Today we are going to be talking about a topic that unfortunately we are all living through, which is ‘how to manage through a crisis.’ While we are all hopefully starting to see a light at the end of the tunnel, it’s safe to say the lessons learned during this time are ones we won’t quickly forget.
One thing we want to make sure you hear is that it’s okay to be human. No matter what level you are in your career or your title we are all in this together.
This episode features Roland Siebelink sharing what he calls the C.R.I.S.I.S framework. The presentation shared in this episode was recorded live. If there’s anything you’re learning or looking to understand more please reach out to us at firstname.lastname@example.org.
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Nicole [00:00:03] Welcome back to Insights an Emplify original series, giving you insights on cultural myths, employee engagement and why it all matters. I'm Nicole McLean. And if you're new to the show, usually each season we focus on one topic and explore it from multiple angles. Now, during this unprecedented time, we've decided to keep in that spirit. And each week we're bringing in experts to talk about how to lead and take care of your people as we release new content. Note that the content will be timely and timeless, providing you with one place to go, no matter what season that you're in today. We're going to be talking about a topic that unfortunately we are all living through, which is how to manage through a crisis. While we are all hopefully starting to see a light at the end of the tunnel, it's safe to say that the lessons learned during this time are ones that we won't quickly forget. Now, as I tee up what you're going to hear, I want to remind you of one thing. It's okay to be human. No matter what level you are in your career or your position. We all have days that are better than others. So as you digest this information, just know that we are all in this together. So now you're going to hear from Roland C. Bleek. He's an impressive man with a very important message. In this episode, he's sharing what he calls the crisis framework. The presentation shared in this episode was recorded live and you'll hear questions in real time as we start the conversation. Roland begins with sharing the realities of the times from the perspective of the many tech founders that he works with.
Roland [00:01:39] This is the biggest crisis in economic history that we can recall, and many people had been used to an environment of essentially a lot of stability, a lot of continuous growth that everyone was counting on building their business plans on. Only yesterday I was talking with a young founder, twenty two years old, of a company that just raised five million dollars to support her, to support recruitment drives at Universities University's events with thousands of students and recruits all coming there. Well, you can imagine what he said when I contacted him. I just want to cry. It's like that. And so the question is, how do we get out of this initial emotional impact and how do we actually start leading our company through the crisis? The best way possible. So the severity of this crisis is not to be underestimated. I think we're primarily looking at three sometimes for difference, big shifts in trends that we have to deal with. So first of all, there's a capacity fallout. So it basically means that a lot of people can no longer work or can only work with less productivity from home. And so the very first challenge that I see many companies deal with is just understanding if their employees actually still available, who is sick and which part is being impacted. Now, second, there's, of course, the supply and demand shocks. So supply shocks in the sense that suddenly certain goods can no longer be delivered because the airlines are no longer flying. A lot of the freight is also being impacted. And then demand, you know, another company in dire straits was a ritual they just announced, I believe an 80 percent layoffs and rituals business model was to help coworkers get lunch together. So one would go to a lunch place and would bring lunch for everyone else. Of course, when everyone's working from home, that company also saw its revenues drop from maybe ninety five percent in a week. These are severe demand shocks that we have to learn to deal with. It is, as I said, the most severe economic downturn in history. So in no way comparative fall even to the financial crisis twelve years ago now. So the framework developed to deal with it is just to keep things simple. Is the same acronym crisis and the six steps I recommend that all leaders go through are as follows. Communicate, reassess, instruct, sustain, inspire in spots. And to add a little bit more to that. Communicate basically means communicate all the time and start right away. Where is fast means reassessing the reality. What throughs are no longer valid? What new through through? You need to learn to embrace. Instruct means making sure everyone knows what to do and getting some certainty from you as their boss or leader even before you have the whole plan figured out. Sustain is the part that instinctively most founders go through right away. Like How can I make this business sustainable? This may mean cutting costs. This may mean doing layoffs if there's no alternative. So after you've cut the costs and hopefully you can do that in just one go, how can you then move into inspiring people again with good examples of the good work your company is doing and slowly get them back on board? In terms