The Simple Six: Tools for Team Well-Being in an Uncertain Time
I remember exactly when I realized that the COVID-19 pandemic was going to have a significant impact on our business. It was March 12, 2020.
I live in downtown Detroit, and as I looked out the windows of my apartment that day, down onto the streets of the city, they were empty. There were no people walking to work in the surrounding offices, and there were no delivery trucks ferrying supplies to those offices. I’m not going to claim to be the smartest guy, but even I knew that we were going to suffer a direct hit.
Our Evergreen® company, imageOne, provides managed print services, document security, and document automation services—office equipment, supplies, and services. We were in the eye of the storm.
That same day, our leadership team gathered and started planning. For a good ten days, we modeled out worst-case to best case scenarios and decided to move ahead with the modifying our plan for the worst-case scenario. We gathered our entire team for an all-hands meeting, via Zoom, and presented the situation. Because we practice the Great Game of Business and operate with full financial transparency, we were able to share the scenarios with the team and say, “You can see the math; this is just a math problem." Then, we asked everyone to take time to consider their personal financial situation and to ideate in teams and get creative to help solve the problem.
Several days later, we came back together and committed to a plan: We would stay together, with a compensation cut across the board, and would implement financial metrics that would allow us to plan our way through this challenge, and, ideally, back to 100 percent compensation.
The decision was made, but that doesn’t mean the path ahead was going to be without its challenges. As a leader, I knew this period would be the truest test of our leadership and the strength of the company culture we have been developing for years. I also knew that it would be essential to focus on the physical and emotional well-being of our team members so that we could all maintain our health and wellness as we worked together to get through this unprecedented situation.
The good news was that we had some tools in our belt. About three years ago, through research I had conducted in the process of writing a book, Do Nothing: The Most Rewarding Leadership Challenge You’ll Ever Take, we introduced an initiative in our company to raise awareness among team members about steps they could take to encourage a balanced life. The “Simple Six” is a list of practical actions that lead to a more fulfilling and mindful life: mindfulness, sleep, nutrition, exercise, connection, and gratitude. These are basic elements of healthy living, but they are easy to overlook.
For the last few years, we have taught the Simple Six as a course in our imageOne University, so all employees have been introduced to the concept. This is not a prescriptive program or set of practices but rather an awareness effort to offer team members insight into habits and behaviors that affect their lives—personal and professional—and related resources and educational opportunities. Since introducing the Simple Six, we have conducted annual surveys to understand which of the topics on the list is most relevant for the team in that year (last year it was sleep, for instance) and have then provided opportunities and tools throughout the year related to that topic, checking in regularly to see how people are responding and if needs and challenges are changing.
In the wake of COVID-19, we made an intentional effort to focus more attention on the Simple Six as part of our commitment to making sure our team felt cared for, connected, and informed through this period of challenge.
What does that look like today as we continue to navigate this new normal? It means that we are continually checking in with our team, throughout the daily rhythms of group meetings and personal interactions, to understand their challenges and struggles and to respond. We are asking; “How’s your sleep?”; “Are you able to get some exercise in?”; “Can you find a few minutes to be still and focus on your breath?”; “Have you been able to connect with your family this week?” Often, simply raising the issue and drawing someone’s attention to the one of these areas is the incentive they need to address it and benefit from putting energy in that direction. We end every meeting by sharing gratitude.
More formally, I have launched a weekly “Lunch with Rob,” during which we gather via Zoom and learn from an expert in one of the Simple Six areas—nutrition or mindfulness, for example. These sessions reflect one of our core values—learning together—but they also connect us as a team, as people open up and share their struggles, ask questions, and share their vulnerability in a safe environment.
The ongoing dialogue around Simple Six is not new at ImageOne, but we are finding that it is especially helpful during this often-stressful time. Though we received PPP funding in late April, allowing us to restore salaries to 100 percent, many uncertainties remain, and we continue to focus attention on our team’s overall well-being.
As I’m able to reflect on the success of this effort, I think it has been essential to stay tuned in with the needs of our people—the first step is to understand what people are struggling with and what resources will be the most valuable. From there, it’s about delivering intentional responses and authentic concern, regularly, to ensure they feel heard, along with resources that are relevant and accessible.
As a leader, I’m also doing my best to focus on the Simple Six in my own life during this time. I know that I need to check in regularly with myself to ask, “How’s my body? How’s my mind? How’s my heart?” I need to pay attention to all of those things to be able to show up and be present for my team. Because, at the end of the day, being present, truly connecting with people in an authentic, personal way, is the most important thing we can do. We can’t solve a lot of the personal and professional challenges that our people are facing today, but we can look them squarely in the eye, listen to them, and allow them to be heard. If we can do this, I believe we will be the leaders our teams deserve.
Rob Dube is CEO of imageOne.
Organizational Adaptability in the 21st Century
NOTE: This Evergreen Journal article is adapted from General Stanley McChrystal’s presentation at the inaugural Tugboat Institute Gathering of Teams in February 2020. General McChrystal’s message of adaptability and innovation in the face of challenge is inspiring, and we feel it is especially relevant in the wake of the COVID-19 pandemic.
