Lessons of Greatness: You have to take the Initiative

Episode Summary

Commander John Boyd was a fighter pilot who changed the art of war in the late 20th Century. He offers a vital lesson of greatness, especially in times of massive uncertainty: Decisive leaders take the initiative, ALWAYS. This episode describes why that's the case and how the philosophy of taking the initiative can help you achieve greatness in what matters to you. Listen here.

Transcript

John Boyd:

You have to take initiative, in other words, do you want to be a shaper or do you want to be a reactor? I can take initiative whether I'm in the office, a deep pit of wherever I am. Whether you're moving forward, backwards, sideways, or any direction.

Mike Maples:

That's the voice of commander John Boyd, the fighter pilot who changed the art of war. Boyd invented the OODA loop an empowering method of taking the initiative always, especially in the fog of war. If you face new clouds of uncertainty ahead because of COVID and the economy, consider this lesson of greatness, his gift to you.

You might recall in our interview that Steve Blank and I talked about John Boyd and the OODA loop. What is the OODA loop and how can you use it to win in the uncertain times ahead. The OODA loop stands for observe, orient, decide and act. It's a process for how a person or a team takes the initiative no matter how chaotic the circumstances. When you observe, you rapidly collect data by means of the senses. When you orient, you immediately synthesize the data to form a mental perspective. When you decide you determine the course of action based on your perspective and when you act, you physically play out the decisions. Let's put ourselves in commander Boyd's world for a minute. You're a fighter pilot. You've been scrambled to shoot down an enemy aircraft and as you fly at supersonic speed, you don't know much. You think about the level of training of the other pilot, their culture, their identity.

Are they impulsive or are they cool under pressure, but now the enemy comes into contact with your radar. You now have new information to observe about the speed, size and maneuverability of their plane. You don't have time to listen to radio chatter anymore. Unfolding circumstances take over, you decide to climb to get into the sun above your opponent. You act by grabbing the controls to climb rapidly. Now it's back to the start of the OODA loop. You observe again, is the attacker reacting to the change in altitude? You orient your thinking again. Do you have time to make another decision and take another action before they make their first move. In a dog fight like this information cascades in real time. The pilot barely has the time to process it consciously. Instead, he gets in a state of flow of action and reaction loop by loop.

Before John Boyd, traditional military thinking was organized around offense and defense, but Boyd believed that it was possible to take the initiative always, no matter what, by harnessing the OODA loop. So what does this mean for you and your startup? The key for you as a leader is not to think in terms of offense or defense. It's a false choice. The key is to take the initiative, stop acting like you know the future. Nobody knows. Don't ask, "When will it get back to normal?" That's framed in the mindset of playing defense. Don't make promises to employees about how the future might unfold when nobody can know what it is in the first place. You need to lead differently. You need to observe, orient, decide, and act. The first place to start, own your runway rather than letting it own you. To do this, you have to start by timing your runway from the top down and work backwards.

Companies that have short runways are fragile and dependent on other people and events such as the economy, venture capitalists, the capital markets, and most of those people are freaked out and irrational right now. Rapidly observe the market trends and what's happening in your world. What's changed for the worse, what's changed for the better? What are the emergent opportunities? What are the emergent threats? Orient yourself, review your finances, map your runway, and then make a decision about how long you're going to give yourself. You make the choice to have a long runway, long enough to control your destiny rather than let events control you. Depending on your circumstances, your mileage will vary, but I recommend 36 months as a starting point. Once you've decided the length of your runway, you divide your cash by the number of months and that becomes your monthly burn cap. Let's say you have 1.8 million in cash.

Monthly burn cap would be $50,000 of burn per month if you want to give yourself 36 months. Another area where it's important to take the initiative is around evaluating expenses. I bet there are months in your plan that exceeds your potential burn cap. So let's apply what Steve Blank referred to as the lifeboat theory and zero based budgeting. So how is zero based budgeting different? Normally when a company needs to tighten their plan in the face of a crisis, they start from the wrong place. They take their existing plan, figure out how much expense to cut and try to reduce the necessary level of expenses. But this is almost always problematic. The first reason is that it reflects a defensive mindset, which we've already decided we want to avoid. The second is that different people have different agendas and they try to argue for their individual interests to be cut less.