of the mission of your company, those that's the five steps. And then finally at the end of the crisis, you will see a possibility to spot opportunities. We're talking there primarily about maybe combat troops going out of business that you can consolidate with better deals from suppliers and of course, also potential new revenue models that will come at the end. But one key message I already want to give is typically we want to make sure those first four or five steps are out of the way before we start spotting new opportunities, because it's just too hard for your staff to deal at the same time with the possibility of cost reductions and then also investing their time and efforts in new future opportunities. So let me go through the first step right away and that's communicate. And really my advice there is to communicate daily with your people, especially in the first parts of the crisis, before it starts feeling like we've reached a new normal. I really recommend that CEOs are visible every day. That basically means on video conference you want to be answering questions even if you don't have all the answers. So be clear about what you know, but also what you don't know. As many of you will be able to relate to, what you really want is authenticity, where a leader says, OK, I do know this, but I don't know that. So I'll try to answer questions to the best of your ability. Many companies set up the shared documents where employees can ask questions and then maybe just see. Runs through some of these questions. Every day in their video and then to back all of that up, you definitely want to have a crisis team in place. I typically recommend five or six people. It should involve the CEO themselves, typically like a number two in a company, like a president or a co-founder. And there may be three or four staff people. We're talking typically head of H.R., head of finance, maybe a head of legal. So let's talk a little bit more about that feasibility. That's a good thing to understand that for daily CEO video does not mean that anything has to be produced at high cost or that it should be staged. What matters is, is that it's authentic and that's why a video can do so much more good than email or a slack message or blogs or even the voicemail. What matters is that people can see you and can see that you're genuinely dealing with this crisis. So not staged. Try not to make this a formal production. We're all working out of our living rooms and our messy houses right now. So it's a great opportunity to actually learn to be authentic that way as well. One last point. CEOs do not delegate that, so make sure that it's actually the CEO's speaking to people in these crisis times. People want to hear from their leader. And if you delegate this to like a head of H.R. or head of marketing or somebody else in the leadership of the company, if they haven't seen your own face yet, then that does come across as a dereliction of responsibility where they really look forward to what the leader has to say. And it's that charisma that people are craving these days. So to be visible to your people every day, at least while there's a sense of chaos less until the action plan is clear and people feel like, OK, I now know what needs to happen.
Nicole [00:08:28] Why do you include non-managerial but highly visible and trusted employees on the case at all?
Roland [00:08:34] You can. So if you have somebody that is already a little bit positioned in that way, as you say, highly visible and already with a lot of credibility, then that can be a good idea, because often these people will have a little bit more time on their hands to really focus on the day-To-Day coordination of that team. I would say it's ultimately a team that needs to be able to make decisions 3D fast and so do take someone that already has the respect and the wherewithal in the company, let's say, to to get things done. It shouldn't just be like a high, high level assistance that people like, but that has no authority on their own. So with that, I proposed to move to the second part of the framework, which is reassess reality. This is, of course, where we see a big needs to start on the saying what's actually the new reality that we're dealing with? And I would divide this up in four key buckets, although there's many, many more points to think about. First, I would say, is reassess the value that you bring for your customers. So do we actually still provide a value for the customers that we always said we did? So I mentioned the entrepreneur in the beginning who was helping universities organize career fairs. They are now trying to pay for 3D fast to doing virtual career fairs and writing software for that. So that customer is still there. But the way they operate is completely change. And the other part is, do they actually still have the money to pay you for it? Because at this point in time, most companies will not be focusing on new opportunities. They will be hunkering down and focusing on how do we keep what we have? How do we do it at less cost. So of all mode is basically changing and it's important to align to that with your customers. That may result in some product reconfigurations. But I mean, with that is that you may still have the same core product, but you may want to position it differently. Highlights on different aspects to your customers to make sure that they can still they still get value out of it. Once you've answered that, you can also look at the other side. How key are we to them as a client? So if you're like the largest client of a certain small