Nine-and-a-half years ago, when I left the military, I started a company, McChrystal Group. I had no investors (I still don’t) and no business plan. Today, we’ve grown to about 100 people. It hasn’t been an easy road. As Evergreen® business leaders know, building a business can be tough. There are times when you find yourself hanging on by your fingertips. When that has happened along the way, people have asked me, “Why don't you just sell it?" My answer: My purpose is my people. That’s what I’m about; that’s what keeps me interested.
That interest in people fuels the work we do at our company, and it’s paired with an abiding fascination I have with how organizations are run. Today, much of the focus in businesses is on efficiency. While efficiency was essential in leading organizations through the industrial revolution to achieve greater productivity, what is actually most important today is adaptability.
I didn't come to this conclusion through academic study but through personal experience. I'd been in the Army many years, when in 2003 I was named to command Joint Special Operations Command, or JSOC. Created in 1981, JSOC is a subset of our special operating forces focused on counter-terrorist operations, hostage rescue, aircraft hijacking, and very precise raids. It's composed of specialized units for those missions: Delta Force, SEAL Team Six, and the Rangers, to name a couple.
I was a Major General at the time of my appointment, and I'd grown up in JSOC. From the earliest years, the organization ran successful missions, including in Grenada, Panama, the first Gulf War, and, after 9/11, just about all the high-profile operations you've heard of—and many you haven’t.
But for the first 22 years of our history, the organization was not pressure tested. From 1981 to 2003, all of the operations were pretty narrow in time and scope, and we could accomplish the missions with subsets of the organization. We hadn’t had the opportunity to find out where the weaknesses were—though, we sort of intuitively knew they were there. If you scraped the surface of this organization, the dirty little secret was that Delta Force didn't like the SEALs very much. The SEALs hated Delta. Both of them looked down at the Rangers, and nobody wanted to talk to the aviators. So, the reality was, instead of being this incredible synergistic team of teams, JSOC was a tribe of tribes. Each tribe had strong pride and cohesion, but they were insular in nature.
In the fall of 2003, just after I was appointed, we were presented with our pressure test. We'd been in Iraq for about six months, and suddenly it started to get really ugly. Al-Qaeda in Iraq, which emerged in 2003, was a very different organization than the Al-Qaeda terrorist network with which we were familiar. Where the Al-Qaeda we knew had operated with an organizational chart that, surprisingly, you might say looked a lot like General Motors—led by a strong founder at the top and operated in a careful, precise (and therefore often slow and methodical), and disciplined way—this new organization had completely different DNA than its predecessor. They weren't slow at all; they were wickedly fast, and if they did an operation in Mosul and they learned lessons, they applied those lessons to another operation down in Baghdad the next day.
To combat this new organization, I had unequivocally the best counter-terrorist force in the world. If you looked at the force I commanded, you’d see just what you might expect from the way these Commandos are portrayed on TV and in the movies—bearded, muscled, arrogant, and, compared with traditional troops, non-standard. But scratch the surface and you’d say, again, "Wait a minute, this organization looks like General Motors.” And you would have been right. We were a big, bureaucratic structure designed in a military culture to be efficient and to operate predictably, and we reflected that. It had always been fine.
But this structure didn’t work well when faced with Al-Qaeda in Iraq. The reason: cell phones. In 1988 when Al-Qaeda was formed, nobody had cell phones, and nobody had access to the internet. In 2003, when Al-Qaeda in Iraq emerged, everybody did. Every Iraqi had at least one cell phone and access to the internet, and it gave the new organization a completely different character and set of capabilities.
We had spent billions of dollars on proprietary systems to communicate, to become and keep ourselves organized; Al Qaeda in Iraq used technology loosely within an organizational structure that melded well with that technology to make themselves extraordinarily effective—quicker than we were, able to focus faster and better than we could. And for about two years, they were defeating us.
When that happens, you have to look inward and do some serious thinking about your organization. When I took over in October 2003, we were doing raids, and we were very good. Our team was well-trained, very well armed, courageous, and committed, and we had success against high-value targets. We were feeling really good about ourselves. But we were only doing about four raids a month, one per week, because it took time to get intelligence, to get focused, and to execute. We captured Saddam Hussein during that period, and President George W. Bush called me personally to thank me and to have me pass on to the command what a great job we were doing. But the reality is that when we looked at the entire spectrum of what was happening in Iraq, and more broadly across the region, it was getting worse rapidly, and we were not moving the needle; we were not making enough of a difference.
First, we blamed everyone else. But if you're on a losing team, you're on a losing team. So, next, as a new commander, a couple of months in, I said, "Okay, well, we have to do more: We have to push harder and get faster." We continued to use our existing process, which funneled every operation up through the established chain-of-command, to me, to approve or not approve. We got up to 18 raids a month, and we were still about 70 percent successful. That means we're taking 13 or 14 enemy leaders off the battlefield every month.
But then we reached a place where we couldn’t go faster using those existing processes—it just wasn’t possible. We knew we had to operate differently. So, we did something none of us had ever done before—we connected the entire command across 76 different bases spread across the world to create a synchronized, integrated operation on a daily basis. The effect was to create a completely different mindset and mode of operating in the organization, almost like one human brain.
