Dear Founder,
So, you’ve found yourself in a crisis. It’s never fun to have something unexpected bomb-in on your plans and day, but it happens to all of us and it happens often. How you deal with these issues is what matters. Will you let a crisis utterly derail you and your business, or will it make you stronger and better?
Whether it happened unexpectedly or it happened because you haven’t managed something well, the imperative is to deal with it now before it becomes something bigger. My advice: overreact instead of underreact.
But before we get into HOW to resolve it—which is most important here, and which I’ll get into below—let’s take a step back.
What’s the magnitude?
First of all, let’s determine: do you REALLY have a crisis? Listen first. What’s the crisp description of the problem? Now, how bad is it?
You need a way to categorize it. In other words, you need a way to measure the mess. At eBay, Meg Whitman and I would judge incoming issues on the Richter Scale model, which gave us a quick, 1-10 scale to measure the seriousness of the issue. A “1” is the routine noise that happens every day—a user having a problem with their computer and unable to log onto eBay. (That wasn’t the end of the world and there wasn’t much we could do.) A “9,” for example, was when the site crashed due to a power outage and the backup didn’t come on. Ask yourself: Is this a tremor that will pass, or is this a killer earthquake you can’t get recover from?
So, you’ve now assessed the seriousness, and let’s say you have a big problem—a “6” or above on the Richer Scale and a threat to the business. Time to get to work.
There’s no time to waste.
If you put a frog in boiling water it will quickly jump out. But if you put it in slowly, it will stay there—and cook. Don’t stay in hot water for long.
I often say that problems don’t get better with age. Too often, people choose to hide problems or let them sit, rather than addressing them when they’re smaller. Remember the issue with the Tylenol cap? Or Intel’s Pentium chip? Think about how differently Tesla responded to a seatbelt malfunction. It recalled every car and managed the problem proactively. As Meg Whitman used to say to me, “Run into the fire!”
Deploy your resources.
It’s time to get all hands on deck. The first thing to do is to sound the alarm to get immediate attention—and action. At eBay we developed codes (Severity 1, Severity 2, etc.), which helped us immediately identify the scale of the problem and the response time. (A “Sev 1” would be dealt with immediately, while a Sev 4 could be handled the next day). We also incorporated terminology like “911s,” which meant that every resource in the company could be pulled off of whatever they were doing to work on the current issue.
You’ll be amazed at what people can accomplish when they come together to address a crisis. But a word of caution: use emergency status judiciously. It may be tempting to escalate future crises to “911” to get a faster response time, but don’t. It will burn out your team fast.
Get the right people in place.
Talent is everything. When you are in crisis mode, you quickly get to see people at their best and at their worst. In the middle of a crisis I learned that I was understaffed on the right talent. I decided that I needed to add several key executives ASAP to my team as direct reports, and I did this within weeks. I’ve also seen a few people who may have been a tad cranky, attitude-wise, save the day during a major incident. Make sure you have the best surgeons, firefighters and problem solvers on board—and if you don’t, get them there quickly.
Have a backup plan. And a backup for the backup.
Let’s be honest: when a problem hits, you don’t always know what’s wrong, and you certainly don’t always know how to fix it. This was the case for me in early 2000 when several Internet companies fell victim to denial-of-service attacks. We had to work with vendors, deploy patches, and collaborate with other tech companies and law enforcement to determine how to stop it.
I was always a fan of working on several possible solutions simultaneously, just in case we were wrong in our hypothesis. If you want to solve a problem fast, it’s always better to develop many possible solutions in parallel than to serialize the process. Furthermore, always look two to four moves ahead so you have options. Keep asking yourself, “And if that doesn’t work, then what?”
Swallow your pride.
It’s not about hierarchy. The best answers can come from anywhere. Allow everyone to have a voice and contribute insights and questions throughout the process. What’s most important is to solve the problems quickly and prevent their recurrence. Always ask yourself: “Are we getting better every day?” If not, make some changes.
Do everything possible to minimize impact for customers.
I reference eBay a lot, probably because it was crisis central. When I started, we used drives from a big vendor and when they crashed, our entire site crashed. The vendor told me that we were trying to recover “too fast” and if we just let them recycle for 20 minutes, everything would be fine. Who has 20 minutes on the Internet?
We agreed that the current situation was unsustainable, and the vendor went to work on a firmware solution. But we needed a proactive interim strategy. For 24 hours a day, we kept people watching for the warning that would flash before a crash. Once it went, they would take the disk out of service before a crash happened. It was a high-intensity solution that required a lot of resources, but until it was automated with a bug-free software fix, we had to do everything within our power to reduce how customers were affected.
Most executives would not ask the vendor to do what I did, but it was critical to find a solution that didn’t impact the customer—even if it was ugly for someone else. Sometimes you have to be a barbarian in war time.
Communicate with everyone (the board, your team, customers).
Have your board and your management on high alert and make sure they’re present until permanent solutions are in place. Don’t hide from anyone.
At eBay, I wrote personal updates on issues to the management team and every week gave status reports on what went well and what didn’t. Make it one of your action items. Also, get every executive’s mobile number and the personal cell phone numbers of every vendor so you can mobilize resources as quickly as possible.
Remember, you’re not just solving for the problem with your team in a silo; customers are involved. Someone has to notify them and calm them down. Silence is not a good thing at this stage. Here’s how to take action during a crisis:
- Tell the truth
- Tell them the next steps
- Tell them when you will update them again
You’ll need to have a process in place to communicate. Who’s managing communications to employees, to customers, to the press? (Hint: it shouldn’t be the surgeon in the operating room.)
The world will always want you to do more. The best thing you can do to address this is to create a culture of transparency and accountability. If we had a problem at eBay, we always communicated it to our community. Be careful about what you say. Be truthful, but keep in mind that often when you think you know what is going to happen or what is causing the issue, it may turn out to be something else entirely. At eBay, and later at Salesforce, we built a “trust site” and dashboard that gives full transparency into what’s happening on the site to let people know what’s going on in real-time.
Postmortems are essential.
Never waste a crisis. It’s an opportunity to make things better. Once the problem is solved, figuring out what went wrong (was it an execution issue, a vendor or product issue, a software bug, an external event, etc.?), and how to ensure it won’t return, is essential. Remember, great companies have to be world class at dealing with crises, but they aspire to be even better at avoiding crises in the first place. (But you’ll need to master BOTH; if you’re in a crisis it’s too late to worry about prevention, so you better be great at getting out of trouble!)
From now on, plan for crises in advance.
Ideally, you want to be deploying a playbook rather than developing a playbook. Most often, founders don’t do this in advance and then have to develop processes while in battle—that’s much harder. At eBay, we built plans and put processes in place that anticipated problems. There was 24×7 coverage and people were assigned to be on call in order to respond quickly to any issues. This proactive approach saved us time in the most critical moments. For example, when we learned that hours after 9/11 people were putting debris from the World Trade Center for sale on the site (a “6” on the Richter Scale) we knew how to respond because we had a policy in place that detailed that we would not profit from disaster. Because of this, we were able to react immediately and take it down.
At eBay we got so good at fire prevention and firefighting that we were no longer battling crises all the time. Things became calm—and then that became an issue.
“We used to be so important,” someone on the team said to me. “Now Meg doesn’t come by every night to see how we’re doing.”
“That’s how it’s supposed to be,” I told them.
You too will have peaceful moments when things are going well again. Enjoy those for a moment and then use time to invest in making your business better.
All the best,
Maynard