It will happen. More than once.
Many events can trigger a crisis. Perhaps it could be a very bad product review (“How could they say that?”). Or it might be a series of Tweets with misinformation (competitors actually do that). Sometimes a huge customer stops using your service (without warning). Or a vice president admits to sexual misconduct (your star executive).
Some bad event will trigger a jolt to your emotions as you grasp that something horrible has happened. You realize this terrible situation is likely to severely impact – or even might destroy – your wonderful startup. Fear is immediately triggered, typically resulting in a wild rush to escape or stand frozen in the headlights. I’ve seen the best of the best react with cold, sweat breaking out on their foreheads. Numbness often swiftly follows.
Most first timers I’ve watched freeze, grasping for some way to get out of the mess (“This can’t be happening – make it go away!”). Others lapsed into old coping methods that in the past had distracted them (but again here they found themselves not taking immediate action to fix the mess). Some experienced ensuing panic attacks and inability to take any action.
I observed the opposite in startup veterans. They had been through the terrible times before and were confident their skill to swiftly start working on resolving the situation. In a nutshell, I found the entrepreneurial veterans were able to function in spite of a crisis, and in some cases the mess showed just how amazing their leadership skills were. I also noted that serial entrepreneurs were rarely caught off guard – they knew bad things can happen and thus they had prepared some form of a general course of action in case a crisis event arrived.
You can do the same. Here is a crisis preparation checklist I’ve found helpful. It’s how Maynard Webb author of “Dear Founder” handles a crisis.[i]. Included are my suggestions for what I’ve found works for many startup leaders, first timers or veterans.
- What’s the magnitude?
- “Is this a seasonal dip in monthly sales or has our leading product stopped selling at our top ten accounts?”
- “Does the crisis involve just a few staff members or threaten the very existence of the company?”
- “Is this as a one-meeting-fix or has it the potential of taking months of time to solve?”
- There’s no time to waste.
- 100%. Veterans will stop all their other activities the same day the crisis arrives and focus on assessing and addressing the crisis situation.
- CEOs will contact all direct reports the same day and, after brief discussions, schedule a group live session within 24 hours.
- Deploy your resources.
- Start with your direct reports. After your first group meeting, assign them to specific, short term deliverables: put out the immediate fire and start work on repairs and a plan for recovery.
- Begin with a second group meeting that meets weekly or, if the situation is life critical, make it a daily session until the immediate fire is out.
- Veterans will quickly contact people in their network, conveying the crisis situation and soliciting advice. NOTE: A prepared CEO will have created a quickly accessible list of who to call in a crisis.
- Board members get personal phone calls – text to set them up quickly.
- Advisors and consultants are contacted and often are assigned work.
- Get the right people in place.
- You are likely to have to quickly move people into firefighting: send some to customers and others to suppliers, while others start talking to employees.
- Some employees may be needed to promptly respond to customer emails and texts.
- Have a backup plan. And a backup for the backup.
- Swallow your pride. This is not about you, the CEO, it’s about how your company (people working together) can attack the problem, solve it, and get back on to the road of viable growth.
- Be honest. Hiding will get you into deep, deep trouble: when people discover your coverups, they will begin to doubt your capability as their leader, plus their loyalty will drop a notch or more; they’ll begin looking for how close the exits are.
- Declare facts – avoid speculation and guessing.
- One veteran told me “It’s not the crime, it’s the cover-up that makes a crisis worse.”
- Do everything possible to minimize impact for customers.
- Street smart startup leaders avoid broadcasts of a crisis.
- Veterans will have a short paragraph of the situation ready for sending to customers, if needed.
- Communicate with everyone.
- Tell the truth
- Tell them the next steps.
- Tell them when you will update them again.
- Postmortems are essential.
- What happened? When? Why? What was the source?
- What did we learn from this crisis (to prepare better for the next one)?
- From now on, plan for crises in advance. Try one crisis planning session per year.
[i] Dear Founder, 291-286.
I wish you The Best on your Adventure!