having safety first and foremost in our mind. Staff monitored for symptoms and encouraged to stay at home if any doubt. A reassurance full pay will remain in place.
Communication has been external too. We have been speaking to investors, for example, to assure them the business is operational and to headline the contingency plans. I can empathise with a fund manager dealing with many companies and all of them affected by the crisis. It was important to us that we removed one issue from their minds.
I received several compliments from colleagues on our communication efforts. Also, a couple of comments that the wider team is coming together like never before. That’s all good. But it also tells me I have to work harder on the other side of this crisis. It shouldn’t take a global pandemic to kick up communication several notches, it needs to the way we do business every day. Not just in times where business survival is at the top of the agenda for leaders.
Plan, Refine, Plan, Refine
Two Fridays ago we agreed on our plan as a team and went home for the weekend. Virtually went home that is, as we were already in lockdown. Like many management teams, we went home, but the crisis kept accelerating over the weekend. By Monday changes were made to it, substantial changes, but still within existing scenarios already discussed. Bear in mind that the business still hasn’t been hit by a slowdown. My feeling was being a step ahead is better than being a step behind. For example, we were home working well before Government advice to do so.
On Monday afternoon we presented the situation to the whole business. What the effect on the organisation was and what we wanted people to do. As well as removing a lot of activity and the associated spend from the business, we also reallocated some staff. Our message was clear: reduce marketing spend that doesn’t deliver immediate return on investment, slash a lot of overheads and preserve all jobs.
We meet as an executive team daily to check alignment and ensure all actions are in place. Very importantly we look at the external and internal events of the last 24 hours. We need to plan and refine. And keep doing it. As an organisation, we are well set to do this, speed is always an advantage in a small company. Business survival depends on a good plan and the ability to adapt the plan as events shift the playing field.
Team At The Centre
There are upsides. Even as we prepare for the storm and help our Italian colleagues through their current storm, there are upsides. It’s plain to see my team bonding and it’s plain to see the broader team bonding. Formal and informal communications are improving.
We had a company day at the beginning of February and the 100 people there heard key messages of growth, change, focus and resilience. All important at the time. All even more important today. Resilience will be needed to move through the next months. The ability to change too, the relatively steady-state we were in has now evaporated. I suspect and hope we will be more resilient as we exit this turbulent chapter.
It’s also time to look at our operations and processes, our organisation in general. Is there a way to be leaner, a way to be smarter? Can we do more with less? A real victory would for our company to exit from the pandemic with a leaner and more effective venture. A more resilient and streamlined operation.
I read a Financial Times article on this being a time of corporate Darwinism recently. A lot of companies will not make it through this coming period, in fact, many have failed already and some sector-wide challenges are apparent in areas such as the restaurant business, airlines and the property sector. Can we use this time to learn and refine and become more competitive? Will there be opportunities to take market share, or adapt to a permanently changed environment on the other side of all this?
Leadership Style
I picked up the Ben Horowitz book again in the last days, the excellent “The Hard Thing About Hard Things: Building A Business When There Are No Easy Answers”. It’s a great book on business survival and leadership and resilience. He talks about Peacetime CEO/Wartime CEO – see article here. It’s an interesting take and relevant as we are now in times of war. I’m not experiencing “wartime CEO rarely speaks in a normal tone”, I’m finding the opposite.
Team members at all levels are uncertain. I’m not convinced that an unreasonable tone is going to help at this stage. I’ve always found my natural bias to be to press the team when the going is good, the way Bill Shankly used to run his Liverpool teams hard the day after a good win. I think the current crisis and recovery from it will be a marathon and not a sprint. I believe empathy is the order of the day, trying to understand what’s going on for the team, what they are experiencing. Bringing a little levity to the situation too.
We are deluged with negative news hour by hour, day by day. News that affects the team and their families, as well as our business. It’s a grind and will be a harder grind in a constantly grim workplace. It’s important to provide relief from that grind whenever possible.
I don’t believe the leadership playbook should change at this time. There’s a strong case to use it more often because the pressure is really on. A good plan that all are aligned around. Coaching and mentoring the team. Knowing when to tell, because the team don’t need the sell right now, they need the decision. Using empathy, taking the temperature. Scanning the whole organisation for soft and hard data. Now is the time to be more present than ever, more alert than ever, more available than ever.
Business Survival, The Why
In its most basic definition, the need to survive is obvious. It’s our job as senior managers to navigate whatever the world throws at us and get to the other side. Then there’s the human survival instinct at work, we are deeply wired to survive. There’s the fiercely competitive streak that gets people into executive management, survival is a matter of winning.
But there’s the deeper need for business survival too. Being supportive of the needs of staff, our customers and consumers, investors and suppliers. Contributing to the economic recovery that will be desperately needed once the world snaps back to whatever the new normal will be.
I mentioned that corporate Darwinism is in action now more than ever. The challenge right now is business survival, but there’s a deeper change at play. How will businesses adapt to the new world? How will our business shape itself for the new world? Because I’m certain that current events will reshape our business and the way we do business forever.
First published at https://stephenmoon.com