This could turn into endless negotiations with individuals on the team as well as conflicts between people on the team who now have misaligned interests and fight for their share of the pie. The other problem with working backwards from the current plan is that it's a lesser version of more of the same and as Steve points out in our conversation, the world has changed. You need to rethink your plan and when you rethink a plan, it's better to start at zero and add resources rather than to start from where you are and trim resources. That brings us back to zero based budgeting. Visualize a lifeboat. You start at zero expenses and add the most essential spend to the lifeboat until you reach the burn cap. Anything that doesn't make it into the boat should be re-evaluated. Can the cost of what's in the boat be reduced?

It's important to understand that whatever money you spend above your burn cap better be super important. It's likely you're going to wish you had that money for something more essential out in the future. Like Steve Blank said in our interview, "The world is not the same today. All of your assumptions about customer, sales cycle, revenue, all of these things are likely no longer true. Because of this if your plan is similar or the same, you're probably in denial." The learned helplessness of denial is the opposite of how commander Boyd would expect you to act. Amidst this cloud of uncertainty though there's a silver lining. A side effect of COVID is that there are newly desperate customers that create openings for you to hack new value propositions. This is the third area of focus, when you have to observe, orient, decide and act in order to seize the moment.

For example, one of the companies I'm working with is called, OriginLabs and they sell 3D printers. In this environment hospitals need millions of testing swabs for COVID-19 so rather than sell printers to the hospitals, they rethought their value proposition, why not sell to them swab by swab. In their prior efforts to achieve product market fit Origin would have tried to sell printers to the hospitals directly, but the hospitals don't have time to get up to speed on 3D printing material, science and how to optimize a run for 3D print. They need swabs right now. So the right answer was to pivot their value proposition to pricing by the swab and performing the integrated steps to deliver the swabs themselves. And as a result, the printers run at Origin and not the hospitals. They run 24 hours a day, seven days a week, and it's the output of the printers that's sold to the hospitals rather than the printers themselves.

And it goes without saying that if you can raise more money, I would highly recommend you do it right now. 

So we've talked about tactics for taking the initiative in the face of uncertainty. How will this impact you as a leader? Leading will be different, especially if your circumstances are more challenging. It's a brutal dilemma for founders because you have to balance the need to evangelize and start a movement, to recruit the best, to sell to customers and anyone else who will listen and it can be hard to switch out of that mode. Admitting problems can feel like showing weakness, but it's a trade off that you're going to have to master. Telling the truth with no tricks is not inconsistent with being determined to prevail, as long as it comes with a plan that's real. Team members and frontline employees won't see as much of the whole picture as you.

They'll often still be focused on getting the resources they originally wanted with their earlier agendas. They won't always be focused on what's truly essential. They might also be too comfortable with the current plan to notice even bigger emerging opportunities that are there for the taking, with a slight hack of rethinking of assumptions. You might even discover that you need to re-evaluate some of the people on your team as well as parts of the business that have been truly working the best versus perhaps not really working. Sadly, too often founders let the pushback of their team delay the hard choices until the startup runs out of options. Some of you might be listening and thinking. This is all easy for a VC to say, but for what it's worth, I've been on the other side. The company I helped co-found, Motive had filed its S1 and was four days away from going on its IPO road show in 2000, then the NASDAQ cratered. Four years later we went public, but we had to overcome the greatest meltdown the tech industry had ever seen.

One of our customers who owed us $15 million one day just up and decided they weren't going to pay us. Venture capitalists were hiding under their desks. It felt like there was no money anywhere. Thankfully, the team committed itself to owning its runway. We had to make tough cuts, but business as usual would have put us in a death spiral and failure was not an option. We had to observe, orient, decide, and act based on new realities rather than how things had once been. I hope you know that I'm rooting for you to be antifragile in the times ahead.

If you're interested in more in depth thoughts on this, I've created a detailed presentation called, Own Your Runway, which I've sent to people who've subscribed to the first edition of the starting greatness newsletter. It goes into lots more detail than I can address in a few minutes here, and it's what I shared with the founders I work with at Floodgate. You can sign up at greatness.substack.com if you're interested. 

In closing, the thought I'd like to leave you with is, if you're a founder committing to starting greatness, the initiative is something that you take

...always.