Managing in Crisis
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Many business owners and operators are looking at 2023 with trepidation and it’s possible many will be leading through crisis. Mark Brooks shares his insights from over 20 years of managing teams (AOL, The Motley Fool, Permanent Equity) with 16 tips for managing in crisis.
LINKS & MENTIONS FROM THIS EPISODE
Connect with Mark on twitter https://twitter.com/markbrooks
Connect with Mark on LinkedIn https://www.linkedin.com/in/markbrooks1/
Connect with David on twitter https://twitter.com/DavidACover
Connect with David on LinkedIn https://www.linkedin.com/in/david-cover-318752230/
Visit https://www.permanentequity.com/ for more
Sign up for our weekly newsletter for operators, Permanent Playbook: https://www.permanentequity.com/newsletters
TIMESTAMPS
0:00 Intro
0:22 Two Guys Singing Songs to Each Other
2:44 Mr. Manager
3:30 1. Get upstream of your current metrics
4:35 2. Review your metrics more often
5:28 3. Create a Confidence Interval
6:37 4. Determine your action items.
7:33 5. Communicate the situation to your team.
8:15 6. Communicate with your team more often
8:57 7. Know the difference between openness and honesty.
10:01 8. It’s okay to say “I don’t know.”
12:12 9. Brainstorm with your best.
13:40 10. Micromanage
15:51 11. Don’t Make Promises You Can’t Keep
17:43 12. Cut deep so you only cut once
19:19 13. Know what you’re cutting
22:29 14. Ask for help
23:56 15. Talk to others
26:49 16. Don’t neglect your health
28:26 Subscribe to the Permanent Playbook
29:18 Legal Disclaimer
EPISODE CREDITS
Produced by David Cover
Intro music by David Cover, Andy Freeman, & Wes White
Outro music by Daniele Musto
LEGAL DISCLAIMER
This podcast is made available solely for educational purposes, and the information presented here does not constitute investment, legal, tax or other professional advice, and should not be construed as an offering of advisory services, or as a solicitation to buy, an offer to sell, or a recommendation of any securities or other financial instruments. The thoughts and opinions expressed by or through this podcast are those of the individual guests and speakers and do not necessarily reflect the views of Permanent Equity. The discussion on this podcast of any entity, product or service does not imply an endorsement thereof, and the guests may have a financial interest, whether through investment or otherwise, in one or more of any such entities, products or services. This podcast is presented by Permanent Equity and may not be copied, reproduced, republished or posted, in any form, without its express written consent.
Many business owners and operators are looking at 2023 with trepidation – there’s a lot of uncertainty in the market and in the operating environment. You may be looking out over the landscape thinking, “Wow, it’s looking more and more likely that I’m going to be managing a business that’s in crisis.”
Whether you’ve been here before or crisis is brand new, here’s our playbook, adapted from Mark Brooks, for how to get ahead of crisis mode and weather the storm:
Metrics
(1) Get upstream of your current metrics. In a healthy environment, you want metrics that are as close as possible to the final answer. In a crisis environment, you don’t necessarily have that kind of time. What you really need are leading indicators. While less precise than final answer metrics, leading indicators give you valuable information earlier in the process to help you nip problem areas in the bud.
For example, if you normally track revenue, getting an upstream metric might mean tracking the number of leads you’re collecting on your website. That number isn’t going to tell you what’s going to actually hit the bottom line, but it gives you an earlier indication of the type of economic activity that leads to eventual revenue.
(2) Review your metrics more often. You may be used to looking at your financials on a monthly or quarterly basis. In crisis mode, you’ve got to up the pace. Getting into your data more frequently, especially when you’ve identified those leading indicators, helps you make decisions earlier in the process.
Confidence Intervals & Action Plans
(3) Don’t bet on one outcome. When you’re in the middle of a crisis, re-budgeting or re-forecasting with one final answer in mind is ultimately not going to help you. Instead, say, “Here’s the high end of possible outcomes. Here’s the low end of possible outcomes.”
(4) Determine your action items. Once that confidence interval is built, figure out your two or three big action items if you’re headed towards the top of the range or toward the bottom of the range.
For example, if you’re headed to the top end, you might ratchet up sales, while if you’re headed towards the low end, you might decide to buy less inventory.
Communication
(5) Communicate the situation to your team. “But won’t that make the team panic?” In our experience, the team will only panic if you appear panicked. You can’t afford errors during a crisis – rallying the troops and making sure everyone is on their toes and looking for opportunities is key to making it out the other side. And, if you’re communicating the situation with your team honestly and effectively, chances are you’ll be surprised at the positive behavior you see.
(6) Communicate with your team more often. Any gap in communication you leave with your team is going to get filled up by rumors. It’s not malice, necessarily, but people need an explanation for the things happening around them. So make sure you’re proactively filling those communication gaps.
(7) Be honest. In your communications with your team, there’s a difference between openness and honesty. Openness is negotiable. Honesty is not. Everything you share must be true, but it’s up to you as the manager to decide what you need to communicate so that people have enough information to do their jobs – and do them well.
(8) Remember that it’s okay to say “I don’t know.” If you can't answer an employee's question, especially about what will happen in the future, don't make something up. Spinning stories just gives you one more thing as a manager to keep track of in an already stressful environment.
(9) Brainstorm with your best. You’ll get good ideas and solutions and you’ll show your high performers that you value them. One of your largest risks in this period of crisis is going to be losing your best people. They have the most options, and they know it. Letting them into the problem solving process lets them know they matter.
(10) Micromanage. Most of the time, we recommend against this. But rule, meet exception. In crisis, you have to take the reins. The key is to set expectations with your team about what you’re doing and why: "Hey, I'm going to be reviewing things I don't usually review and I'm gonna be getting involved in decisions I typically let you make. And this has nothing to do with a change in the trust level of our relationship, and everything to do with our lack of margin for error."
(11) Don't make promises you can't keep. Vowing to keep jobs or not cut pay or benefits when you're not absolutely 100% sure that's true sets up the potential for you to violate trust with your people, and it might make cuts that you have to make in the future even more painful than they have to be.
Making Cuts
(12) Cut deep so you only cut once. Surgical oncologists refer to this as margin: the removal of potentially healthy tissue around the tumor to ensure an additional surgical procedure isn't necessary. The alternative death by a thousand paper cuts, and it's miserable.
(13) Know what you’re cutting. There are three types of cutting: Fat, muscle, and bone. Fat is expenses that can be cut without any noticeable impact to the business’s output or culture. Muscle is capabilities that are producing value right now, but can be regrown if they’re temporarily cut. Bone is capabilities that, once cut, may never come back without significant reinvestment. You may have to cut from one or all of these capabilities – do so with your eyes open.
Support
(14) Ask for help. From your landlord, your suppliers, your customers… Don’t be proud, and don’t wait until it’s too late.
(15) Talk to others. Leadership is already lonely. Leadership in crisis is even worse. Share what you’re going through with someone you trust.
(16) Don’t neglect your health. If you’re in the middle of a crisis, your inclination is going to be to work around the clock. But that’s a game of diminishing returns. You only have so many productive hours in the day, and your decision-making will be sharper when you’re exercising, eating well, and resting.
Read Mark Brooks’ Twitter thread on managing in crisis.
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