Recession-Proof Leadership: Building an Anti-Fragile Company

Cole Abbott

[0:00:10]

With a potential recession looming, founders are grappling with crucial decisions on financial strategy and company positioning. What early indicators should founders monitor closely to accurately gauge the economic impact of their startups?

Mark Abbott

[0:00:23]

Well, so let's unpack that a little bit. We got a number of dimensions in this conversation. Number one, which is there's where the organization is developmentally. Developmentally. Number two, there's what's the nature of the industries. Some industries are going to be more susceptible to negative economic growth than others. Right. And then those companies, it's really dependent upon where they are developmentally in terms of, you know, stages of development. So let's, let's focus on companies that are, you know, stage three at least. Right.

Cole Abbott

[0:01:13]

Stage three meaning for those who have. Do not remember what that means.

Mark Abbott

[0:01:18]

Yeah, so, so that, so they're beyond product market fit. They're beyond just starting to prove that they can generate repeatable revenue. They're now to the place where they have various functions and functional leaders. Sales, marketing, operations, finance as an example, customer service typically. Right. At least at this stage. And so they've, you know, they have a, you know, know they have a company that's producing revenue. They may or may not be in a place where they're actually making profit. Most stage three companies are, most are, depends on how obviously sort of complex and long term oriented the business they're building is and where they are developmentally. But. Well, let's just assume that they're at least at stage, at stage three. Let's also assume that they're in an industry that is going to be adversely impacted by the recession. So the founders hopefully early on recognized that recessions are a thing. They tend to happen every 10 or so years and that you need to be prepared for the recession. How to be prepared for the recession? One is obviously financially, so hopefully you have some cash saved up, you're ready to, to weather the storm, number one. Number two, whether you've done it formally or informally, explicitly or implicitly, you've been thinking about, you know, when this day comes, we have the general sense for how we are going to respond. And so, you know, you've thought about like the nature of your organization, is it well positioned to withstand the reduction in revenues? As an example, as I said, there's a financial element to it for sure, which is having cash on the balance sheet. There's a, there's an emotional element to it as well. There's a structural element to it as well. So emotionally, you know, a good founder say, hey, you know, we are not having our heads in the sand, we are prepared. We have designed this business to be able to withstand a downturn. And, and when it happens, we're going to, you know, it's, it's going to put pressure on all of us. But, but we've built it so that, that, that, you know, we can minimize the level of disruption. We can minimize the having to let go people. We can minimize having to do restructurings. Not everybody, not every founder does this, but I think it's a very wise thing to do, which is when you're starting to build the company, think about the kind of company you're building, think about the marketplace that you're going to be a part of and to be relatively prepared for these moments. And as I said, it's financially, it's structurally and it's, you know, you, we can say emotionally or we can say culturally, but you know, that's, that's the best way to, to, to, to, to address moments like this. It's, it's actually have been prepared. I will stop there and see if you have questions on that and then we can obviously talk about what happens if you're not prepared.

Cole Abbott

[0:04:54]

That was. You're not prepared.

Mark Abbott

[0:04:56]

It sucks.

Cole Abbott

[0:04:58]

That's a great answer.

Mark Abbott

[0:05:00]

It does, right. And. Because what's going to give, is it, you know, is it going to be that you're going to borrow money? That could be a case, right? You may not have the cash, but you may have a line of credit enables you to withstand the storm. It may be that, you know, you have to do a reduction in force because two things. Number one, you don't need everybody to supply, to do the work necessary in order to fulfill the, the demand for your product. And in that particular case, is it a, you know, is it a, is it a layoff, like a permanent thing? Or is it just we're going to shut down for a couple weeks and everybody's going to have to deal with that. Maybe it's, you know, people take half their salary or something like that. There's a whole host of different ways that people can deal with a situation like a downturn in demand, a downturn in revenue. But, you know, the, the obvious things are you can either put more money in the business, you can bar what you, you put more equity in, you can borrow, you can lay people off. But, you know, what you really want to do as best you possibly can, is ensure that the. It's a bad metaphor, right? But the notion of cutting into fat versus cutting into muscle, right? You, you, you really want to be be sure that whatever you do, you're not fundamentally harming the long term viability of the organization. Right. You're, and, and, and across a host of different things. One, culturally. Right. Are we value violating our core values? Two, are we value, you know, are we going out and doing work that we shouldn't be doing? Are we violating our, you know, our compelling value proposition in order to just survive? Are we taking on non icps to survive? Some things are like, yeah, you can do that. Right. Figuring out any way you possibly can to generate revenue, but preserving the core on other situations, it's like, you know, you start laying off people that are really, really important to the company's long term success. And all of a sudden now, you know, to, once the company gets back into a better position, you go out, try to hire some people. First of all, people are going to be wild. Right. That company, you know, really didn't handle this, the recession particularly well. Now you got to go out and go hire people that are core. You got to train them up and you know, it's, it's, it's, it's hard and it could set you back significantly. The flip side is of all this is you're prepared to not just weather the storm, but actually take advantage of the storm because you went in recognizing that if there is a storm, there are others who are not going to be as prepared. And, and we're prepared to go out and, and take advantage of the moment. That's like, that's real leadership. Right. You're like, okay, this is happening. We're well situated for this and some of our competitors aren't. And so there may be an opportunity to either take their customers because you're, you know, your, your level of service, your level of performance is not the same. Maybe you can actually, you know, be aggressive in terms of terms, you know, for, in terms of how you're selling and how fast people have to pay you back because they're also dealing with, you know, the adverse effects of the, of the, of the, of, of the recession. So there's a whole bunch of different ways to play the game. Um, and, and, and, and the way you play the game is going to be in large part set up by how well you were ready for the game to be played.