supplier, it might actually be the time to negotiate this. So that's a little bit about reassessing in the reality. As I mentioned, it is really to help yourself card yourself from taking emotional decisions. Looking at objective figures and ratios and sharing metrics, but not yardsticks with people. So what this means is when your people are asking for information. So will this company fall or will we have to do layoffs? All those difficult questions that you will never have directly answer to. You can be honest and say, look, I don't have an answer for that yet. Typically, they'll want to know a little bit more. And what I would say there is well, an example like if layoffs would be. Necessary I would look particularly at this ratio or this metric. For example, the cash coming in compared to our cost base, that would be the metric I would look at to decide ultimately if a layoff would be necessary. But I would not share the yardstick in sense that I would not share with the whole employee base. Well, if it drops below 80 percent, we're gonna have to do a layoff. If it goes above 90 percent. We're going to have to do a fast layoff. You would just shared that mentioned, but not the actual critical trigger points with people because that would just cause undue panic. And the last part is not just knowing what trigger points will drive the switch, but also what's the last possible moment to switch. It's important not just to look at what is the impact on the cash flow, but also when we actually need to pull that trigger to have enough impact from that decision. So be clear to your employees and to your managers how priorities have changed and how they should adapt their own prioritization, their day to day work towards reaching the crisis rather than following previous plans. Okay. So with that, we do get to instruct your people. And what I really mean with that is that it's important to keep telling people what to do, even if you haven't figured out the plan yet. So I'm contrasting this with the typical behavior of insecure leaders. They're bound up by a crisis and they say, well, I don't know what to do yet. So let me just stay silent until I've figured out everything. That is probably the worst thing you can do as a leader. Because what they need right now from you is some clear guidance just to feel a little bit safer. I put here on the slide no time for consensus seeking. What I mean with that is this is more of a war time mentality where people are not looking for endless debates. They're just looking for a pretty decisive decisions on day to day actions so that they know what to do. Immediate no brainer actions are things like cutting marketing spending, cutting travel, of course, getting people out of the office, keeping them safe. There's no way there's no need to debate these at length. Just assign them to someone, get them to worry comments if everyone something to do. So people on your crisis team should, of course, have something to do every day, but also in the rest of the company, even if the instruction is just try to keep doing what you're doing for now, then at least they know that they're in line with what the company expects from them. And finally, make sure that these instructions are to get the company out of the immediate danger zone. So how to cut costs with the best chance of sustaining your startup seal? I would actually start with the top right one here and say other options come first. So before you consider a lay off, let's look at all the other things you could do to reduce the cost of your personnel if your staff without having to resort to a layoff. So it could be as simple as driving down employee expenses in companies where there's a lot of expenses, for example, related to the sales force, unpaid leave options, freeing up some players that have already had that performance review. You can do some targeted during negotiations. And of course, in many countries there's also a form of short work or cuts are about, as they call it in German, which is an across the board percentage reduction that then gets partially refunded by the government's furlough would be an American option that would come close to debt. And so there's a lot of things you can do before you actually resort to full layoffs. On the other hand, if you do see that the layoff is really the only option, then bite the bullet when you have to. And even targets one time in the right. So try not to cut to just the bare minimum. And then if the worst scenario comes through, you'll have to cut a little bit more. That's absolutely the worst for building trust and keeping trust in your company that it never ends. So try a one time and done. If, for example, your target is to reduce the cost base with 10 percent. Most companies I would see cutting about 15 percent so that they can go back on a growth trajectory if everything comes through. And where to cut. It's really important to understand how you can preserve that core of what the company is doing with the core. We typically mean the kinds of customers you've always been serving successfully with the products that you're most successful in. So typically look at keeping that core there, but try to cut more in speculative efforts. As I said, new products, new geographies, things that haven't proven themselves yet. That doesn't mean you can ever move there anymore. But at this point in time, you're in crisis. So it's not the time to also be preserving all those speculative opportunities. You simply don't have the cash for it. Any questions about sustaining your startup beyond the crisis?
