Virtually all startups are very exciting – at the start. But virtually all startups hit speed bumps, or worse yet, go totally off the rails.
A crisis is the true test of your investors and fellow founders. It’s very easy to be supportive and enthusiastic as the company moves from idea to prototype to product to actual paying customers. Everyone gets very caught up in the excitement of a fast growing company.
But what happens when things go wrong? That’s when you will find out what your Board and senior execs are made out of. At Course Technology we had a major problem with our printer, which meant our book/disk product would not ship in time for our customers. Our CEO accompanied a bunch to their plant to help the printer’s staff get the product out on time. No one panicked. I’m not even sure if the Board knew that we had run into a major problem that seriously jeopardized revenue and customer relationships or how it got solved.
There’s a great quote from Ariana Huffington, founder of The Huffington Post (and a Board member at Uber!) in The New York Times about crises:
“Knowing how to deal with crises without being overwhelmed — keeping one’s head while people all around are losing theirs — is the most important leadership quality. In times of crisis, people often overreact and move into very dark places where they have a hard time seeing their way out.”
So how will you know how your executive team and your investors will react when your company runs into trouble? One thing is to make sure every interview you conduct includes the question, “Tell me about a time when something went seriously wrong and you were responsible for fixing the problem.” The second thing to do is ask this question of your employees or investors references: “How did they react when the company had a major problem?”
I think the reason that sports and “adventure trips” are popular amongst founders is they are good proxies for business. How do your employees react when their team loses, and loses badly? How do teammates react when one of them makes a bad error that might even result in a loss? Of if the team is off mountain climbing, how do they deal with an unexpected snowstorm?
Every startup will go off the rails at some point. Knowing your team has helped put another company back on track will provide you with the confidence that you can handle your problem too.
While I’m not sure that handling crises is the most important leadership quality – in my opinion it’s the ability to inspire the company and set direction – it’s certainly critical. So don’t wait until you have a crisis to find out what your team and investors are made of. Perform your due diligence before they join the company and consider what sort of activities can test your teams ability to handle problems. As the say goes, “When the going gets tough, the tough get going.”