Cole Abbott

[0:08:52]

And, and there's an element of experience here. If you've been around the, in the same situation before, Right?

Mark Abbott

[0:08:57]

Yeah.

Cole Abbott

[0:08:58]

Ten years prior.

Mark Abbott

[0:08:59]

Yeah.

Cole Abbott

[0:08:59]

Then you know what happens. Yes. Right. When it comes to leadership struggles.

Mark Abbott

[0:09:04]

Yeah.

Cole Abbott

[0:09:04]

And like, we need to tighten Things up. Refine the system.

Mark Abbott

[0:09:08]

Right.

Cole Abbott

[0:09:08]

Don't. If you're stuck on an island and there's no food, it's like, well, if I cut my leg off, then that's less meat that I have to fuel. It's like that's, that's kind of stupid. Don't do that. Yeah, right. And really just getting everything down to just the essentials and. Yeah. And operating through that and like the Warren Buffettality of just don't die.

Mark Abbott

[0:09:25]

Right.

Cole Abbott

[0:09:25]

And then you survive longer. You'll beat everybody out if you just never die. Yeah. You'll perform pretty well over time.

Mark Abbott

[0:09:31]

Yeah.

Cole Abbott

[0:09:31]

That's a thing. Right. There are a lot of companies that are fortunate enough to take advantage of recessions and things when competitors really just step back and don't do anything. And then you're like, well, you know, not a very helpful example, but an example is like Rolex. It's like when the recession comes and everyone else is like, well, people aren't buying watches and Rolex is like, well, if anyone's gonna buy a watch, it could be a Rolex. Right. So we can. They push heavy on the marketing when that stuff happens. And you know, this, that they see as an opportunity to step on the gas, not pull back. But obviously they're demand far exceeds their supply. So even in the worst of times, it's like, oh, the demand's probably not going to meet supply, so we don't have to worry about it. But I don't think anyone listening is going to be able to take the advice and use that as their model.

Mark Abbott

[0:10:17]

One more thing on this though is going back to being prepared. Right. So if things are soft and you're playing the long game, you know, softer moments are actually times for you to do work that you just hadn't been able to do. Right. Whether it's to clean up your factory or it's to reorganize. Right. The way your factory's laid out, or it's to clean up your processes or update your processes. There's a lot of things that most organizations, because most organizations are running lean, relatively speaking, vast majority of them. And they have a long list of things that they probably been wanting to work on.

Cole Abbott

[0:11:00]

For us, it's software like technical debt. Technical debt, yeah. You know, the physical world's like, well, yeah, well, things are probably messy. They gotta clean them up. They've been in the shadows and say, oh, well, now we have the time to go look into all that and invest in cleaning up our acts. That when things do pick Up. Yeah, we're better off than we were before.

Mark Abbott

[0:11:17]

Yeah. You know, as an example, if you have an organization that is specifically set up for hiring and things go soft on the hiring front, this is a great time to go to work on those things. You know, on your hiring system. What, what things have you wanted to fix that you didn't have any time to fix? Right. We, we literally have that opportunity right now and it's. And as I'm sitting here chatting with you, I'm like, why haven't we gotten to work on that? Right. You know, we have a decent hiring system, but there's, there's things that have not been, you know, I have a whole guide that's mostly deck based and I want to turn it into a, you know, a written guide and ultimately into a book. And that's the thing that we can work on right now. Right. Because we are not, you know, hiring as swiftly as we, as we have been over the years. And so there's just, there's a lot of things that you can, you know, do ahead of time and during these times that better position you for the long run.

Cole Abbott

[0:12:19]

I think a lot of people recently said, oh, you're just not prepared. I think most people are going to be under prepared.

Mark Abbott

[0:12:24]

Right.

Cole Abbott

[0:12:24]

That's just the nature of the things. So how do you keep a cool head when you find yourself under prepared?

Mark Abbott

[0:12:32]

It's a great question and a number of different answers. Right. So one of them would be other people to help you sort of objectively, better, more objectively understand the moment you're in. It could be a coach, it could be a peer group. Right. Obviously what you'd like to have is your leadership team, calm, cool and collective together, like, together. We've all seen this. Some of us have seen some parts, others have seen other parts. But to have a cohesive leadership group that's like, we're in this together. We got this, you know, just another day. And so, you know, so surrounding yourself with, with people that you trust and can lean into and then, you know, being real honest about, you know, what's working, what's not working, what are you confident about? What are you not so confident about? What do we need to do to increase our level of competency? As I said, is it a peer group? Is it a coach? You know, is it your leadership team? Are there others that you can talk to that have what, know, some experience in the areas that you're, you're, you're missing? Obviously, you know, in certain parts of the business, you can Lean into maybe your vendors or other people to help you navigate your way through you. Get back to all this is having high trust relationships with your ideal stakeholders and being able to, you know, lean into them. If you recall, I don't haven't talked about it as much lately. You know, one of the reasons you want to build high trust relationships is you will get knocked down. And when you get knocked down, those people who trust you and want you to be successful, they'll help you. And so hopefully, you know, as you've been making your way through the stages of development, you've been working on creating high trust relationships with your ideal stakeholders and you can lean into those relationships. You know, I think back to Covid. One of my clients was, was in the food distribution business to schools. That was like almost all the revenue. That was basically what Covid came in. And I want to say March, plus or minus in the US and so they lost, you know, they lost April and May and June and whatever it was, they just all that revenue. But you know, they swiftly pivoted and took advantage of their strengths and distribution and they found other ways to support the community in ways the community needed to be supported in terms of being able to deliver food because we still had to eat food. And then they did a really good job of maintaining their relationships with their customers, stayed close to them even during that period of time. And they came out of it stronger than ever. It's really cool.

