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Anticipate & Adjust: Leadership During a Black Swan

Christopher Clark . March 13, 2020

To any entrepreneur or organizational leader:

Edison sent out the below communication to our portfolio CEOs across the country on Sunday morning, March 8. We hope it can provide some guidance and support to you too.

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I hope you are all safe and sound.  To state the obvious, I'm not an expert in health or the macro-economy. These are my personal comments, but they are in Edison’s spirit of care and responsibility for our portfolio family.  

 

  1. Regardless of the lifespan of this major health situation, this is a prime opportunity for adaptive leadership. 
  2. The biggest CEO decision frame, after employee safety and BOD communication, is the growth to burn ratio and what adjustments you need to make if that ratio is going down now. If you have less than six months of cash runway available (rolling basis) and your growth rate drops starting in March combined with 50% to 80% GM, then it is a simple calculation of where your call to action is for immediate focus. Starting Monday, you should work with your head of finance to develop a plan with increased scrutiny of detailed growth to burn items.
  3. Ensuring you are airtight on your top ten expenses internally and top vendors’ costs is the same as having breakfast for at least the next three months. Sales commission is one of the only favorable items on a variable basis in a fast marketplace contraction. All expenses in marketing centered on demand generation, discretionary and usage spending should be re-assessed on a weekly - or even daily - basis if you are B2C.
  4. I recommend a cash-flow dashboard for your weekly staff meeting (which might be a dial-in, so crisp pictures are necessary). The dashboard pattern after three weeks is the value versus the weekly number itself. If you do not have one or want me to take a look at yours, feel free to send it to cclark@edisonpartners.com or request it. We will build one for you after one call with your CFO/VP of Finance.
  5. Knowledge builds confidence even when those around you lack it. You made assumptions on how and where you are growing. Go deeper now.
  6. My opinion based on experience is your team will know more than you how to be disciplined and also how to be clever and even opportunistic.
  7. Your Board should be a resource and probably can share experiences from previous cycles. Utilize them!
  8. You can always go back to burning cash very quickly - one of the easiest and most popular things to do as a CEO.
  9. There is going to be a two-way street on vendors and customers. Customers may take advantage of the situation on you and you will need to assess your latitude with your vendors at the same time.
  10. I am sure lenders are telling their teams to review their loan portfolio and discussing trip wires connected to covenants.
  11. Inside sales models are superior to field models at the moment and obviously online revenue models. If you have a choice of go to market then you should run a few scenarios on the P&L where inside sales become more weighted on quota and commission for the rest of the year. If you are only a field model then you cannot do this, but you can assess hiring.
  12. If you are able to adjust your product(s) for more remote on-boarding, even if it is not the full product value, then this is a good thing to do – and coupled with an inside sales over-weight for now.
  13. Extending customer contract renewals (month to month) without entering into a renegotiation is sometimes wiser.
  14. Mobile working productivity is a must. Do you have the tools and culture? Are you uncovering some tricks and hacks to get the voice of the customer feedback on your top 50% of the revenue base with an inside operation between sales, customer service, and product management? Always a good thing to do anyway.

 

Everyone always states that getting real and decisive is the critical leadership requirement in tumultuous times. But I have found the smartest and most enduring CEOs are the ones who ANTICIPATE the future by running scenarios, making assumptions and having processes to support their judgments and decisions across the whole business.

 

I have not said anything new or profound. It’s a note of respect, feeling and support as you steward your company. Feel free to reach out between Monday and Sunday anytime.

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