The Covid-19 pandemic has turned every business plan into a question mark. Companies of all sizes are having to rapidly re-assess almost everything, from how they organize their people to the viability of products and services, their pricing, and the resilience of customer relationships.
This is a global crisis with no obvious comparison in recent memory. But we can learn from the companies that adapted and thrived during previous periods of turmoil. To that end, Accel recently brought together in conversation on Hopin two CEOs who successfully led companies through and beyond the global financial crisis of 2008/2009.
Cris Conde is Executive-in-Residence at Accel. In 2008 he was CEO at SunGard, which he grew into a Fortune 500 company and what was then the largest privately-held business software and IT services company in the world. Lars Björk was CEO of Qlik, the data integration and analytics specialist, one of the first post-crisis IPOs in 2010.
They shared their experiences and advice about how to lead a company through crisis, fear and uncertainty. Key takeaways include:
1. Accept that everything has changed
In a global crisis, companies have to accept that everything becomes subject to change. “The biggest blindside in 2008 wasn’t that new bookings were well off, which we expected. It was that existing customers wanted to renegotiate contracts that weren’t even up for renewal,” Cris recalls. “That really caught us by surprise. We also had to give away upgrades that we planned to sell for free, to preserve ARR.”
For some companies, strategic plans will need to be abandoned. “We were planning to go public in 2008 and that went straight out of the window,” says Lars. His advice is to focus on the present and be realistic about the necessity of change. “This is the time to have a better grip on your business and be in control of your outcomes. It’s a big mistake to go back to what you did before and expect that nothing needs to change.”
2. Plan but don’t predict
With so much uncertainty, don’t try to predict what will happen next. “Precise forecasts at this point are worthless, because it’s impossible to foresee what’s going to happen in the economy as a whole,” Cris says.
Instead companies should focus on making their forward-looking plans adaptable to a wide range of possible circumstances. “Come up with a series of potential plans based on what you’re seeing,” he suggests. “What will you do if half of new logo prospects don’t buy? Or if all renewals are happening at a deep discount? Have multiple scenarios and code them green, yellow, red and black according to the severity of the situation. Give yourself as much runway as possible.”
With uncertainty affecting every employee, customer, partner and supplier, this is the time to be consistent and deliberate in how you communicate. “Overcommunicate, because you can’t have too many conversations at this point,” Lars says. “You can guess what customers will do, but you don’t know until you’ve spoken to them. Stay close to your ecosystem of vendors too.”
Communication needs to be done carefully, Cris counsels, and above all honestly. “Don’t spin and don’t get sucked into talking about the virus, the economy or the stock market. Be honest about what you know and what you don’t. Show some humanity and vulnerability, and don’t pretend to have all the answers.”
4. Look after your people
At times like these, leaders should spend more time than ever focusing on the needs of their people. “Employees may be dealing with actual life or death situations, and they may be afraid,” Cris says. “Acknowledge the emotions that many of your team will be experiencing and their validity. Also encourage people to focus on what they can do and be in control of, rather than worrying about what’s on the news that day.”
“See yourself as a servant leader,” Lars advises. “Ask what you can do to support your team to be successful.”
In his experience, leaders must also look to their people to help shape the path forward. “People want to help if you let them, so engage your whole team. You motivate people by involving them in key decisions and the direction of the company. Create a plan to which everyone has contributed.”
5. Think ahead and think relative
In a crisis you have to focus on survival but also look beyond immediate challenges. What will your company look like on the other side? “It’s like being in a Formula 1 race where your car goes from 200mph to 20mph to take a turn,” Cris describes. “It’s not your speed going in that matters, but your position coming out of the turn. How can you stay ahead?”
Every business is having to slow down and adapt, so use relative rather than absolute performance as your KPI, he argues. “Focus on how you are going to become more competitive when customers start buying again. Ignore the stock market and don’t think about your valuation. Just focus on what you can do to continue building a great company. If you do, the valuation will follow.”
6. Challenge yourself and be creative
When everything changes, opportunities emerge. Customers are dealing with new challenges and realities, which your business may be able to help them with. “There are fewer sacred cows now and clients will be more open to new ideas,” Cris says. He recommends pitching ambitious ideas at a senior level. “Give them one no-brainer idea, one that’s good but difficult to implement, and then a really wacky, smart one. Everyone takes the first one, and half of them will do the second. The third demonstrates how engaged you are with their business.”
“Normal stakes are not on the table,” Lars concurs. “Turn over every stone and look under it.”