Cole Abbott

[0:15:25]

You picked up a new market. Yes. You retained the old stuff and, and you have a whole new stream.

Mark Abbott

[0:15:30]

And they developed even stronger relationships with their, with their, with their, you know, current customers. Yeah. And the community and. Yeah.

Cole Abbott

[0:15:37]

So I think that ties into the like community and, and culture.

Mark Abbott

[0:15:41]

Right.

Cole Abbott

[0:15:41]

And then the culture, the community appreciates it because of the culture of the company. Right. Where they're serving everyone basically as much as they can. And at first that's just confined to the school system and it's oh, well, now we're doing more than just that.

Mark Abbott

[0:15:54]

Yeah.

Cole Abbott

[0:15:55]

So I. Right. The uncertainty can threaten the organizational culture, but also like as we said with other things, it provides an opportunity to really define and strengthen it. So why is investing in culture particularly critical during periods of uncertainty?

Mark Abbott

[0:16:13]

Let's just talk about, you know, you know, agreements based high trust cultures. Right. You know, part of that trust is developed because people believe in the leadership team and believe the leadership team has what it takes to navigate through the tough, tougher times. Transparency, as an example, is a one of the components of trust. And so hopefully, you know, as you're, what you've built up to that moment is people trust you, they trust you as a leader, they trust you. You that you're being direct with them, that you're being open with them, that you've prepared for some of this, these things they're never. You're always going to have people who hear you but don't totally hear you. So you can't like lean in and over index on like an individual's perspective. But generally speaking, right, the organization trust you, they trust your leadership, they. You've been talking about stuff for a while with regard to why you do the things that you do. You've been doing a decent job of helping them understand that you're preparing. One of the reasons you do some of the things you do is you want to prepare for the rainy day and as you start to enter into it, you're being open with them about what's going on. How we're handling it so depends on where you know and how swiftly things are happening. If you look at certain, certain downturns like 08 as an example is Covid as an example, you know, those were pretty darn swiftly upon you. And so in those situations you may be having, you know, weekly. I remember God decades ago where when I was running a, you know, lending and investment business there was an event, it was the collapse of long term capital that swiftly just like boom went through the, the capital markets like a, like a hurricane and we literally had not just daily conversations but we, I set up back, you know, before Slack. I literally did all. Everybody in the company email thread and we were all just doing reply alls on everything we were hearing and it was multiple times a day. Right. Kind of weird if you think about it became a huge email thread but it was just reply all this is what I'm hearing reply all this is. And, and everybody in the company was, was on that email thread. So yeah, we're talking. I forget what this is 1998, something like that. Right. And, and yeah, I think it's like 1998. And the point is, you know, you're just staying, you just do, you're just over communicating over communicating and then, and you know, and then you know, as a CEO you do that and then obviously what you also want to do is you want to have your, you know, your direct reports. The rest of your leadership team doing their job as well in terms of reinforcing and making sure that everybody's communicating everybody's understanding and you know, and we're handling all the questions and we're doing our best to keep everybody updated. We're not overly indexing on trying to find perfect words. And hopefully your company knows that, you know, that's part of your culture, right, is you're going to be open, you're going to talk about stuff. You know, you may, you know, may say something that's not perfect in terms of how it lands, but they know you're trying to do the best, you're trying to be communicative and you're, and you're not, you know, hiding behind words or fear that how what you say is going to somehow or another land poorly for, you know, some segment of your, of your organization. Because the reality is as you're talking to this whole organization and the level of sophistication, and that could come from sophistication can come from experience. Right. You know, someone who's just joined your company and has never experienced this, never been in a recession as an employee is, has a very different experience than someone who's done this, you know, been in, you know, six recessions. You know, I think that, you know, this is going to sound self serving but you know, one of the things that I have the benefit of, weirdly so. Right. Is that as working in the financial industry for the first 30 plus years of my career, I wasn't just dealing with recessions as, you know, your typical downturns. But there are, you know, Black Friday and there are all these, you know, I probably experienced like, I don't know what I want to say, like seven or eight downturns that impacted my industry. I feel like even more than that, I'm not going to stop and count them all. But you know, after a while, you know, you're like, well, you know, this is the moment we're in. This too shall pass. There's obviously some are bigger and some are smaller.08 was pretty darn big. But you know, being able to sort of, you know, walk slowly, drink cool water. As a mentor of mine once said, during these moments is pretty important.

Cole Abbott

[0:21:22]

And you don't, in a time of uncertainty, you don't want to create artificial ambiguity around the things in the company, you know, hide things in the fog.

