According to the National Bureau of Economic Research (via Forbes), the U.S. economy has been in a recession since February.
For entrepreneurs of a certain age, this isn’t news. They can recognize the signs because they have been here before. In fact, this is the third time they’re confronting financial chaos in just 20 years. These entrepreneurs were at the helms of tech companies during the dot-com bubble of 2001, only to face economic turmoil a few short years later following the 2008 market crash. What they learned through those experiences have undoubtedly prepared them to lead their businesses through the financial crisis currently gripping the country.
For those new to business or leadership positions, this is a learning curve. Economic uncertainty is challenging. That said, there are several lessons you can take from the past to ensure your company is best positioned for success.
Rethink Your Business Plan
Tackling uncertainty isn’t easy, particularly when considering your existing plans and thinking about the future. It’s important to come to terms with the new normal as quickly as possible. We aren’t going back. In 2001, when the tech bubble burst, we learned that the world changes after major disruption. Coming to terms with this sooner rather than later can provide a competitive advantage.
As part of this, it’s critical to reframe your business plan for two years. It will take time for your business to adapt, and you need to be prepared for that. At the same time, we don’t know what the future holds, so looking beyond two years isn’t necessarily useful at this stage. When setting the plan, your company’s long-term strategy should not change, but your rate of investment should slow slightly. For example, if you had five key areas you wanted to pursue this year, you might choose to start with two and tackle another the next year.
Contrary to popular belief, it is paramount that you resist the urge to make cuts to survive. Instead, think about cutting costs to facilitate growth. That may seem like a luxury, but it’s the only way to come out successfully on the other side. Again, your long-term business strategy should remain intact, so consider the cuts you can make to help manage costs in the short term but that will actually enable your long-term growth strategy.
Finally, you absolutely need a plan B, and probably a plan C, but don’t give up too soon. Have confidence that you can rely on your backup plans but remain on course. You may be surprised by how little you need your fallback options.
Invest In Company Culture
There is often a debate between prioritizing company culture or business strategy, and particularly in a crisis, business strategy tends to win out. Our current environment has the majority of employees working remotely, many for the first time. Not only have impromptu hallway conversations, coffee breaks and happy hours become nonexistent, but employees’ personal lives have been upended.
Investing in company culture is more important now than ever before. In fact, there has never been a stronger need for companies to facilitate “fun” that employees love to complain about. These activities don’t need to be complicated or expensive. Start the week with a team meditation. Host a daily BYOB coffee break or happy hour via Zoom. Conduct virtual events that offer employees the chance to introduce their significant others, children, pets or homes.
Look for opportunities to show employees their hard work doesn’t go unnoticed. Maybe that is a gift card for dinner or a subscription to a meditation app. Particularly for those who are new to remote working, the risk of boredom, sense of isolation and loss of community are high. You don’t know just how much someone might need that companionship.
Company culture during a crisis is also dependent upon communication from senior leadership.
Particularly when your staff is remote, there is no such thing as overcommunication. It’s essential that leadership is available to employees and communicates openly about the challenges and plans for the future, for better or worse. When possible, providing employees a forum to ask questions and offer ideas can be particularly beneficial and encourage ownership in the process. This can not only lead to a better company culture, but a more productive, empowered and invested workforce.
Redefine Your Leadership Approach
As the leader of a company, you are likely accustomed to having all eyes on you. During moments of uncertainty or significant change, this is particularly true. As employees continue to balance personal and professional obligations, manage job security fears, deal with financial stresses and health risks while battling remote working burnout, they will look to senior leadership for guidance.
It’s important to remember the full range of outcomes. During stressful moments, you see many people anchor in the possible negative results, but there are a number of ways in which a decision can net positive, and it’s essential to give both sides equal focus. When you do this, you redefine reality and give hope to those around you. It’s OK to show that difficult decisions are painful, but ultimately, it’s your job to show the path forward.
An important opportunity to lead by example exists around work habits. We know that routines are important. Closing your laptop and truly shutting it down is an important part of that routine. Your ability to set structure for yourself will enable your managers and the rest of your organization to do the same. The risk of burnout is high and is easily avoidable. This is a marathon, not a sprint.
Learning from the past teaches us how to prepare for the future, invest in our culture and think about our role as leaders so we can succeed. The situation can seem dire, but it’s important to remember that some of the best innovation comes from necessity. Don’t panic, stay true to your strategy and be open to ideas along the way. You might be surprised where you are when you look back on this moment.