Through the reorganization, we kept the basic structure for all the things it had served well, like finance and logistics, but we changed fundamentally how information moved in real-time and where and how decisions were made. We democratized information drastically, and then we pushed decision-making way down the line. We transitioned from a daily video teleconference every morning for 30 minutes with our rear headquarters at Fort Bragg, North Carolina, and our forward headquarters outside Baghdad, where I was—about 25 people on each end—to a 90-minute video teleconference for 7,500 people a day spread across the world, in different time zones.
You might be horrified at the thought of that a meeting that size—and it was, truly, the mother of all meetings. But it was the most efficient thing I've ever seen in my career. Because it wasn't an order-giving meeting or a report to the command in general, it was a discussion across the command. We were talking about the current situation, how it had changed, what we had learned, and what we needed to do to move forward. Instead of giving orders that would take most of the day to cascade down the chain of command, everyone involved heard the same thing every day and could connect the dots for themselves. We also ran 15 chat rooms during the meeting where people could connect, ask questions, and collaborate about resources and assets.
That fundamental change to the communication structure within our organization—that ability to adapt in the face the new capabilities and structure of Al Qaeda in Iraq—allowed us to turn the tide.
So how is that applicable to business? I've now been out over nine years, and I'm shocked by how similar war and business are. It's amazing. The people who are good at war, who understand camaraderie and commitment and all the values that you represent, typically are pretty comfortable in business, and the people who you wouldn't want to work with in war are the same people you don't want to work with in business. And, in the same way that our priority in Iraq was to first understand the new landscape, any business leader will first need to understand their market, their competition. But more important, as we learned, is to look inward first and understand your own organization and yourself as a leader and an individual. How will you be able to respond to a pressure test? If you scratch the surface, what weakness might be the thing that will hold you back? How are you communicating and leading within the structure or your organization? It’s from that place of understanding that you will be able to adapt and turn the tide in whatever challenge you are facing today.
General (Ret) Stanley McChrystal is Founder and CEO of McChrystal Group. He the former commander of US and International Security Assistance Forces (ISAF) Afghanistan and the former commander of the nation’s premier military counter-terrorism force, Joint Special Operations Command (JSOC).
Lead with your Heart when Layoffs are Necessary
The challenges that the COVID-19 pandemic is presenting to businesses today are myriad. Among the most heartbreaking for Evergreen® leaders is the necessity, in some cases, of carrying out layoffs. For many leaders, this will be the first time they have had to lay off employees, and it’s hard to reconcile this move with People First principles. When you love your people, letting them go is an excruciating experience.
Even for those leaders who may have guided a company through layoffs in a previous downturn, it’s important to acknowledge that this is a unique situation. This could go on for a long time. People are dying. Your employees today are not only worried about losing their jobs, they are worried about their health and the health of their loved ones. It’s personal. It’s emotional. It’s uncharted territory no matter your tenure as a leader.
Against this backdrop, there is no denying the pain of telling a team member that the company can no longer support their position. Anybody who says they have a pain-free way of doing layoffs doesn't care about people. That said, there are steps you can take to approach this difficult task in a way that prioritizes the well-being of employees and aligns with the philosophy of servant leadership.
Be Transparent: Communicate Early and Often
I operate under the philosophy that, "Only the truth sounds like the truth." The best thing you can do is to be open and honest about what's going on in the company, as soon as possible, so that there aren't surprises. Your team deserves to see the real picture. You need to be as authentic and as vulnerable as possible.
Share the financial state of the company in the current situation and all the factors at play for your business and acknowledge the universal uncertainty and fear in this moment: “You know, we're all afraid. We'll do the best we can. We're in it together. We won't keep any secrets."
Be the First One to Take the Pain
Expect that you're going to have some pain in this downturn. Nobody's going to escape the impact of this deal. The people who work with you—your employees, your partners, your associates, and you will feel it in one way or another.
In this scenario, if the unique circumstances of your business require you to take cost cutting measures that affect your people, whether that means freezing salaries or retirement matching, reducing pay, or more extensive cuts through furloughs or layoffs, you have to be the first one to step up and take the pain. You need to share with your team how you will take the hit. Your people have to know that you're putting yourself up first.
Be Efficient
If layoffs are a necessary piece your cost cutting plan, be sure to plan the communication and the practical steps of this process carefully to ensure it is as efficient and as humane as possible.
The communication around layoffs should begin as early as possible, through the transparent sharing of your financial situation. Go in with a plan: tell your people exactly what's going on and that there are going to have to be some layoffs, why this is necessary, that it’s not their fault, and that you’ll do everything possible to help them.
If you don’t have a clear timeline for announcing layoffs, at least provide a date that you will be able to share that information: “Here is when everyone will know if and how many layoffs we will need to make.” You can’t stretch this process out. It’s agonizing for your team. Once you have committed to making layoffs, the action itself needs to be taken within two-to-three days.