Mark Abbott

[0:21:32]

Yeah, that just exactly. And, and people, you know, you and I were talking before the podcast today about what the moment we're in globally and how I don't think the vast, vast. And it sounds arrogant, I know it does. Right. But I don't think the vast, vast majority of the people understand the moment we're in Reality is you're. You're going to have, within your organization, you're just going to have a. Just a wide range of experiences and comfort with uncertainty. And your job as a leader is to do the best you can to address, you know, to address it as broadly as possible. And part of that means. And just obvious to me. Right. Whatever you say has got to be truthful. Whatever you say has to be, you know, as best you possibly can, talk about it. Given the audience that's in front of you and trying to hide or not talk about things or say one thing to one group and another thing to another other group. I just think you end up creating a huge, you know, mess.

Cole Abbott

[0:22:51]

Creating complexity.

Mark Abbott

[0:22:53]

Yeah. In a complex moment.

Cole Abbott

[0:22:54]

Yes. And the last thing you want to worry about is like, well, what did I tell this group and what I tell this group? Does this group know that this group knows this? Do I. Is this. And then just wasting time worrying about things that you created on top of the things that already exist, whether you like it or not.

Mark Abbott

[0:23:10]

Yeah. And I've been through this before on numerous occasions where, you know, someone wants someone, you know, and they're coming from a good place, but they're like, hey, you know, classic Jack Nicholson thing, they can't handle the truth. Right now. It's like, no. Right. Because it's either. It's either I'm going to talk about it or we're not going to talk about it, or maybe I talk about it to this group and then that group talks about it to this group. But the reality is we got telephone tag going on. Right. And so, you know, so the way that I talk about and answer questions, the way that maybe the next group down talk talks about and answers questions that may even come across as contradictory. And now all of a sudden you're like, you know, you're back shoveling, you know, stuff that you didn't need to back shovel if you just would have been as open as you possibly can with the entire organization. So there's no. There's no right answer. You know, when you. And obviously we're talking about, you know, a wide range of situations. Some. Some situations where, you know, as I said, the downturn may be an opportunity. And it's really easy to talk about the opportunity and make this into this is. This is a really good moment for us. In other times, it's got to hunker down, but it's not a big deal. In other times, whoa, we got to hunker down. And this is a really big deal. So There is a continuum, obviously, in terms of, in terms of the nature of the moment when, when, when a recession, you know, downturn comes along for every single company. And as I said, it's dependent upon the industry, it's dependent upon stage of development. But you know, what it, what it ultimately gets down to is what we talk about all the time here. Right. Which is creating a high trust, you know, relationships with all of your ideal stakeholders, being as open as you possibly can. The things that you can't talk about are usually the personal stuff. Right. The individual things, the individuals and what's going on with them personally or confidential.

Cole Abbott

[0:25:08]

Stuff that you, you can't talk about either. Right.

Mark Abbott

[0:25:10]

Yeah. And then, and then. But you know, it's interesting, I'm, I lean more towards you.

Cole Abbott

[0:25:14]

Bias towards. All right, this isn't as secret.

Mark Abbott

[0:25:17]

Right.

Cole Abbott

[0:25:17]

We trust everybody in the company. Yeah. And the other thing is, right, if you get into the situation and you don't have, you have a culture that prioritizes comfortable and like, oh, we don't talk about this. That's gonna upset some people.

Mark Abbott

[0:25:29]

Yeah.

Cole Abbott

[0:25:29]

Well, then when you get to the point where you have to talk about it.

Mark Abbott

[0:25:31]

Yeah.

Cole Abbott

[0:25:32]

A, you're not going to be as good as talking about it as a leader and be. The people are going to react more with apprehension and openness because there's just that difference between what's happened in the past and where you have to be at this moment is just too. Is overwhelming. And so, yes, the spectrum of this is a great opportunity for us where we really need to hunker down, but having a culture where that communication is always present and flowing and expected and there's trust going both ways, whatever happens, it's better for that.

Mark Abbott

[0:26:06]

Right.

Cole Abbott

[0:26:06]

So it's, it's like, well, yes, there's a spectrum of things, but what sets you up to succeed and all of those things is more objective than, than not.

Mark Abbott

[0:26:14]

And what we haven't talked at all about. I'm surprised at this. You know, as much time as we've already talked here is anti fragility. Yeah.

Cole Abbott

[0:26:21]

Yes.

Mark Abbott

[0:26:22]

Sorry.

Cole Abbott

[0:26:22]

Thank you for the segue.

Mark Abbott

[0:26:23]

You're welcome. Right, but that's, that's a huge part of this. Right. Which is, which is. Okay, how is this going to make us better? Right. Is it, you know, like I said earlier, does this give us an opportunity to upgrade our entire hiring system? Does this give us an opportunity to start working on our leadership and development program, something we haven't had an opportunity to do? Does this give us an opportunity to stand back and really do zero based budget budgeting because we've never done that. Does this give us an opportunity to go out and do that reconfiguration of the shop floor that we've never talked about? Right. Does this give us, does this give us, does this give us. How do we go into this thing with an anti fragile perspective as opposed to the sky is falling and fear.

Cole Abbott

[0:27:08]

Based perspective and going back to what we were going on before. If the stressor is too strong relatively, then it will break you. But in an ideal thing is like, okay, well this is more stressful than what we've dealt with before. But that opens the door for conversations that haven't been of the utmost priority until that moment.

