SFB #20-02: Move Fast and Break Things
The Startup Foundations Builder Newsletter
Note: this was originally a paid subscriber-only post that has now been made available to paying and free subscribers in order to provide as much useful information to all in light of COVID-19. 👍
2020’s New Celebrities: Epipeni….epandemie…epdipiolo… <oh, screw it!>…the people who know stuff about diseases.
Up until a few weeks ago, did you even know what an Epidemiologist was?
Me neither.
But, oh boy, aren’t they having their moment now? In between doing critical work, surely there’s been some Tom-Cruise-like double-fist-pumping, couch-jumping exclamations of “YES!”
It’s their moment - instant celebrities…they’re like the Kardashians of this decade.
The travesty, of course, is epidemiologists will eventually fade back into public obscurity until the next pandemic, while the Kardashian empire continues to spread epidemically.
See what I did there? 😁 Anyway - shout out to all the epidemiologists and their other science and medical colleagues out there: you’re doing great! 🦸🏻♀️🦸🏼♂️
In this edition:
Manage what you can control: sage advice from VCs
Scenario planning for dummies: basic templates and guides
Things leaders and managers need to do now (but sometimes think is beneath them)
Move Fast & Break Things
“Nobody ever regrets making fast and decisive adjustments to changing circumstances. In downturns, revenue and cash levels always fall faster than expenses.” -Sequoia Capital | Letter to founders & CEOs | 6 March 2020
In 2008, Sequoia Capital, one of the most renowned Silicone Valley VC firms, famously shared some tips to their portfolio companies around how to survive the glum times. The presentation was headed “R.I.P. Good Times”.
Twelve years on and much of the advice from then could ring true again today. Below are some of the key points VC firms like Sequoia are advising founders, CEOs and senior leaders to do right now.
Further below are some tools we’ve cobbled together, which can assist in executing some of this advice.
Manage what you can control
It’s the mantra of stoics: Stop worrying about things you cannot control. Not to be confused with the mantra of certain powerful Hollywood producer types: Control those whom you manage 🤐.
We know that philosophy didn’t work out well for them.
❗️Reduce customer acquisition spending: Consider cutting costs generating only incremental growth - many marketing and sales campaigns and events will fall in this category. ROI will be severely impacted over the coming quarters, so things you do which historically generate a small ROI may end up dipping into negative ROI territory. Scrap ‘em. If your balance sheet is healthy, consider repurposing the spending across new campaigns with high ROI. This could mean refocusing your product/service messaging to suit the current market and delving into new channels - most likely digital.
❗️Adopt zero-based budgeting: Like a chocolate teapot, your annual budget will quickly be rendered useless. Look to adopt zero-based budgeting - a method where you draw up a new budget based on looking forward at the beginning of each period (in this case, perhaps as often as every month) to make sure money is being spent on the most important things that need to be done in that period. Decent explanation here.
❗️Headcount: Freeze all planned headcount like it’s Lindsay Lohan’s career. Ask existing teams to get creative around doing more with less. Examples could include:
Repurposing your outbound face-to-face sales team: If your sales process relies on face-to-face interaction, you're out of luck. The team may need to invent an entirely new sales process, move to digital/remote selling scenarios, which may have the benefit of being able to reach out to more customers.
Engineering team priorities: If you’re engineering team plan included additional headcount to execute features on the roadmap, then review the roadmap and prioritize only critical new features and functionality.
“Cease worrying about things which are beyond the power of our will.”–Epictetus
Run the scenarios
Right now, it’s like a David Lynch film - nobody knows what’s happening. But don’t get caught scratching your head at the end and asking “what the f#@k?” (if you can explain Mulholland Drive to me, please reach out).
Instead, do some scenario planning exercises to at least have some idea of where things might end up, depending in which scenario plays out. You can do this for your own role, your team or your company.
❓Start with a question: An obvious one might be “How does this pandemic affect our revenue over the next 12 months?”
📈 Identify the big trends: What things are creating a prolonged change in society which you’d expect to influence the outcome of your question. Use the STEEP framework:
Social: demographics, consumer behaviour, values
Technology: lifecycles, innovation
Economic: ability to purchase, macro-economic factors
Environmental: Climate, pollution, food etc
Political: trade, sanctions/regulations, stability
🔀 Create scenarios: Pick two trends and plot them in a quadrant chart across their extremes. For example, what if social distancing ends soon/doesn’t end soon. And what if the Government bails out my industry/doesn’t bailout. Should look something like this:
This gives you four quadrants and your job is to come up with a story for each scenario. Give each a catchy name and a narrative. Who are the winners and losers? What is the crisis or response?
🧪 Finally, test your plans across each scenario. Particularly think about:
Who are the most important stakeholders in each scenario?
Are there stakeholders which emerge from a scenario that you haven’t considered?
How do your plans play out in each scenario - what’s the likely result?
What could you adjust at the onset of each scenario to produce the most favourable result?
How will you know when each scenario is coming true? What are the triggers to indicate the onset?
McKinsey have a great article discussing the merits and pitfalls of scenario planning, check it out.
🧰 ADD TO YOUR TOOLBOX 🧰
Download the Scenario Template Canvas.
