This post is by Jeff Carter
from Points and Figures
Don’t know about you but this whole COVID19 virus thing has been a lot of fun hasn’t it? Sort of kidding about the fun part. However, one thing a leader can never do is lose their sense of fun in a crisis. It helps keep your team loose-and it helps keep their minds active.
I am not saying to become a big practical joker. What I am saying is great leaders smile a lot during a crisis. They physically exhort and encourage their teams. They just say out loud, “Isn’t this fun?” and smile. They do things that help give their team a sense of hope. Hope drives down to determination because without hope, all effort is fruitless and you will fail.
My friend Jeff Minch wrote a little piece on leadership the other day and I wrote one about penalizing failure as well. However, I am reinforcing it today. As JLM says, there are no perfect leaders. Some leaders are great when it comes to confronting a crisis but that same person is not a good leader when things are calm.
One thing I want to stress and point out with emphasis. When you are managing through a crisis you won’t get “good data”. It really rubs me the wrong way when I ask someone about their thoughts on something and they say they are a “data dog”. It’s totally avoiding the question. When you are managing through a crisis, you need to assess the quality of the data you have but more important is to get great clean “information”. Information is different than data. Sometimes you can’t put information in a spreadsheet.
Crisis leaders that wait for good data sit on their hands and don’t do anything. That’s when the situation overwhelms you and you lose.
Crisis leaders quickly assess risk and reward. They make decisions that are for self-preservation but sometimes if they see an opening they make decisions that are opportunistic. There are times to do each and it certainly depends on your condition prior to going into the crisis.
If your business was cash strapped going into the crisis, you aren’t suddenly going to find a new pile of money during it. Virtually everything you do will be hard. However, you can create gains if you find the right seam to run down.
One thing you absolutely cannot do in a crisis is be selfish. Selfish leaders will die upon the sword themselves and it won’t be heroic. History will not remember you well and you might just be a footnote. Churchill was an example of a great crisis leader. If you know how General Mark Clark ran the WW2 battle in Italy, you will have been exposed to a General who made consistently poor decisions. If you don’t know the legacy of the 442nd, which was sent into horrific unwinnable battles by Clark, learn it. Here is a little history for you:
When sent to Italy, he was not happy with one General, in particular, Mark Clark, who had rerouted troops in an attempt to seize Rome. Truscott felt that the attack was Clark’s vainglorious attempt to stroke his own ego, demonstrating little regard for the well being of the men, or the bigger picture of the war’s goals. He did not wish to participate in what he deemed to be an exercise in ego.
Recently, Nancy Pelosi intercepted a bipartisan process because she was selfish. Her ego got in the way. She not only crushed hope, but she is trying to leverage her position to attach all kinds of irrelevant ideas to a bailout bill. It’s a lesson in how not to lead during a crisis. She will go down in history as a non-functional leader in my opinion. Contrast that to what Gov. Cuomo is doing in NYC. Other Governors have been very slow or just do #me-too leadership. Afraid to take action they say they have experts and are waiting on data but the reality is they are just not great crisis leaders. They are selfish and their own ego gets in the way.
When I was trading, certain times became crisis management. You worked differently during that time. There are decisions that I made during crisis management times that I would never make during regular time. Given historical data, some of my decisions looked kind of crappy. But at the time I made them, they seemed like the right decision. That’s the difference between Crisis CEOs and analysts, consultants, academics and number crunchers. You don’t have the luxury of a lot of time to act.
As a leader, if you can figure out ways to extend time it gives you a breather. If you are a small business or startup today, maybe it’s an SBA loan. Maybe it’s a convertible debt round at what you would normally think is an inferior price? Are their short term things you can do to extend time? How can you cut your cash burn without long term implications for the business? Taking that sort of action gives you the chance to think clearly about your next action. When you make a decision, don’t look back. The time to rehash is once you get to the other side of hell.
Great Crisis CEO’s have a good sense of first principles, but they are willing to apply them in unique ways. This is how a startup CEO might look at what they are doing through a different lens and find an opportunity.
You are not going to hit home runs. Don’t swing for the fences. It’s about Risk/Reward, making decisions that align with your core mission and then executing on them.
Virtually all the CEO’s in our portfolio are doing things during this crisis and not sitting on their hands. They are utilizing the information at hand and trying to create an opportunity. They are talking to their teams with a sense of hope, not dread. I want to give you a few examples.
Megalytics is a company that analyzes commercial real estate risk. If there is a time when CRE Asset Managers would like to know the risk in their portfolio, now is the time! However, Megalytics has found a new place to apply their data. Megalytics recently came up with a new application for COVID-19, using the same technology they have been using for years in other real estate applications. It turns out, this sort of thing was absolutely a game-changer in China when it came to tracking and controlling the spread of the virus. As we re-open our economy this tech will be vital. They can geofence an infected site and track from the date of infection many of the people that were in the same building and where those people live and work, and also where they might have gone before and after leaving the building. On a recent CNN Town Hall, they mentioned contact tracing as the only way to really get on top of this for community spread and this is the best way to accomplish this. Although not perfect, it can be used in conjunction with other data sources and can be very good to get on top of things.
Holberg Financial has created an entire program to help companies help their employees deal with financial stress. No doubt this is happening worldwide today. It costs you nothing right now. This crisis has illuminated its mission more than anything that has happened since the company was founded.
Pipit Global moves cash digitally. I saw in the bail-out bill there was a notion of creating a digital dollar. Pipit already has the tech so financial institutions can move cash digitally. It happens fast and it’s cheap. All financial institutions have to do is plug into their process. It’s simple to set up. There are also fears of the virus living on hard cash. Pipit alleviates that concern because you can have cash, but never touch it.
FinMkt has set up a network where financial institutions can increase their loan volume at low cost. All of a sudden, she has inbound interest from financial institutions to be a part of her network. If you are a bank, a credit union, or a non-traditional loan provider she can give you easy access to finding good opportunities to extend credit that won’t blow up your business. In a situation where cash is in high demand, this is a good way for you to meet it.
The CEO’s in my angel portfolio aren’t sitting on their hands either.
Ycharts has set up a whole new dataset with COVID19 stats so you can compare and contrast looking at different financial information as it relates to COVID19.
NuCurrent is hiring! Their wireless charging technology could be huge in an environment where people are scared to touch things.
Yes, a mandated government shut down sucks for increasing top-line revenue. But, you cannot stop. You have to give your team hope. Finding rays of sunshine to pursue is a way to give your team hope. Finding low-risk opportunities to capitalize on gives your team hope. Sitting on your hands and waiting for data that will come when it is too late will kill your firm.
Remember this and let it be a guidepost for you