Mark Abbott

[0:27:32]

Yeah.

Cole Abbott

[0:27:32]

And so it kind of forces the hand in that way. And that's, that's a good thing.

Mark Abbott

[0:27:35]

Right.

Cole Abbott

[0:27:35]

So it's going to bring some things to the surface and while it's gonna be uncomfortable and obviously unenjoyable.

Mark Abbott

[0:27:41]

Right.

Cole Abbott

[0:27:41]

Those things need to happen and you should be thankful that that's happening now and not later.

Mark Abbott

[0:27:48]

Yeah.

Cole Abbott

[0:27:48]

And so it's good to have these sort of cleaning cycles a little bit.

Mark Abbott

[0:27:52]

Right.

Cole Abbott

[0:27:52]

Cause it keeps things tight, it keeps things, brings things out in the open regularly.

Mark Abbott

[0:27:57]

Yeah.

Cole Abbott

[0:27:58]

So you just have 30 years go by and like, oh, we haven't had this conversation that we probably should have had.

Mark Abbott

[0:28:02]

Yeah.

Cole Abbott

[0:28:02]

Oh, that's gonna be, that's gonna be really interesting. But right. Antifragility. The think of it like strength training. You lift something really heavy and then you're sore after, like that's, that's good.

Mark Abbott

[0:28:12]

Right.

Cole Abbott

[0:28:13]

Your body's gonna adapt and improve. But if you lift, swing too heavy and then you tear muscles, that's not good. You don't wanna be in that situation.

Mark Abbott

[0:28:20]

No, but, but the other side of is you do not want to not work out.

Cole Abbott

[0:28:25]

You will. Yeah, but that's the consistency.

Mark Abbott

[0:28:27]

Right.

Cole Abbott

[0:28:27]

And it's gonna be, you know, you do this regularly and that's good. And then if you just never do it, that's bad. And so when that time comes, when you've already been lifting and no diet, you're doing a different routine. Basically you're changing up what you're doing where your body's better able to handle.

Mark Abbott

[0:28:45]

That adaptive stress and what, you know what, what I've often found is that these moments also reveal where you have parts of your organization that are not as evolved as other parts of your organization. Right. So you may have a department or a team that has over indexed on belonging versus performance. Right. Over indexed on I don't want to say comfort and security. That always sounds, I always feel like I'm being a bit of a, you know, an when I say that. But, but they've over indexed on those things. As opposed to have a lean, mean fighting machine that's ready for, you know.

Cole Abbott

[0:29:29]

Back to the strength is you haven't been training, right. You're like, oh, it's easier to sit on a couch and yeah. And just do the bare minimum.

Mark Abbott

[0:29:36]

Yeah.

Cole Abbott

[0:29:36]

And then when the stress comes, it's like, well, it's going to really quickly reveal the weakest link in the system. And it's like, oh, well, now we know exactly what we have to address. Right.

Mark Abbott

[0:29:46]

And so as an example to go back to revert back to something I talked about earlier, you know, if you, and this is for all you founders, right. If you nceo's, you know, if you've been relying on you, you know, you talk to your senior leadership team and then they talk to all the parts of your organization and then all of a sudden you find yourself in this, you know, in, in, in this stressful moment and you find that certain parts of your organization, you know, have been managed so that they're antifragile and other parts of your organization have been managed for, you know, for belonging and comfort. All of a sudden, you know, you start talking more broadly because you're in a moment that's impacting the entire organization. You're going to see different levels of preparedness, right. You're going to literally find out that your culture is not one culture. And I see this a lot. You've got multiple variations of your culture because the leaders sort of approached leadership from different places.

Cole Abbott

[0:30:58]

So we talk about the, the Matthew principle a lot, which is basically. So let's say there's a line of things are going the way they're going and then you can be above or below that. And as time progresses, if you're above that, you're going to get further from, as time progresses, you're going to move further away from the line, whether that's down because you're below it or up because you're above it.

Mark Abbott

[0:31:18]

Right.

Cole Abbott

[0:31:18]

And so if that in times of stress, right. So let's say here's the line and we have three points above the line. And if the stressor comes in and it moves the line into the middle of those three points or however many points, right. You're going to see a divergence in those, all of those things. And so before where it's like, oh, well, all the teams are strong. Some teams are a little bit stronger than others, but who cares?

Mark Abbott

[0:31:39]

Right? Right.

Cole Abbott

[0:31:39]

Well, now you're going to see not only is there a clear difference between all the points, but the teams that are below the line are going to drop, not only because. Well, that's the nature of the thing, but also they're not used to being that position.

Mark Abbott

[0:31:54]

Right.

Cole Abbott

[0:31:54]

So they don't know how to pull themselves back up.

Mark Abbott

[0:31:56]

Yeah.

Cole Abbott

[0:31:56]

And then the teams are above it. Well, they're still going to continue to strengthen. Right. They're going to be above the land, they're going to be improving as a result of this thing, but they're also.

Mark Abbott

[0:32:03]

Now going to be not happy because, you know, almost every. I mean, I can only speak with complete insight into our company. Right. But in our company they're. Every single team to some at some point or another is dependent upon other teams.

Cole Abbott

[0:32:26]

Then we just draw a blob around all the points.

Mark Abbott

[0:32:28]

Yeah.

Cole Abbott

[0:32:29]

And if the bottom team really draws it down well, then you average of the whole thing and it's. It's going to pull everything as well.