It’s Time to Experiment
Remember the time you “experimented” in high-school? Behind the gym? With the kid selling “herbal cigarettes?” Yeah…well, I don’t mean THAT kind of experiment.
I’m talking about experiments you can run quickly and continuously in your business to test things, learn and improve. If there’s ever a time for experimentation - a time to move fast and break things - surely, it’s now. It also ties in well with helping you consider options to test within your scenario planning assumptions.
Here’s a summary of key experimentation steps. You can apply this not only to business but also to your personal life:
Decompose your problem into smaller pieces: You can decompose any problem into smaller pieces that are easier to think about and, therefore, easier to solve.
Formulate a hypothesis: Based on data, create a hypothesis that addresses why the problem is happening and what you can do to solve it.
Define a metric, timeframe and goal: Every hypothesis must be measurable and quantifiable (also, falsifiable). To achieve this, you must choose a metric with a goal to prove if the experiment is a success or not.
Run the experiment: It’s execution time! Run the experiment for as much time as defined in your hypothesis.
Verify the data: Once the execution time has passed, check if you reached the goal of the metric you chose. If it was, your experiment was a success.
Iterate and pick your next problem: Once you’ve proven your experiment a success or failure, tackle the next one.
(credit to my old friend Gonto for this step summary.)
🧰 ADD TO YOUR TOOLBOX 🧰
Download the ExperimentationTemplate Canvas.
Things Leaders Must Do Now (Even Though Some Think It’s Beneath Them)
“A sergeant major spends his time training his men to be killers. He doesn’t polish his own boots. He probably does polish his own boots, but, you know, that doesn’t mean I have to do my own filing.” -David Brent, “The Office”
You’ve probably worked with a David Brent in your time. Someone who makes everyone uncomfortable when they walk in the room. Like Prince Harry at a Royal Gala (too soon?).
Often it’s due to an air of arrogance. The David Brents think certain things are beneath them now they are a “leader.” They believe those things should be done by others who are yet to “pay their dues.”
Stop and think for a minute about the best manager or leader you’ve ever worked with. I bet humbleness and humility are words that’d describe them.
Great leaders are willing to do all aspects of leading, no matter how long they’ve been in the job or what their current title is on their LinkedIn profile. Here’s a list of things they still do well, while poorer leaders avoid them:
Repeat themselves: It can get boring saying the same things over and over. So David Brent-like leaders continually spout their super interesting new perspective, shine the spotlight on some new outlandish story, or just bullsh*t. Their priority is to be interesting and entertaining.
Great leaders recognize the importance of creating and reinforcing clarity. They repeatedly tell the same stories and reiterate the same core messages. They don’t entertain: they inform and inspire.
Actually manage their people: Recruiting a great leadership team to fill skillset gaps is critical for senior leaders. But the David Brents of the world think “hey, those people are all senior, I’ll just leave them to it so I can focus on all the stuff I love doing. Because I’m the boss, after all.”
Great leaders manage their people no matter what. They understand what drives their direct reports, which makes them vulnerable, where they want to develop personally and professionally. They communicate often, ask for and provide feedback, and generally connect on a human level.
Run great meetings: David Brent types hate meetings. They often delegate others to run them, provide a half-hearted effort during the meetings, and essentially take no actions after them.
Great managers own great meetings. They know why the meeting’s happening, they elicit participation from everyone attending, and they walk away with clear actions and owners.
Have tough conversations: David Brent sympathisers do everything they can to avoid tough conversations. Patrick Lencioni, author of The Advantage, tells a great story - it’s one of my favourites - to illustrate a real-life example of this:
(Excerpt from “How to be awesome at your job podcast”, Ep 552 with Patrick Lencioni)
So, a true story, a famous CEO of a big company, who I don’t think was a great leader, for obvious reasons when I tell the story, he had a chief technology officer (CTO) working with him, but the CEO wanted to bring in a different CTO. So, instead of sitting down with the old one and explaining that “I’m going to hire somebody to replace you,” he just hired a new one.
So one day, the old CTO comes to work and sees an email that goes out to the company saying, “Hey, John Jackson is our new CTO. Let’s all welcome him.” And this guy is like, “I thought I was the CTO.”
So, this guy calls the executive assistant to the CEO and says, “I’d like to meet with the CEO,” and they just can’t find any time to meet with him, “Oh, he’s busy.” Weeks go by. Literally, like weeks. And all that time this guy is coming to work knowing that there’s another guy in the company with his title. Finally, there’s an event or some reason for him to have to get on a private plane with the CEO, a small private plane, and he thinks, “I’ll finally have a chance to talk to him.”
So, they get on the plane, and the CEO closes his eyes, pretends to sleep the entire time, never speaks to him. Finally, the CTO just quits.
Great managers don’t shy away from tough conversations. At the moment, there are plenty to be had.
Closing Thought
"The Waiting Place…
Everyone is just waiting.
NO! That’s not for you!
Somehow you’ll escape all that waiting and staying.
You’ll find the bright places
where Boom Bands are playing."- Dr Seuss
‘till next time -
Clayton 👋
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