Do all within your power to only carry out one round of layoffs. Multiple rounds of layoffs are incredibly harmful to morale and to your team’s belief in your word. If you've got to cut, go as deep as you need to on the first round. Once complete, the people who remain know where they are and can move ahead with confidence.
Be as Generous as Possible
I have always believed that you should treat people even better going out of the company than you did bringing them into the company. That means providing as much severance as possible and, after you have completed a layoff, making a personal call to each employee who has lost a job. Find out how they’re doing; make sure you can help in any way possible. Remember that, especially in this current situation, people need emotional as well as financial support.
Empower Your Remaining Team
In the wake of a layoff, open, authentic communication is again essential because those who remain will still be fearful. They will continue to worry about their jobs, their health, and their families. Offer reassurance and calm and continue to be transparent: "Here's where we are. Here's what we're going do to try to get out of this. Here's why the decisions we're making will help to save the company."
Remember: It’s Not about You
As a leader charged with making these decisions, you will feel the pain of layoffs deeply. But remember, this is bigger than you; this is about the survival of an organization. These are the necessary steps to protect the jobs you can and guide the company to emerge from this so that you can welcome employees back. The thing that will define you as a People First leader in this crisis is the absolute understanding that your role is one of service—to the company and your team.
At the end of the day, the fact is that layoffs, no matter how well planned and executed, will be painful. But if you can do all within your power to act honorably, generously, and authentically—with love in your heart—you will be carrying out a People First process.
Howard Behar is the former President of Starbucks International and served on the Starbucks Board of Directors for twelve years before retiring. Howard currently serves on the boards of several for-profit and non-profit organizations and is also a Tugboat Institute Fellow.
Evergreen Leaders Focus on Humanity and Connection in Today’s Remote-work Landscape
The social distancing and quarantine restrictions of this unique moment in time have created a new normal for many businesses, as teams have shifted to remote work. Remote work looks different across industries and companies, but a recent Tugboat Seminar on the topic revealed that Evergreen® leaders share essential core beliefs about how to approach remote work for the health and well-being of their people and their businesses.
Acknowledge and Adapt to the New Normal
“The world—and the world of work—is different today, and to pretend it isn’t would be a mistake,” says Steve Shifman, President and CEO of Michelman, a global developer and manufacturer of environmentally friendly advanced materials for industry. “At Michelman, the work itself goes on, but our associates need a different kind of support. The challenges for us aren’t in maintaining the business, but in maintaining humanity.”
“We have a phenomenal culture based on values, including collaboration, respect, and integrity, and we are focused on supporting the connections that are so vital between people during this time,” Steve says.
“We have had a largely distributed team from the beginning—for 18 years now—and we’ve gotten pretty good about communicating and staying in touch, but we found it surprising how much changed and how rapidly in the wake of the COVID pandemic,” says Ben MacAskill, COO and President of online image sharing and hosting company SmugMug+Flickr.
With homeschooling in effect and with partners and roommates sharing workspaces, the remote setting has changed. To accommodate some of those changes, Ben says, “We’ve acknowledged the new reality and have normalized and encouraged the presence of family, kids, and pets. We are making a point of greeting family who make an appearance on video conferences and making it clear that’s ok and, in fact, welcomed.”
The company has also embraced new flexibility in team members’ daily schedules. “We have always offered unlimited vacation, but what we’re finding now is that people don’t want days off but rather a few hours within a day for homeschooling or to care for a parent,” Ben says. “Accommodating these requests allows work to continue and family needs to be met.”
In addition, he notes, “We’ve done away with a lot of the ‘pretending,’ that goes on in video meetings and remote work. We’re saying outright that it’s ok not to have your hair and makeup done, that you can come to the meeting in pajamas. That change has been pretty great, and I think we will maintain that approach after we resume ‘normal’ remote work.”
Recognizing the novelty of this time and place and being flexible have also guided Michelman’s response. Steve says, “We have associates juggling young children when both parents are working at home, some with teenagers at home, and some caring for parents. All of us are facing this remote work scenario differently. For those of us in leadership, the challenge is to recognize that everyone has a different situation and to do what we can to allow them to bring their whole selves to remote work—that might be bringing a kid on their lap for a conference call or wearing pajamas.”
Working to dispel the expectation of perfection at such a stressful time is also a goal at home décor and consumer products company Balsam Brands. “There is no doubt that working from home while homeschooling is challenging,” says Claire Magat, EVP of People and Growth at Balsam. “We are hearing from parents that they are feeling pressure. We are working to assure them that they don’t need to be perfect—we are naming the challenges and brainstorming solutions: shifting schedules, swapping responsibilities, and moving people to part time temporarily when that’s an option.”
Support Mental Health
Efforts to alleviate anxiety stemming from the added pressures people are feeling while working at home are part of a more-broad plan to support employees’ mental health among Evergreen companies.
“The number one thing we are focused on is supporting the wellness of our team members and especially their mental health,” Claire says. “Let’s face it: this is a scary time from a health and economic standpoint, and our teammates are feeling it. They are concerned for their health and the health of their loved ones and about their financial livelihood.” The isolation made necessary by new social distancing restrictions adds to anxiety for many, especially for extroverts, she notes.