Mark Abbott

[0:32:35]

Right.

Cole Abbott

[0:32:35]

So in the short term we have a bigger blob.

Mark Abbott

[0:32:37]

Right.

Cole Abbott

[0:32:38]

That's below the line. But then eventually that team is going to just sink it up, sink the rest of them down because their fall is stronger than the other teams and rise.

Mark Abbott

[0:32:49]

And then the stronger teams are going to be like, wtf?

Cole Abbott

[0:32:51]

Then they're going to want to split from the other teams. Right. They're going to get mitosis thing going on.

Mark Abbott

[0:32:56]

Yeah.

Cole Abbott

[0:32:57]

Urge to.

Mark Abbott

[0:32:58]

Yeah. And you know, I wrote a blog actually, we've published this week about, you know, about the weakest link. And I don't know if you read it, but I referred back to your. That day where your coxin got demoted and you guys ended up not placing in a regatta. Yeah, I. I wrote a. I wrote a blog about this Decock. What's his face. Remember he was mouthing off when. When.

Cole Abbott

[0:33:24]

Oh yeah. That was stupid. Yeah.

Mark Abbott

[0:33:26]

And it was in a. It was in a big regatta.

Cole Abbott

[0:33:28]

Yeah.

Mark Abbott

[0:33:28]

And you guys would. It should have been what, first or second or third for sure. And you didn't place. And I got. And I got mad at the coach. I thought it was unfair. But when I reflected on it afterwards, I was like, you know, you guys, you know you're only as good as your weakest link. And if you knew that when was like mouthing off and, and getting. He got you all in trouble, basically.

Cole Abbott

[0:33:53]

Yeah. Or you'd be in my situation where I mouthed off enough to Basically not have a coach, but we did. We did well, except for when it came time to enter us into races and we didn't get entered because we didn't have a coach to enter us. So that, that did happen. Lots of yoga too, on the end.

Mark Abbott

[0:34:08]

But, but the weakest link thing is a real thing, right? And so what I, what I wrote about and, and I wrote this blog.

Cole Abbott

[0:34:14]

Well, especially in something like that, where that does really matter, right?

Mark Abbott

[0:34:17]

Yeah.

Cole Abbott

[0:34:17]

Because if you're in a boat, everyone's rowing and then you get one person that's just rowing really badly, out of sync, not carrying their weight in the boat. It's like, well, not only is that just basically an empty seat, but they're harming the, the rhythm of the rest.

Mark Abbott

[0:34:31]

Yeah.

Cole Abbott

[0:34:32]

And so, you know, we have a co worker who talks about things. You put a sandwich in a seat and if the sandwich performs better than the individual in that seat, that says a lot. And you're like, that sounds so stupid. But there are situations where a sandwich would be better than the person.

Mark Abbott

[0:34:47]

Yeah.

Cole Abbott

[0:34:48]

I think it's funny this has a sandwich, but. Yeah, that's the thing.

Mark Abbott

[0:34:51]

We should make it a bologna sandwich.

Cole Abbott

[0:34:53]

I just think it's just so stupid about a sandwich that makes it funny and memorable.

Mark Abbott

[0:35:00]

Yeah. Because it's bs.

Cole Abbott

[0:35:01]

Yeah.

Mark Abbott

[0:35:02]

Yeah, the BS sitting in the seat, right?

Cole Abbott

[0:35:05]

Sure.

Mark Abbott

[0:35:05]

Yeah. But the point, but the point here, right, is you're, you know, and what I wrote in the blog, and I literally wrote the blog, I think I wrote it almost a decade ago, but I wanted to. I knew there'd be a day when it would really make sense for publishing. Imagine that your, your culture is so strong that every single quarter you could say, so let's just say on the leadership team, Mark, you're the weakest link. We're going to work on you this quarter. Right. These are the things that we think you could do better for the, for the betterment of the, of the company or the team. Right. And you're constantly just working on your weakest link and you're creating a culture where, where everybody knows that, that, you know, we are as only as good as our weakest link. And so we care and, but we care about one another and we're going to work on our weakest link. And then likely the next quarter it's going to be someone else and the next quarter is going to be somewhere else, someone else. And it's likely that the vast majority of you at some point or other is going to be the weakest link. Now that Cult starting that in the beginning is going to be hard. That first person who gets designated the weakest link and like, they're the focus.

Cole Abbott

[0:36:14]

You're like, you're the weakest. L. Like. And then you all dance around them with a shame dance. You put a dunce cap on their head. Right. And then you make them just like sit really awkwardly in the middle of a thing.

Mark Abbott

[0:36:22]

You.

Cole Abbott

[0:36:23]

Yeah, yeah. No, that's not how that works.

Mark Abbott

[0:36:25]

Right.

Cole Abbott

[0:36:25]

It's just this is an opportunity for like, Right. This person needs the most attention right now, needs most support. And that's good that you can identify that. And it's not. Right. Don't be like, you suck. You need help. Right. It's not an intervention. It's just an opportunity. And it's not like the. Is the old thing of, well, we just fire the bottom 10 every year. Right. Like, don't do that.

Mark Abbott

[0:36:46]

No.

Cole Abbott

[0:36:46]

Get those two things confused. Right. Those are completely different mentalities.

Mark Abbott

[0:36:50]

Yeah.

