How are CEOs emerging into the fast lane?
Pete Daffern and Howard Bell have lived and led through crash and recession, helping to build six unicorns between them along the way. Talking to CEOs around the world, they’re beginning to see patterns emerge in the behaviours and decisions companies are taking. “It’s like a motorway,” says Howard. “At the start of lockdown, many companies were moving from fast lane to slow lane or into the hard shoulder.” But many, proving their resilience and power to change, are now moving from slow lane to fast. So as we emerge into a new reality, how are things looking for startups?
“Using this motorway analogy we’ve been able to map each venture with some precision,” says Howard. “Which lane they were in, which direction they were going, whether they were in the wrong lane…”
“And then there were those who thought they were in the fast lane, but in fact were in the slow one,” says Pete. “But as long as they were willing to take the right help, they’ve been able to get going again and move towards the fast lane, stronger, more focused, more aligned, back towards category leadership.”
“I know one CEO in Europe, who went into the deserted office that first weekend of lockdown, grabbed all the desktop monitors and drove around to everyone’s house, dropping them off ready for work on Monday,” says Pete. “Since then, they’ve changed their sales model, added components to the product and refined the mission critical core. They’re coming out of this stronger and they’re going to hit their numbers.”
“The question is, how real have CEOs wanted to be?” says Howard. “Could they get hold of the data? Did the data speak to them in a way that either jarred with or reinforced their previous beliefs? Were they able to be truly dispassionate, or were they still just stuck in last year’s pitch?”
The CEOs who have been doing it right, in Howard and Pete’s opinion, have been looking at reality, week on week, day on day, seeing the change, tweaking the dials. “They’ve been iterative, in a way that all good startups should behave anyway,” says Howard.
Sometimes, the honest answer has been “I have no clue, and neither do you.” That can be tough to say if your board is bearing down on you, but it’s the people who have been seeing and telling it like it is who are succeeding in lockdown.
“I’m not working with a single company that hasn’t changed its business model in some form or fashion,” says Pete. “Many customers are seeing that now’s the time to get the new systems in place. There might be a bit of churn, but one company I’ve been working closely with just had its best new sales month ever.”
Ways of working are also changing. Some aren’t renewing their lease on office space. They’re imagining an office a third of the size, a ‘hotel’ where teams can meet. With some spending £25-60,000 a month on rent, that’s a significant change.
Focus to grow
“We bang on about this – and we were pre-Covid – but it’s all about focus,” says Howard. “We see too many businesses that think they can do everything for everyone at the same time. The pandemic has forced a discipline that wasn’t there before. It’s forced focus.”
The stakes are higher and bolder decision-making is required, but there is no amber now, only red and green. In the early days of lockdown it was “what must I do to survive?”. Now it’s “what must I do to grow?”
“The quality of engagement is higher,” says Pete. He’s referring specifically to Zoom meetings – the new “face-to-face” medium. “People show up on time, they’re sharper, more focussed. Our own workshops are actually more efficient, we’re getting more done and reaching more people.” Pete and Howard have been talking recently to CEOs in the Philippines, Holland, Toronto and the US – some from a cold start. “No dinner the night before, no beers after but with the right commitment we’ve got into quite a level of depth.”
Howard has an issue with digital comms however: “As a leader, I valued the soft communication. Sitting in the cafe, over-hearing views, the nuance, the chats before and after meetings, absorbing feedback and impressions. How you replicate that on Zoom is the challenge.”
“True,” replies Pete, “but once a company gets to a certain size… I remember walking into Netsuite (Pete was President) when we’d grown from a company of hundreds to one of thousands in just a year – and realising that while osmosis is a wonderful thing, the company was now of a size that required more than just pints down the pub to interact successfully with employees.”
Pete’s daughter, Isabel, a Field Marketing Specialist at Optimizely, drops in on the conversation (an example of the lockdown home-working universe we now live in) and makes the point that while she lacks the social interaction with her co-workers she’d prefer, her connection and communication with her company’s leadership is fuller and more frequent than before.
So while direct communication between individuals, teams and leadership could now be more efficient, the softer, blurrier “osmosis” is harder to channel.
“Whether on or offline, lockdown is forcing us to make sure communication is world class,” Pete concludes, “whatever the size of the company.”
What are the conditions to start to bring in the new applications and the new segments, to start looking towards Horizon 2 again? Pete and Howard would say a pipeline that is as clear, controlled and measurable as you can get it.
They give an example of a company who cut their marketing budget by a third, locked in to just two of their three markets, cut out the third completely, and looked at the consumer data day-on-day. Only now is this company considering going back into that third market. “If the unit economics are there, if the demand is there and the capability to execute is there, then go for it, but in a measured way,” says Howard.
“Do it in a measured, thoughtful way. That’s what we’ve been saying all along,” says Pete. “Always come back to what the market is telling you through the data.” To get specific, this means you know the answer to these questions:
- what are your crown jewels?
- who are your target accounts?
- how many new leads do you need?
- what does the product roadmap look like?
“Your daily, bill-paying business should have this discipline, let alone your future initiatives,” says Pete.
The message to founders
To build a Paypal or a Netsuite, to $bn valuation, is really really hard. Emotional and rational honesty is required and the recent situation has forced that from the best CEOs. “Surround yourself with amazing people, get the team to work together and execute amazingly,” says Howard. Pete puts it even more simply: “Keep on testing and keep on learning. You can only learn by doing.”