“There’s not much we can do to provide certainty, which is hard, but we can take steps to support mental health,” Claire says. “We’re reaching out to individuals each and every day, listening, and meeting as many needs as possible. We’ve secured mental health resources for those who need them, including connections with virtual therapist and apps and other accessible tools.” Overall, she adds, “we’re making a concerted effort to destigmatize mental health challenges.”
Being open with employees about mental health and providing a range of benefits that address the issue is essential, agrees Everett Harper, CEO and Founder of software development company Truss. “Just normalizing and talking about mental health struggles is often the most profound thing you can do. When I have been open about my own experiences, I have been amazed at how many people reach out to learn more.”
Connect Often to Maintain and Grow Company Culture
Despite the years of experience supporting a remote team, Ben says that the current period of challenge has highlighted the importance of personal connections. “Our managers check in with or send a message to their direct reports daily now—not to ask, ‘are you getting your work done?’ but to ask, ‘How are you doing?’ on a personal level.” In addition to these one-on-one interactions, he notes, they have created opportunities for “scheduled spontaneity”—surprise virtual birthday parties, online karaoke, and virtual “water cooler” chats among the recent offerings, all with the intention of building community and connection.
At Michelman, Steve says, similar efforts to connect people and build on the foundation of culture are underway. “We’re keeping up the normalcy of company traditions where possible, with virtual tweaks. For instance, I have always hosted weekly “chow and chat” lunch meetings when I travel to our locations, and I’ve carried on with that now virtually. Last week I sent pizzas to 200 associates around the U.S., and people dialed in for the lunch.”
Everett says that Slack has been valuable in maintaining connections between remote team members at Truss, specifically the Donut app, which helps introduce employees who may not know one another and provide the opportunity for virtual coffee breaks and meet ups.
We’re All in this Together
As all four Tugboat Institute members who shared insights into remote work made clear, there’s no question of the challenge of this period and the personal anxiety of team members. But, in the face of these hurdles, there is also a unique opportunity for Evergreen companies to offer a platform for connection and meaningful support.
“The potential upside of this scenario is the recognition that we’re all in this together,” Claire says. “We’re all facing disruptions, and those constraints can drive creativity and a shift in perspective.”
Ben agrees, noting “All of the changes we have made, inspired by this new reality, have been around personal connection and staying in touch with people on a human level. We wish we had done some of these things 18 years ago; I think we’ll carry many of these things forward and be a better remote company for the changes.”
Finally, says Steve, as leaders, it’s an opportunity to also express thanks and empathy. “We need to continue to recognize the great work that’s being done, stay visible, and offer up our gratitude. Our people are dealing with hardship, and we need to be calm for them. We can’t predict the future, but we know we can get through this together.”
Diana Price is Content Manager at Tugboat Institute.
Photo courtesy Balsam Brands.
Growing Our Evergreen Companies When Times Are Tough
The current health and related economic landscape are bad and are likely to get worse. For many, from CEOs to Team Members, this might be the first big downturn they’ve seen first-hand. It’s one thing to read about a downturn – it’s another to live through one.
While it might be tempting to curl up into the fetal position, we have work to do. At our company, Savage, which provides service offerings for truck, rail, and marine transportation and logistics, materials handling, and other industrial services, we’re taking steps today to weather this storm, support our people, and, grow our businesses.
Step 1 – Preserve the Cash
This situation requires a laser focus on preserving capital. Sadly, I’ve seen this show before – having been through a downturn about every ten years in my 40-year career. There’s one lesson I learned the hard way: “Don’t ever run out of cash.” An unprofitable company can run for years, but a company without cash doesn’t last very long. So, in a crisis, anything and everything we can do to preserve cash should be on the table. Halting capital expenditures, cutting overtime, freezing wages, eliminating new hiring, reducing travel, slowing payables, speeding receivables, etc. I’ve been through enough downturns to know that you can never cut too soon, too fast, or too deep because you'll always wish you’d done more.
This can feel counterintuitive, but it’s essential. As entrepreneurs, we tend to be optimistic, and we want to believe that we can solve any problem – that things will work out if we just work harder. That optimism is what creates success but it can also cause problems. This is a time to tap into our entrepreneurial energy and be as creative about cost-cutting as we are about everything else. And, for Evergreen companies, it’s critical that we do it all while honoring the principles and values that have made our companies unique.
That means we’re looking critically at every dollar we can cut without limiting our growth. We’ve turned off the spigot on capital expenditures, frozen all hiring, and delayed wage increases. We’re also considering voluntary, unpaid sabbaticals for those who have the financial freedom to take a 90- or 120-day leave, and we have a list of very specific actions we can take depending on the depth, duration, and impact the downturn has on our Customers. We’ll continue to dig deep and evaluate every opportunity to preserve capital and provide this vital cushion as the downturn progresses.
Step 2 – Change your Team’s Mindset
All the cost-cutting and cash-preservation actions will send fear throughout an organization. So this next part becomes even harder. Now we have to shift our teams to thinking about growth. In 2008, when the economy was in free-fall, our company actually grew. Think about that for a minute – if you remember 2008, it’s pretty amazing. Our team did it by changing the focus from the terrible things that had happened, or that people were afraid were going to happen, to how we could tap into the needs of our Customers and solve their problems.
