The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew.
Rousing words from President Abraham Lincoln, taken from his 1862 annual address to Congress. It’s a call to action which has resonance with the current COVID-19 driven turbulence, where the need for new leadership attitudes and new thinking to face the challenges is needed, a ‘can do’ spirit in the face of adversity.
But most businesses hesitate to adopt new thinking and look outwards during a crisis, instead they focus on hunkering down and a low-key ‘back to basics’ existence, defaulting to a cost-reduction focus. Whilst this can secure short-term protection, it rarely offers a life-saving strategy, and certainly impedes thinking beyond the immediate time horizon – plans for new ideas and investments are put on the ‘wait and see’ pile.
However, there is a tradition of innovation and entrepreneurship in times of great hardship. The Great Depression of the 1930s saw several successful companies that did not delay investment in their future. One was DuPont. In April 1930, Wallace Carothers, a research scientist, recorded the initial discovery of neoprene (synthetic rubber). At the same time, DuPont’s financial performance was suffering, with sales down 15% that year. However, maintaining a long-term view on their strategy, DuPont boosted R&D spending.
A lack of competitor ambition and low raw-material prices helped the company keep the cost of its research investment manageable. Neoprene, which DuPont publicly announced in November 1931 and introduced commercially in 1937, became a major C20th innovation. By 1939, every car and plane manufactured in America had neoprene components. Alongside this, DuPont discovered nylon in 1934 and introduced it in 1938 after intensive product development.
When Henry Ford’s first Model T rolled off the assembly line, listening to music in the car meant the passengers were singing. Then two brothers, Paul and Joseph Galvin, who had started Chicago’s Galvin Manufacturing to sell electric converters for battery-operated radios, needed new revenue after the Wall Street Crash.
By teaming up with William Lear, who owned a radio parts company in the same factory building, and audio engineer Elmer Wavering, they installed the first car radio in May 1930. The next month, Paul drove 800 miles to a radio manufacturers’ convention in Atlantic City. He parked uo near the pier and cranked up the radio, coaxing attendees to look and listen. Orders began flowing in. In 1933, Ford began offering factory-installed radios from the brothers, and Galvin Manufacturing changed its name to Motorola.
Thus although deep downturns are destructive, they can also have an upside. The Depression-era economist Joseph Schumpeter emphasized the positive consequences of downturns: the destruction of underperforming companies, the release of capital from dying sectors to new industries, and the movement of high-quality, skilled workers toward stronger employers. For companies with cash and ideas, history shows that downturns can provide enormous strategic opportunities.
So how are you going to face the COVID-19 challenge? Let’s use Harvard Professor John Kotter’s seminal book, Our iceberg is melting. On the face of it, it is a simple tale of a group of penguins who are scared about losing their home and lifestyle because their current habitat – their iceberg – is melting, and yes, even more scared of the changes that could entail – it’s a useful analogy to the challenge we currently face.
The book narrates how the penguins discover a major problem which highlights a need for radical action, and how they adopt a process to secure survival, captured in Kotter’s eight principles. Through this simple allegory of their struggle for finding their new home, the story delivers a powerful message that is relevant for startups as they search for their sustainable icebergs of opportunity in today’s COVID-19 environment.
In the story, Fred is an observant and curious penguin – maybe a data scientist in a penguin’s disguise? He observes that their iceberg home was melting. Not one to just wait for his daily quota of squid, he spoke to Alice.
Alice is one of the leaders of the colony, practical and mentally tough. Alice initially wondered if Fred was suffering from a personal crisis – had he missed his morning fishmeal? But she was patient, and she rapidly became alarmed when she saw the cracks and fissures in their iceberg.
Alice brought Fred’s concern to the rest of the leadership team, and eventually the colony waddled their way to a miraculous solution, enjoying quite a few squids on the way, showing that in order to survive in the face of adversity, you need a vision, a process and teamwork.
Let’s cut back to the reality of our COVOID-19 world, where the tech market is the iceberg and is melting in a maelstrom of new, emerging economic paradigms, contradictions, red herrings (Alice’s second favourite food) and more twists and turns than a King Emperor swimming at 30mph in the Antarctic sea.
Facing a startup founder this Monday morning is a mass of data, noise and emotion, looming from customer information to cashflow to marketing. Then the blogs, podcasts and twitter offering insights, opinions and comments. Against this backdrop of a constantly changing situation, a founder has to balance cash, tech and well-being of their people, to survive in the near term.
Let’s look at the eight steps for survival and adaption outlined in Kotter’s book, and see how they apply for your startup trying to survive and evolve in today’s shifting, mutating market.