Cole Abbott

[0:36:51]

One is just we just want to elevate everybody, and some people need more help than other people. And that might just be because, well, you're going through something and something happened personally and like, well, we need to come in and help that person. Right. We need to get them through whatever that moment is.

Mark Abbott

[0:37:04]

Yes.

Cole Abbott

[0:37:04]

And then once we do that, then, well, that might have taxed somebody else. And then, well, now we need to help them. But there's always going to be someone in that situation versus, like, now you're just fired. And then everyone's trying to be comparative and survive at the expense of the things. It's like, I just need to make it next quarter or next year and that's all that matters.

Mark Abbott

[0:37:22]

Right.

Cole Abbott

[0:37:23]

And then trying to sabotage other people, play zero sum game.

Mark Abbott

[0:37:27]

Yeah.

Cole Abbott

[0:37:27]

I don't feel like we don't need to go into why that's bad. Yeah. But it still happens. It still exists. So you kind of have to talk about it.

Mark Abbott

[0:37:34]

Yeah. And so, so the, the big idea here is, you know, you are as only as strong as your weakest link, especially. And I believe this more now more than ever like that. Absolutely. In our company, and I think in most companies where, you know, because you're. You're working across the organization, this is why an operating system obviously is so important. Right. Everybody is on the same system, everybody's using the same language, everybody has the same tools, everybody has the same disciplines. Right. Whether it's, you know, weekly meetings, quarterly meetings, quarterly discussions, feedback sessions, et cetera. And, you know, we're all in this together and we're all focusing on, not just the resiliency part, which is to save money for the rainy day or to have the line of credit that you can tap into or to have high trust relationships that you can lean on, but even better. Right. Taking this moment and becoming even more anti fragile. Learning from it, growing from it, taking advantage of the opportunities that are provided by upheaval, by a recession, by, you know, you know, tough things happening.

Cole Abbott

[0:38:44]

That gaps opening up.

Mark Abbott

[0:38:45]

Yeah. That not everybody's prepared for by gaps opening up. Right. And, and it's just a, just a very different way of, you know, I obviously think it's a smart way of playing the game.

Cole Abbott

[0:38:58]

So I think a lot of people when they get into these situations, they're like, oh, whatever the purpose of the company, the broader mission.

Mark Abbott

[0:39:03]

Yeah.

Cole Abbott

[0:39:03]

They're like, that's just a luxury. We don't need to worry about that right now. We just need to make it through by any means necessary.

Mark Abbott

[0:39:10]

Right.

Cole Abbott

[0:39:10]

And that comes back to your forever agreements. Right. And I would imagine there's a strong urge in most people to just put that aside and just worry about the day to day, every day.

Mark Abbott

[0:39:21]

Right.

Cole Abbott

[0:39:21]

Just survive this day, survive this day, survive this day. So I would disagree with that. What does purposeful leadership practically look like in a downturn?

Mark Abbott

[0:39:32]

Well, let's go through the forever agreements. First of all. Are we going to change our culture? No. Just period in the discussion. Right. So now you could say, well, what happens if your culture wasn't actually, you know, sort of set up for this kind of moment? Well, then I'm like, well, you know, back to being thoughtful from the very beginning. Right. A founder, I think, should be thinking about these things from the very beginning as part of the Vision Builders workbook.

Cole Abbott

[0:40:01]

And is that an issue of we didn't have it defined properly, we need to tweak some things or is it. We didn't have it reinforced properly. Right.

Mark Abbott

[0:40:10]

We don't.

Cole Abbott

[0:40:11]

Or people like we have all this list of principles, these core values, and people don't understand what they mean or don't truly appreciate them.

Mark Abbott

[0:40:19]

Right.

Cole Abbott

[0:40:19]

And where is that coming from? There's going to be a. If culture is an issue in this moment, well, there's going to be a reason for it. So find out that core.

Mark Abbott

[0:40:29]

Yeah.

Cole Abbott

[0:40:30]

Insufficiency.

Mark Abbott

[0:40:30]

Yeah. But, but presume for a second that it's a, you know, you were thoughtful about your core values and you know, take it to level for their, your principles. Don't mess with those things. Right. Lean into them as opposed to, you know, the opposite number One, Number two, you know that part of your northern constellation is your, is your, is your compelling. Why don't muck with that. Right. Stay true to that. This too shall pass. Right. You know, number three, now you have ideal customers. Go against or do something that's in conflict with your ideal customers. If you need to go and support non ideal customers so that you can bring in revenue, sure. But don't do it to the detriment of your relationship with your ideal customers. Right. Don't change things up that your ideal customers are going to react negatively towards. And that tends to mean don't change your compelling value proposition. Whatever the reason, they're buying it from you all of a sudden. You know, let's just say that you know, you're, you're, you know, you destroy your services organization. So no, you know, all of a sudden you know, people you, it used to be within five minutes you would hear from, from us as an example, you know, do not, you know, may, maybe it becomes six, maybe it becomes seven. If you really had to go there, my preference would be no, that you do not veer from that. But you don't go from five minutes to, you know, the next day. Kind of a thing that's just like, that's just, you know, indicative of you not having your act together. And now you not having your act together on something that's kind of core to are, that's going to harm your relationship, that's going to harm the level of trust, the com you know, your customers have in you. So don't. So, so be mindful of these things. Right. Whatever is core to who you deeply are, you know, keep, keep, you know, keep those stars a shining. I don't know, some. Right. But does this make some sense?