It’s easy for fear to cloud the vision and stall objectives in a scenario like the one we’re facing today. We know that mitigating fear—of the personal health risk and the financial impact—by providing information and reassurance is a powerful first step.
We held a company-wide virtual town hall meeting to share facts and statistics about the COVID-19 pandemic, to provide information from trusted health sources, and valuable context about the impact to the economy and our company. The health information answered a lot of questions our people had and offered reassurance of all of the steps we were taking as a company to ensure their well-being.
We also offered factual and compelling information to put the current economic downturn in context and provide a sense of the bigger picture. Realizing, or being reminded, that our company actually grew in 2008 provided a different context for having the conversation about growth. Asking our Team Members to step back and consider that while it might feel like we’re getting pummeled today (because we are), when you look at the long-term picture, downturns are blips on the screen and can actually provide opportunity. That’s a critical message to propel the team to engage and refocus on the long-term horizon.
Providing information and context allows our people to see the bigger picture, so we can shift our shared mindset from reacting to a negative situation to creating a positive outcome. We can start to ask, “How can I create value for the company or create value for the customer because that's going to be better for everybody.” We can channel creative energy to ideas and solutions that will add value instead of wasting time on worry and fear.
It’s not our job as leaders to offer platitudes in situations like this. Instead, it’s the time to put our teams to work solving problems – doing what they do best.
Step 3: Create Opportunities for Growth
This shift in mindset helps us look at the current situation and ask important questions that’ll help us not only survive this challenge but grow into the future:
- What obstacles/issues are our Customers facing?
- How can we help our Customers manage their slow-downs?
- What new opportunities does this situation create?
- How can we lock in Customers in now for long periods?
- Would it be better for us to partner with someone?
- How do we leverage our infrastructure costs to support a larger combined business
- Are there new opportunities to make acquisitions?
You don’t have to look far to see examples of innovation driven by our current situation:
- Yoga studios offering virtual classes;
- Restaurants providing curbside/delivery service;
- Health clubs extending favorable extension terms for members who continue to pay monthly fees even when they can’t use what they’re paying for;
- Wineries holding online tastings.
For us, the best example is a service that we’ve offered for years, for decontaminating facilities after a spill or release of a toxic substance. It works extremely well for sanitizing and decontaminating locations. We’ve branded it “SafeSite,” and we’re seeing incredible demand from Customers who want us to help make their facilities clean and safe from the spread of the Coronavirus.
This is the time to think about our Customers and what they're struggling with, and we’re asking our people to help us figure it out. The reality is that despite the hardship of a downturn, Customers are often much more open to different and creative solutions during these periods, and that offers us an opportunity to step in and provide solutions that can lead to long-term projects and partnerships that create lasting value. Even ideas that have been proposed in the past, can have a new life when Customers are much more open-minded about finding ways to solve their problems.
As we continue to engage our Team Members, help our Customers, and evaluate choices we make to sustain the long-term health of our company, we know we’re not immune to the impact of the challenges of this time. This will affect all of us. But I know that if we can embrace a proactive, creative mindset, we will emerge stronger as a company. We’re creating resilience as we persevere through this downturn, as we have through those that have come before. As is frequently the case, Warren Buffett said it best:
“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.” - Warren Buffett (2016 Annual Letter)
Kirk Aubry is President and CEO of Savage.
Creativity in This Time of Crisis
Artist Phil Hansen has presented at three Tugboat Institute events—first at our inaugural Tugboat Institute Summit in Sun Valley, Idaho in 2013 and, most recently, at the inaugural Gathering of Teams in Dallas in 2020. While Phil is an artist, his message of constraints driving creativity is an important message for all business leaders, but particularly in our current time.
As we all face new limitations imposed by the current health crisis and resulting economic shock, we thought Phil’s message would be an especially relevant reminder to, as he recommends, “seize the limitation.” When we can do that—change our beliefs about what’s possible—Phil notes, we can transform our lives and our businesses.
In his original 2013 TED talk, "Embrace the Shake," Phil shares the story of his return to art after a health setback, and the revelation that not only could he still make art, what he had perceived as a personal limitation in fact drove an explosion of creativity, as he learned new ways to express himself within the constraints of his disability. We hope his message inspires you and your team to attempt new, creative approaches during these uncertain times.
Learn more about Phil Hansen here.
Taking the Fear Out of the Workplace
Fear. Uncertainty. A growing sense of panic every time the president delivers a national address filled with increasingly bad news. Even with interest rates at essentially zero percent, the stock market (and 401(k) balances) continues to tumble. Chatter around the workplace is filled with questions like: Should I get married? Can I afford to pay my rent? Will I get sick? Will I have a job tomorrow?
Sound familiar?
As scary as things may seem today as we confront the impact of the Coronavirus, we’ve lived through this eerily similar economic horror movie before—four times, in fact. We actually bought our business, Springfield Remanufacturing Corp. (SRC), in the wake of the 1983 recession. Since that time, we have navigated each period of challenge through a system of open-book management we developed to empower employees with financial literacy—The Great Game of Business.