Nicole [00:16:36] Can you go a little deeper into the communication. Yes, template or recommendation will have, especially if someone does try to make it a one and done now to me. Except that's your company. But that company still believes them. So you that they say, hey, we won't be falling and try and get one. How do you need a foster trust after an announcement like that?
Roland [00:16:58] Well, I think, you know, it's about being honest about your thinking, right. So I would always start a presentation like this with all the other options you have considered. And then also being very clear about the cash situation of the company. The best presentations or announcements that I've seen have made it very clear that if the company doesn't take action, then all jobs will be lost because the company will simply go bankrupt. And so that has been the best reasoning. And then typically be open about, well, our targets has been about 10 percent. That would just barely half us make the mark. But because of the insecurity, because of some of the other measures that might still go wrong, we have said let's go a little bit deeper so that we can really target one time. And the third point would definitely be, you know, nobody can give a guarantee in these times. Right. So I'll be very honest about that, too. But also show your confidence that if things keep going as they are right now, that one time in Dunn will truly be enough. Plus your cutting primarily in the more speculative functions, as I said, you know, like new initiatives, new products that have not yet not yet proven itself so that people also have to trust that the company can still survive with the people that will read me. And one point that's not on this slide that I always stress into custom plans is preserving the core also includes cutting more in management and in leadership on a proportional basis than in the frontline workers. This is not a natural thing for companies. They will typically want to preserve the people they know. So managers, of course, the leaders know the managers and so they try and preserve all their friends or their direct reports. That is the most unfair way of doing a layoff or a cost reduction that you only let go or frontline people. And all that remains are managers who basically come up with all these ideas and nobody has any time to execute them anymore. So do it the other way around. Make sure that the cuts in the frontline are lower than the cuts in middle management and the cuts in leadership are even higher than the cuts in management. Debt is a fair way of doing it and preserving the true core of the company. So with that, we are at the almost at the end of this crisis framework. And it's after we've executed that cost reduction. Now, how do you get people to put all their soul and energy back into the company? And I think the mistake that many leaders make is that they try to come up with huge visions right away or even worse, connect to the original vision as if nothing has changed. And that doesn't work in my experience. What matters is that you basically start building up goodwill again. So I would do this with things like supporting the community. If you're a product away for free to schools, for example, or do some some volunteering, but also if there has been a layoff, take care of both of the victims and off the survivors in your company. So a lot of companies are now using their networks to get people that they had to lay off. But the context and possibly a new job and I think that's a very good way to inspire your people to get that belief up and going again to your to your question about communication. Right. I would not actually be pitching huge new visions here. I would be pitching the little pockets of hope and the heroes that we see throughout the company. What do I mean with a bucket of hope? You know, a company that finds that some of their clients are renewing or maybe even renewing at a higher rate than before. A hero could be somebody just doing their day to day job and let's say a support department and that keeps people happy that does the things they can do in their function. I would basically highlight that those pockets of hope and those everyday heroes to inspire people again about this is actually still a great company to work with. And the one thing you would reconnect with is the purpose of the company. So not all the big plans and all the ochers and everything you set up before. But more like what was the original purpose of this company? So, for example, if this were to apply to Google, which it does owns, but we all know the companies. So the purpose was how do we organize the world's information? So to get people reconnected to his, everything we're doing really focused on organizing the world's information. Can we focus our efforts even more on that will help to inspire positive action again throughout the remaining employees. We're almost out of time. So I'm going to. Jumping to the last section, which is spot spotting new opportunities. So this is after you've done the cost reduction, made the company sustainable and that initial spark of inspiration has already happened. Now is the time to actually start looking at new opportunities. So as I said before, don't mix this with thinking about having to do cost reductions because she will just confuse people and you'll inadvertently signal that there is no cost reduction necessary because of all these opportunities. So separate them in time. Start with big change. Your new opportunities. Things like, you know, there is actually a big market now of people working from home. Our products could really help them. Right.
