Step back and plan for your future so you can execute today.
As a leader during the Coronavirus crisis, you are certainly dealing non-stop with your current emergencies. Your time has probably been spent situating your employees in the new remote working arrangements, talking to customers, and shoring up your cash situation.
As an executive coach working with startup CEOs, I’m encouraging all of my clients to step out of reaction mode for a focused period of time to conduct planning. The problem with planning right now is that there is so much uncertainty. Here are some tools to use to navigate your business through an evolving and unpredictable future:
1. Accept reality. This may be the hardest step for you and your team. The world has changed rapidly and it’s hard for people to adjust their mindsets so quickly. I talked with one of my clients last week and he told me “we haven’t seen any changes except that some customers asked to put off their payments for 30 days.” It is tempting to use this data point as a way to convince yourself the world hasn’t changed all that much. The problem is that if you don’t get your mind wrapped around a new reality, your team will also be complacent. You will therefore not be geared up to adapt to what is certainly going to be an unpredictable future.
One way to make sure you are being clear-eyed about this crisis is to scan the environment. Get as much information as you can from external sources. The Conference Board, for example, has put out 3 scenarios which assume a base case, a bad case and a worse case. Even though these are hard to swallow, it’s important to be ruthlessly honest and fact-based when you are trying to plan for an evolving future.
2. Ask “what if” questions. Once you begin to come to terms with the macro environment, start asking “what if questions” for your business. Questions you should ask include:
- What if most of our customers pay in 90 days or more rather than 30 days?
- What if I or one of my key executives get sick and is out of work for two weeks or longer?
- What if we can’t get the parts we need because of delays in the supply chain?
- What if revenue goes to 0 for the rest of the year?
Brainstorm with your leaders and other members of your team to get a long list of questions you should ask yourselves. Encourage your team to ask questions that seem absurd. In the current crisis many unpredictable things have already happened and there are more on the way. Asking your team to be expansive in their thinking will help you capture a majority of the possible outcomes.
3. Run a sensitivity analysis. Once you list out a set of scenarios for your business, including a worst case, create a budget that takes into account these different cases. Review the model with your CFO or VP of Finance and look at your biggest cost drivers. Change them in the spreadsheet so you can see what changing one element does to your entire budget. It’s important for you as the leader to get informed at a detailed level what might happen to your business in each of these environments.
Your team also needs to understand the implications of these potential outcomes. I’ve observed that even now some employees in the startups I work with are still thinking about business from their perspective of a month ago. They are, for example, talking about continuing the process with a potential new hire who is now not critical, or advocating for the purchase of an expensive software program which is a “nice to have,” but not a “need to have.”
As a leader, the more clear you are on the details of what the most important things are and what tradeoffs your business needs to survive, the more clearly you can communicate that to your team to help them make good decisions. Also, having this information helps you adapt more quickly as circumstances unfold.
4. Think about the upside. Maybe one of the only bright spots in this situation is that in crisis, there is opportunity. You may have developed a product that can’t be used for its original purpose but now has a different use case. Or you may have developed some technology for your internal infrastructure that is suddenly very valuable. Explore all of this. One of my clients decided to convene a war room to specifically ask “What will we do with what we’ve built if we can’t continue this business?” They came up with several possibilities that they are now exploring.
It’s not pleasant to think about what might go wrong, but it’s important to anticipate various outcomes so you can start planning for an uncertain future while executing intelligently today.