The power of the principles of that system was reinforced after the 2008 recession hit. It was the result of a so-called “black swan”—an economic wreaking ball that no one saw coming, not unlike the coronavirus. In that case, it was the collapse of the U.S. real estate market.
Now, more than ten years later, I can tell you that it’s never fun to go through a downturn—but we are a stronger company because of each one we’ve been through. Now here we are, facing yet another crisis—one with so many unknown variables yet to play out. But we’ll use the same Great Game playbook we’ve relied on in the past to alleviate the fear that is rising up again.
Here are four steps we’re taking today, which may benefit your Evergreen® company as well:
1. Embrace Transparency
Understand that your people are afraid. You can help alleviate that fear by openly sharing the current finances and the conditions the business is facing. This founding principle of open-book management will empower your employees and bond your team as you tackle the challenge of this time together. If you can share the current reality and say, “here is the worst-case scenario—now that you know what that is, let’s move backward and put plans together to get through this,” your team will be inspired to help.
As you think how to navigate, recognize that you don’t have all the answers, and be open to the ideas and creativity of your team. Not tapping into the wisdom of your people means potentially missing great ideas and the opportunity to develop solutions together.
What has always been amazing in my experience, is to see that when you have the courage to share the ugly truth, people don’t run; they are more than happy to help, and they want to contribute. I have never seen our people come together more than during a recession. Don’t let this crisis go to waste. There’s a lot to be gained by building bonds through transparency.
2. Talk about Your Cash
Today’s motto should not be “watch your cash.” It should be: “Talk openly about your cash position, about how much debt you have, and how long it can last.” If you can teach people how much is left in the bucket of cash, they are the ones who can best extend it to sustain the health of the business.
Similarly, I recognize that some of you may find yourselves in an overleveraged position. But that is an opportunity to engage your workforce and tell them the truth about the situation. If you do find yourself in trouble, ask your associates for ideas about how they can contribute to cutting costs—and increasing cash flow to the point where you can actually cover your debt obligations. Your people are the ones buying the office supplies, converting inventories to cash, selling online, and coming up with other innovative practices that will make a difference. The creativity and ideas that I see when people open their books is incredible. People actually develop new businesses within existing businesses with and without money; they find solutions where you’d never expect. You’ll be amazed what can happen when you teach your people the rules of the game—and start keeping score.
Right now, banks around the country are deciding what industries are going to survive—which businesses they will lend to and which won’t make the cut. That’s really scary. We saw this happen in 2009. With that experience in mind and despite how liquid we are today, and with a strong balance sheet, we went ahead and drew down a $10 million line-of-credit last week as an additional safety measure. As you consider the steps you will take to help ensure the cash health of your company, you might think about drawing on existing lines of credit now while there is still money available.
3. Protect Jobs
If you’re like us, you’ve been fighting tooth and nail over the past few years to attract—and retain—people in the middle of the “War for Talent.” We don’t have a future without people.
I’ll never forget the night in June 1980, when I turned on the TV to watch the evening news. It haunts me to this day. We were smack in the middle of a nasty recession, and the news was usually grim, especially in the Rust Belt where I lived and worked. Factories were closing left and right; thousands of people were losing their jobs on a daily basis. Unemployment was soaring, along with interest rates that topped 18 percent. Executives became idols as downsizing jobs became the new mantra, laying off people at a time they needed those jobs the most. Something similar could happen today.
I attended a conference last summer in Silicon Valley with a number of business leaders, and my biggest takeaway was that the minute they run into trouble, they will go back to their old ways, and downsize, instead of figuring out how to protect jobs. I caution you to think differently.
There is no future without people. We are doing scenario planning on how far we can go without any revenues, e.g. the government shuts down our factories. We look at how much longer we can go if top people take less pay. We look at how far we can go if everyone takes a pay cut—measuring days, weeks, and months. It’s my belief that whoever has the most talented workforce will dominate their markets as soon as 2021. We will avoid layoffs at all costs so that we will have the people when this thing turns.
4. Get Ready for the Upturn
You have to recognize that there will be an upturn and do what you can now to prepare. As bad and as uncertain as things look today, I have a secret to share with you: it’s actually harder to get a company ready to take advantage of an upturn than it is to prepare for a downturn!
Downturns can actually be opportunities to fix things inside your business that you can’t afford to invest the time and resources in when the economy is booming. While it might seem counterintuitive, the current down market comes as a kind of short-term relief. It’s giving us a chance to catch up—to make investments in our people and facilities—and to prepare ourselves to capitalize on the economic uptick that we expect to hit in late-2020, early-2021. By then, our workforce should be more stable and productive—and ready to take full advantage of the available opportunities.
Today, as we face the reality of quarantines or shorter work weeks, we’re thinking creatively about how to invest in our people. If they have to be at home, they can be learning about financial literacy or gaining other new skills. When they come back, they will have even more to contribute to the team. We are consistently thinking about how to maximize people’s time and learning in this challenging time.