Roland [00:22:19] And start seeing first internally before you go to external partners and investors whether that actually makes sense. They can't vanish of a buyer's market. We mentioned some of this in these flat chain management, but this is also applicable to recruiting, for example. There is now far more people on the market that are happy to take a deal than before. So if you had trouble, for example, finding software developers before. It's much easier right now. And you can actually take advantage of locking in people with slightly lower rates than you would have paid before. Same for many other functions. And of course, the same goes for suppliers as well. Sharpen your business model. What I mean with that is really that 80/20 rule. So you have fewer resources. But can you make sure that these resources are really focused on the core of your business model and not on many ideas from the supplementary activities? That's projects that just this is a great time forward to not continue those projects. And finally, export consolidation. So what this means is the number of companies in your sector may be former competitors that have not done so well in managing this crisis and that may be open to either selling themselves or maybe they even go bankrupt and their clients will be looking for new suppliers. Luke Ford, is these opportunities of consolidation because in a crisis, typically the number of suppliers in every sector will dwindle. And that means that everyone ends up with a larger share of the pie, either proactively through just reaching out to their customers or sometimes by doing a merger and acquisition, if that's a better option for that particular industry. And that is the last part of our CROI ISIS framework. So we talked about starting to communicate daily and be visible to your employees every day, reassess the reality, make sure your people get clear instructions, sustain your company, inspire positive action and finally start spotting new opportunities. With that, I'd like to leave another few minutes for questions. If any.
Nicole [00:24:29] One. That came to my mind, as you're talking about opportunities rolling, how should you think about being a financial steward for your business? I think you'll see opportunity that you might want to return to in order to essentially have a better payoff in the long run. How should you balance investing in your opportunities with preserving cash flow right now?
Roland [00:24:51] When I work with the growing startups, those are typically my clients. I always inspire positive action myself by saying, hey, remember how you would how you would do this when you were in a garage five years ago with three people around the table. You didn't have resources, you didn't need investment. You were just exploring ideas and putting on putting some screenshots on paper and going out and asking people asking the world about it. This is an opportunity to reconnect with that startup zeal that you once had and that you always say you want to preserve. So I think it's a lot about just hacking new opportunities together, trying to do more with less, and maybe saying goodbye a little bit to some of the corporate's ways that have crept in that are not really necessary to get to exploring a new opportunity.
Nicole [00:25:44] Awesome, awesome tips on how to keep emotional based decisions in check.
Roland [00:25:49] I would say, first of all, make sure that this is not just a one person's decision. Right. So we deal very well with emotions as people when we are able to vent them to other people around those, when we feel like it's a joint effort. That's why this crisis team is so important that it doesn't just feel like the CEO is the only one in charge and is making all their decisions at their own instigation. It has to be where we can at least quickly discuss some of these decisions and just fence our emotions and our worries. One of the best crisis team, one of my clients is running actually starts every daily huddle with that. Like what our our new worries, what are we feeling? And I think this is a great tip. Of course, I'd be remiss if I didn't say in other ways have averaged. With your coach. That's what they're there for. And they can help a lot. And many coaches, including me, have also offered companies sometimes for free coaching if they just can't afford it at this stage, because we know at this stage coaching is needed more than ever. And finally, use the time working from home to reconnect more with your family. It's challenging times. And we need to do a lot of work, but also use the time when you're at home. Any way to switch off a little bit to reconnect with your family and your emotions around that? And those are ways to basically make sure that you don't take too fast an emotional decision because you're not running it by anyone.
Nicole [00:27:19] Roland, thank you so much for watching this framework.
Nicole [00:27:25] Thank you for joining us for this week's Insights. Don't forget to subscribe so you never miss an episode. And next week we have three incredible guests sharing their thoughts on how to lead in times of uncertainty. In the meantime, if you have questions or topics that you'd like to see us cover, please go to emplify dot com slash questions. That's EMTALA I F.Y.I dot com slash questions and let us know what's on your mind.
Nicole [00:27:54] Stay safe, stay sane and we'll see you next week.