Practice Productive Paranoia (Avoid the 5 Stages of Decline)

The first step in being built to last is don’t die. The only mistakes you can learn from are the ones you survive. Every company is vulnerable to decline. There’s no law of nature that the most successful companies will inevitably remain at the top. Any can fall and most eventually do. Entrepreneurs who build great companies differ from less successful comparisons in how they maintain hypervigilance in good times and bad. Leaders who navigate turbulence and stave off decline assume that conditions can unexpectedly change, violently and fast. They obsessively ask, “What if? What if? What if?” By preparing ahead of time, building reserves, preserving a margin of safety, bounding risk, and honing their discipline in good times and bad, they handle disruptions from a position of strength and flexibility. Productive paranoia helps inoculate organizations from falling into the 5 Stages of Decline that can stop the flywheel and destroy an organization. Those stages are (1) Hubris Born of Success, (2) Undisciplined Pursuit of More, (3) Denial of Risk and Peril, (4) Grasping for Salvation, and (5) Capitulation to Irrelevance or Death.

This wasn’t a moment to stand back and let the team figure out what to do on their own. I needed to make sure people knew exactly what they were working on and had the tools to find solutions as fast as possible. I had to command and control.

In a crisis, everyone has their job:

• If you’re an individual contributor, you need to take your marching orders and start marching. Do your core job while continuing to look for and suggest other options to solve the issue. Try not to speculate or gossip. If you have concerns or suspicions, report them up the chain, then get back to work.

• If you’re a manager, you need to relay information from leadership without overwhelming or distracting your team. Check in with the team a couple of times a day—try not to harass them more than that (hourly messages just freak everyone out). You need to be there for them, not just to ensure that the work is getting done, but also to make sure they’re okay. You’re the first line of defense against burnout. The pressure, stress, red-eyes, and bad food in the middle of the night will get to people. You may need to give everyone a break—even during a crisis. Remember to set expectations and limits. You’ll probably have to work over the weekend. Okay. That happens. But tell your team what the plan is: we’ll work hard on Saturday but everyone needs to get out of the office at 5 p.m. and then we’ll have a check-in on Sunday night.

• If you’re the leader of a broader group or company, you probably spent years of your life unlearning the tendencies of micromanagement. Well, if you’re in a crisis then it’s time to be a micromanager again.

You’ll need to dig into the details—all the details. But you can’t make every decision on your own or fix everything single-handedly. You have experts, so you’ll need to delegate to them. Agree on the microsteps that need to be taken, but allow them to take those steps without you. Schedule check-ins in the morning and at the end of the day and instead of getting the usual weekly or biweekly reports from your team, start going to their daily meetings. You have to be in there, listening, asking questions, and getting necessary information in real time. You might have to be the conduit of that information to the rest of the company, to investors or reporters or whoever else is watching this situation like a hawk. You need to be able to answer their questions. You need to keep up their confidence that you’re getting somewhere.

Clear your calendar of nonessential meetings. Focus entirely on fixing the problem. And don’t let yourself get knocked off balance— you’re human. Don’t make things worse by losing your mind and ignoring the things you need to keep your head on straight. That might be exercising or resting or having dinner with your family or lying on the floor under your desk for ten minutes quietly singing show tunes. Whatever you need. And remember, your team is human, too—people need to go home. They need to sleep. They need to eat. And they need to feel like things are getting better.

It’s your responsibility as a leader not to try to deal with a disaster on your own. Don’t lock yourself in a room, alone, frantically trying to fix it. Don’t hide. Don’t disappear. Don’t imagine that by working for a week straight and not sleeping you can solve the problem yourself and nobody ever has to know. Get advice. Take deep breaths. Make a plan.

Then put on your rain boots and walk into the tidal wave.

The silver lining is that once the crisis is past—assuming you survived it, of course—you’ll have a team that’s gone through hell and back and is stronger for it. You’ll have time to go figure out the why—why did this happen in the first place? And what can we do so it doesn’t happen again? That may mean someone gets fired or the team reorganizes or the way you

communicate with each other drastically changes. The process may be lengthy and unpleasant.

The decision to disrupt businesses that are fundamentally working but whose future is in question—intentionally taking on short-term losses in the hope of generating long-term growth—requires no small amount of courage. Routines and priorities get disrupted, jobs change, responsibility is reallocated. People can easily become unsettled as their traditional way of doing business begins to erode and a new model emerges. It’s a lot to manage, from a personnel perspective, and the need to be present for your people—which is a vital leadership quality under any circumstances—is heightened even more. It’s easy for leaders to send a signal that their schedules are too full, their time too valuable, to be dealing with individual problems and concerns. But being present for your people—and making sure they know that you’re available to them—is so important for the morale and effectiveness of a company.

Creating the conditions for a cultural transformation takes all the tools at your disposal. You can’t, for example, command an internally focused culture to magically metamorphose into one that canonizes its customers. You have to nudge, suggest, cajole, and ultimately convince people that the new environment you’re proposing really is the best one for the business and, perhaps more important, for themselves. That takes time - and a good sense of timing.

Some leaders look back on their first hundred days and say, “If I could do it again, I wouldn’t hesitate so long to make those key people changes or that strategic move.” Others were glad they exercised restraint. In most cases the timing are dependent on the situation.