I know how painful things are today—I feel it, too. The health and safety of our associates is our highest priority. But there’s no reason you can’t also dare to be successful. Embracing transparency, practicing financial discipline, trusting and respecting your people, and remaining forward focused are all steps you can take to alleviate fear and stress in your workplace today and prepare for the future.
Jack Stack is President and CEO of SRC Holdings, Corp.
The Trust-Leadership Connection
Tugboat Institute member Penny Pennington was appointed Managing Partner at Edward Jones—the sixth in its 97-year history—in 2019. Edward Jones has over 43,000 associates and 7 million clients who trust Edward Jones to help them achieve their financial goals—the company is Evergreen through and through.
In this presentation from Tugboat Institute Summit 2019, Penny shares her insight into the fundamental importance of building and maintaining trust in Evergreen businesses—with employees and with customers.
How a Stanford Visit Led to A New Business Innovation in Chile
Education has always been a priority for our Chilean-American family. My father and his four siblings, raised on the family farm in the Casablanca Valley in Chile, were sent north to attend college in the U.S. My two brothers and I all earned MBAs, as my father had, and I always loved school and the challenge and stimulation of academia.
Given the draw of education, it’s maybe not surprising that a significant Pragmatic Innovation in our Evergreen® business, Kingston Family Vineyards, has an academic focus.
Founded in 1922 by my great grandparents Carl John and Caroline Kingston, our farm was primarily run as a dairy and beef cattle operation for two generations. In 1998, we planted grapevines to provide an alternative source of revenue to the commodity boom-bust cycle. In the 20 years since, we have developed the vineyard and the winemaking operation to create world-class wines, host wine-based experiences, and, more recently, welcome academic travel groups.
Our pursuit of the academic travel business began back in the early 2000s. Adventure travel to Chile was just starting to grow at the time, and alumni travel groups were at the forefront of that trend. Noticing the interest in our part of the world, I decided to see if I could tap into the trend and fit Kingston into group itineraries. My first foray was in my own backyard. Stanford University has one of the biggest university travel programs in the country, so I leveraged the fact that I was an alum of Stanford’s Graduate School of Business (GSB)—and had served as an alumni wine judge in the university’s alumni wine program—and was living nearby in Portola Valley to get to know the team planning the university’s trips to Patagonia and Antarctica.
Persistent networking and a long sales cycle paid off when, in 2009, Stanford brought a group of 21 alumni to the farm as part of an extended Chilean visit. Nineteen of the 21 Stanford visitors joined our newly formed wine club, and I realized we may have just hit on a new target market. I began to reach out to other university and alumni travel programs to test the idea with them. Pretty soon, largely through word-of-mouth, we were regularly hosting visitors from colleges and universities around the U.S. We had a new, profitable business line.
In 2015, the opportunity developed even further when Stanford’s GSB approached us with a request. They wanted us to be the subject of a MBA case study on the changing landscape of wine production, export, and tourism in Chile.
I was excited about the prospect of opening our business to academic analysis and learning from the research. Having been flying the plane, so to speak, for years in my leadership role in the business, the prospect of stepping back and studying the plane was intriguing.
While we acknowledged the vulnerability inherent in allowing access to private financial and operational details, our family ultimately agreed. I knew that we could learn valuable insights, and that we would be challenged in ways that would help us grow the business. And, it just felt right—probably not surprising given we’re a family of MBAs who like to geek-out over margins and engage in continual dialogue around the business.
The result of that leap to open up and be vulnerable as a family and as an Evergreen business continues to offer rich rewards today. The first case study, published in 2016, has resulted in a new series of academic visits by MBA programs. We have cultivated this new audience by partnering with several significant travel operators that design and operate itineraries for business school professors and deans seeking to plan overseas trips for their students focused on global management. We have also cultivated direct relationships with faculty and deans in top U.S. executive/business programs to seed client relationships
Today, 20 percent of our guests are connected to educational travel/MBA/eMBA programs, visiting to study our business. These visits have created a new market for our business focused on developing food and wine experiences for larger groups, and the success of this segment allowed us to take the plunge to build a new private event center and professional kitchen that will allow for further growth. And we feel great about the potential for expansion in this aspect of our business.
Beyond the measurable growth we’ve seen, the visits have had an unexpected benefit. Our Chilean and American team members, who all participate in hosting these groups, take part in fireside chats about our successes and our challenges. The level of discussion transports our team from focusing solely on the urgent and tactical to also embrace a strategic perspective on a weekly basis.
While continually opening yourself up to questions and analysis can be difficult— these are smart, experienced executives, and they can ask probing and sometimes uncomfortable questions—the result is deeper knowledge of self and team, and new inspiration and growth for our Evergreen business.
Courtney Kingston is Founder and CEO of Kingston Family Vineyards.
The New Normal
Doug Tatum is a Professor at Florida State University and a student of business. He’s an expert, specifically, in the area of scaling small businesses through a challenging period termed “No Man’s Land,” during which a leader can do what appears right and still see their business fail.
In this presentation from Tugboat Institute Summit 2019, Doug shares insights into how Evergreen leaders can strategize to successfully navigate this potentially treacherous period—and emerge to thrive.