1. Set the scene
Create a sense of urgency – don’t wait until your iceberg starts to melt Fred discovered the iceberg where the colony lives is melting. He tells Alice, who is initially sceptical, but she sees how urgent the situation is. Alice tells the leading council of penguins, most of whom don’t believe her. But Fred shows the penguins the urgency of the situation.
For startups, it’s a combination of instinct, hunches and data. But the message from the iceberg is that difficult problems won’t go away, and you need to help others see the need for change and the importance of acting immediately.
Pull together the guiding team A team of five penguins is put together to deal with the situation, they immediately start brainstorming ideas. This team has to focus on driving a balance between creativity and data driven decisions. Unexpectedly, their inspiration for a solution comes from a passing seagull, which happened to land on their iceberg.
For startups, the lesson is to ensure there are problem solving skills, not just creative thinking skills in the team, and to maintain a sense of balance around domain expertise and outward looking curiosity of your immediate environment for potential disruptive ideas. Never get complacent that you have all the questions – let alone the answers.
2. Decide what to do
Develop the crisis vision and strategy The inspiration from the seagull led to a solution, which would change the way the penguins lived. They would become a nomadic colony that moved to locations suitable for living, rather than being static. This would be a big change to the penguins, who had lived in one location for years, and were used to their current way of life.
The business learning here is to keep an open mind, and be prepared to pivot – in essence to start again. To find a sensible version of a better future, hold you vision – keep all the penguins together – but have a strategy that responds to the changing environment, and one that isn’t constrained by previous thinking.
Communicate for understanding and collaboration Though the team had now found a potential solution, they needed to get the buy-in of other penguins. There were penguins that were very sceptical and thought either the whole thing about the melting iceberg was nonsense, or it was too dangerous to move.
In a startup, avoid hierarchies and promote open communication at all times, change makes people nervous, and uncertain times combined with gaps in communication makes this worse. Ensure frequent and open communication with regular and personal attention.
3. Make it happen
Empower others to act The team found ways to include other penguins to become part of the solution, and because others felt part of the solution, the opposition decreased.
Opposition to change arises because of a lack of engagement and inclusion, and creates a feeling of not being valued. Remove as many these barriers as possible – a change of direction in a startup, as a result of the iceberg melting, needs everyone to be engaged, empowered and together.
Produce short-term wins When other penguins got involved they started achieving short-term goals, which were necessary on the way to the end result. This encouraged and motivated the penguins to keep working towards the solution.
Create some visible, unambiguous successes as soon as possible. Short-term wins create a positive atmosphere that everything will be ok, even if there are some tougher challenges ahead.
Don’t let up The colony finally moved to a new iceberg, but they didn’t stay there. They found a better one and moved again. They were not giving up but kept looking for better living situations for the colony.
The lesson for startups is to remain restless and ambitious, never resting on your laurels, adopting a culture of continuous learning, pressing harder and faster after the first successes. Be relentless with initiating change until the vision is a reality.
4. Make it stick
Create a new culture Actions were taken to cement the new culture in place, there was no going back to old ways of living. This ensured that the changes would not be eroded by stubborn, hard-to-die traditions or a lack of focus on the future.
As a founder facing the COVID-19 crisis, constantly looking forward to new horizons and don’t get stuck in a way of being that was successful in the market of yesterday. Ask yourself whether you are living on a potentially melting iceberg and getting stuck in pack ice.
The reality is that you maybe fit for purpose today but recall Darwin: it is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. As the Roman poet, Horace, so eloquently said: Adversity reveals genius, prosperity conceals it
I am going to remain optimistic, and that’s because adversity is what breeds innovation, a mother of necessity. Facing difficulty is a time when people’s best is brought out in them, as shown by the examples of innovation earlier.
These are nervy, volatile times. Are you struggling to find the right balance between caution and optimism? No one knows what will happen next, but taking less risk and hunkering down is actually more dangerous than investing to preserve a number of future-focused options.
There are lessons for us all in the attitudes of penguins – in the face of a meting iceberg, everything-is-possible and optimism rules. A similar strong sense of the impossible is essential to driving startups this week, positive energy and exuberance is needed against the constant stream of maudlin and misery we could sit in.
In 1923, economist John Maynard Keynes observed that in tempestuous times we only tell ourselves that when the storm is past, the ocean is flat again. Let’s tip that out, rather than merely resisting COVID-19 and economic collapse, you must pivot sharply and prepare for the new future ahead, and do that now.
Confidence and certainty are lacking currently, we’re running a severe optimism deficit. We’re never the most upbeat of nations. Adversity introduces a man to himself, face to face. In times of adversity, we really discover who we are and what we’re made of. Hardships prepare ordinary people for an extraordinary destiny. Now is your moment.