The Great Turnaround
What if 2020 wasn’t such a waste after all…
The World Economic Forum called for The Great Reset in 2020. Following a fundamentally changing context for decision-making, we have an opportunity to rectify inadequacies in our systems (from healthcare to finance) with the purpose of making them work for our lives, livelihoods and the planet. For this to work, though, we can’t just shut the machine down, and turn it on again. Or erase everything on that page and started drawing anew. There is no point in throwing the baby out with the bathwater; we can’t just make another baby you know..
We need to build on our own best.
When the pandemic hit, a big part of my role advising the WeWork start ups was to lend my business expertise, gather timely market insight, and advise on what to do next for each individual company that asked for help. Some of that process looked like this:
- I sat down with some of our founders and analyzed their runway and what they could do to extend it. I then motivated our founders to think of the value of resourcefulness and avoid a mentality of defeated-ness.
- I also showed them what our VC friends had advised start ups to think about: advice on protecting employees and the business. And inevitably comparing companies not to unicorns but to dark horses or camels. (but enough of the zoo analogies.. before the Tiger King shows up to steal the show.)
- And I ran a whole Europe-wide Investor Readiness program for our founders on how to prepare themselves for investment. Founders thought through their milestones, dug into their KPIs, and connected those in a coherent investment story — through Covid and beyond.
If we want to look back on 2020 one day, and call it a “Great Reset”, we need to complete a Great Turnaround.
I believe this year we took on the doubtfully pleasant task of performing The Great Turnaround. And we had to do it all together and all at the same time, considering multiple layers of players upstream and downstream, and sideways — left and right — and north and south… you get the point. Unless we were making PPE, or were growing video conferencing apps, or were the CEOs of big tech companies, the majority of us completed the first 4 steps in a classic turnaround:
- Determine where your value is (now - in the short term)
- Simplify the product line (yes, say b-bye to peripheral products)
- Shed off the extra weight (yes, yes, and people)
- Strengthen the core
The world has done this many times, and we have good examples for this. Apple is one such example, and in case you haven’t read the case, the below abbreviated version will be of interest.
In 1996/97, Apple was struggling. Steve Jobs was back to a company with an overburdened product line with dozens of models across four vague categories (Macintosh, information appliances, printers and peripherals, and “alternative platforms.)
In “Good Strategy / Bad Strategy”, Richard Rumelt, a business strategist on Apple’s turnaround, summarises what Steve Jobs did to return Apple to glory.
“[Steve Jobs] shrunk Apple to a scale and scope suitable to the reality of its being a niche producer in the highly competitive personal computer business. He cut Apple back to a core that could survive.
Steve Jobs talked Microsoft into investing $150 million in Apple, exploiting Bill Gates’s concerns about what a failed Apple would mean to Microsoft’s struggle with the Department of Justice. Jobs cut all of the desktop models — there were fifteen — back to one. He cut all portable and handheld models back to one laptop. He completely cut out all the printers and other peripherals. He cut development engineers. He cut software development. He cut distributors and cut out five of the company’s six national retailers. He cut out virtually all manufacturing, moving it offshore to Taiwan.
With a simpler product line manufactured in Asia, he cut inventory by more than 80 percent. A new Web store sold Apple’s products directly to consumers, cutting out distributors and dealers.
What is remarkable about Jobs’s turnaround strategy for Apple was how much it was “Business 101” and yet how much of it was unanticipated. Of course you have to cut back and simplify to your core to climb out of a financial nosedive.”
While the theory of this turnaround can be easily found in business books and case studies — and oh boy didn’t we talk with our WeWork founders about finding your value, and simplifying the business operations — the human side of how to cope and how to come on top is not always obvious.
I spoke to some of the most prominent founders based in WeWork about their experiences in 2020 and how they turned around (and some of them even allowed me to publish their name). In the midst of being forced to cut down on social interactions, and previously assumed business opportunities, founders employed various business and personal tactics.
A couple of themes emerged, in how founders went through a crisis and found strength to keep on moving on. You will notice, it starts within the individual:
1. Embrace Realism — accept reality and cut your losses short. Some things (projects, relationships, etc) are not meant to last through adversity. And that’s alright. Our founders said, if your heart is not in it, you will find yourself looking away, so it is in everyone’s interest to just drop it. Just because you can, doesn’t mean you should. Some founders did say goodbye to their creations, and are already happily building new things.
2. Choose Quality — surround yourself with smart people who push you to be better and brighter (in and out of work). Founders did this with their employees, advisors, and customers. As someone put it, “loving what you do and working with amazing and talented people is paramount; without that we would not have ended 2020 on such a high.” Some founders worked on themselves too— like Bruce, founder of fitness app SoSweat, who managed to learn a few new coding languages and squeeze in time for reading 75 books this year.
3. Allow the Low — feeling deflated during the pandemic is normal (who didn’t go through their low points?). People were disappointed, betrayed, hurt, and simply… tired. The key for some has been to allow themselves to go through that mental process and set themselves a deadline. Pick a time, and set that your lowest. Let yourself hit a low consciously, so you can keep in control and gather the strength to bounce back.
4. Find Your Humanity — at the end of the tunnel (and it might be a long tunnel!) we all looked for the light. And even in the face of “poor patterns of behavior” we tried to help others, and make them better. Because on some level it helps us too. Sustaining a positive momentum remotely was a challenge for founders, but thankfully they had the necessary amenities to keep going even through escalating tiers of lockdown. As a friend of mine puts it, “It is great when your friends have good news in all this shait, because it reminds you the dynamic can change.” And we all want it to change.
This year I did my own turnaround of sorts, focusing mentoring and developing deeper relationships with fewer founders; focusing on my value and passion, and running the Investor Readiness program (looking forward to the new iterations in 2021!). There are early signs of the efforts working — IR has been very highly regarded by our founders; and of the start ups I advise, one has been growing more than healthily even through Covid, another one got accepted to YC, and one had an exit. Maybe, just maybe, 2020 might not be a total waste after all?
In the next months to a year, we need to complete the turnaround. We need to complete step 5:
- Build around the stable core
Now that we have gone back to basics, it is time to build on that core. Each and every one of us, and still roughly all at the same time! If 2020 didn’t give us what we had worked for, it is time to claim it ourselves. It is time to get angry, get going, and get building. And just make sure that whatever we build works for our lives, livelihoods and the planet.
Then dress up and stay classy ✌🏼
(And before my friends ping me with this, Yes, the irony of someone working at a company going through a turnaround and calling 2020 a “turnaround year” is not lost on me, so here is an independent report on that comeback story. You are welcome!:)