Cole Abbott

[0:42:44]

Yeah. Especially if you're B2B.

Mark Abbott

[0:42:46]

Right.

Cole Abbott

[0:42:46]

That someone, your, your client is going to be also struggling.

Mark Abbott

[0:42:50]

Yeah.

Cole Abbott

[0:42:50]

The last thing they need is like, well, you're not helping them out.

Mark Abbott

[0:42:53]

Right.

Cole Abbott

[0:42:54]

So you're not doing your, you're not serving them well. And then also you're harm, like you said, you're harming the trust with them because like do I, do I, are they. So you go from five and it's like, oh, now it's a week or they, are they shutting down? Do I have to go look for A for someone else?

Mark Abbott

[0:43:08]

Yeah. Whether it's B2B or B2C, I would think it's the same.

Cole Abbott

[0:43:15]

You say B2C. If you're a strong person, you're strong in the market and yeah.

Mark Abbott

[0:43:19]

Right.

Cole Abbott

[0:43:20]

People are Going to. The motivation's gonna be different.

Mark Abbott

[0:43:23]

Right.

Cole Abbott

[0:43:23]

Low cost versus whatever. Yeah. It's just more nuanced. Whereas the B2B is like. No, they're directly. They're also probably suffering here.

Mark Abbott

[0:43:30]

Yeah.

Cole Abbott

[0:43:31]

B2C, you just say, well, they're buying less things. So from a customer support things like. Well, we can actually probably be slower. You could probably justify that. You shouldn't justify that.

Mark Abbott

[0:43:40]

Right.

Cole Abbott

[0:43:40]

But it's just not as significant as the B2B side of things.

Mark Abbott

[0:43:43]

And not being a B2C, I can't speak to that. I just know that from a philosophical perspective, I would still want to, you know, do the best I possibly can to not screw up with my, you know, with my customer value proposition.

Cole Abbott

[0:43:56]

Yeah. If you're. If you're a consumer versus a business, you are less reliant on those that you purchase from to operate for the most part.

Mark Abbott

[0:44:10]

Right.

Cole Abbott

[0:44:10]

Because it's like, if it's an essential thing, that is a B2B businesses buying your services, it's probably pretty core. So, yeah, it's like. So say for, like Slack, for an example, if they're just say, oh, they had a bug and then the server's down for a week, that doesn't work.

Mark Abbott

[0:44:25]

Yeah, that's gone.

Cole Abbott

[0:44:25]

Same with teams.

Mark Abbott

[0:44:26]

Yeah.

Cole Abbott

[0:44:26]

Google. Right. If that happens, then, yeah, well, it doesn't work.

Mark Abbott

[0:44:30]

But, you know, in the consumer business, we don't need to keep going here. Right. But, you know, let's just say you have a million customers and all of a sudden, you know, thousands of them are like, bitching because this is, you know, you're not doing what you used to say you do. Right. That's pretty powerful too.

Cole Abbott

[0:44:45]

It's a little more murky on the. On the customer side of things. And all that was just to say.

Mark Abbott

[0:44:51]

Right.

Cole Abbott

[0:44:51]

When your purpose is much more. Com is more concrete as a. As a B2B thing, because you. As a B2C, you should reframe it as well. We need to take this time, like, really revamp our systems. And then the consumer is much more forgiving than a business would be.

Mark Abbott

[0:45:04]

Yeah. I understand where you come from.

Cole Abbott

[0:45:07]

Yeah. So to close out, do you have anything else that you want to say, you know, about using the crisis as an inflection point for building companies that truly matter or anything along those lines?

Mark Abbott

[0:45:20]

Well, you know, I say this all the time, but I think once. Once the company has gotten to stage three, stage four, stage five, and I think stage four and stage five are really important. Here you are playing a long game and you need to be thinking as a founder, as the CEO, you need to be thinking about the long game. And part of thinking about the long game is being prepared for these moments. And part of being prepared for these moments is not just having cash, right? It's, it's, it's, it's, it's having an, you know, an anti fragile culture. As an example, it's zero based budgeting all the time, right? All the time, every single year. Right. Making sure that we are a lean, mean, fighting machine. It's not finding yourself, you know, all of a sudden waking up one day and there's a recession and you realize that your organization, you know, has, you know, is, is, is, has lots of complexity that's not particularly useful. Maybe it's over bloated, right? Because you didn't do the hard things that you should have done last year or the, or, you know, or, or over the last three years. And all of a sudden instead of, I'm just making this up and I don't mean to be harsh, but all of a sudden instead of having to furlough 10% of your employee base, you actually have to like let go 30% because the reality is like the 15% of it shouldn't have been there anyway because, you know, you were, you had, you know, you just weren't lean and really operating at a, at a, at a sort of a, you know, high level of fitness, if you will. So play the long game. Be prepared for these things. Have the discipline to do zero based budgeting every year. Have the discipline to make sure that up and down and across the organization, you know, none of our weakest links were too significant. Have the discipline to make sure that the organization, culturally speaking is, you know, is one where they're used to you chatting, used to you talking about things where transparency is high, where they recognize that life is not always, you know, daisies and you know, soft, gentle music.

Cole Abbott

[0:47:50]

All right, thank you.

Mark Abbott

[0:47:52]

You're welcome.