I have had the opportunity to live through at least two boom/bust cycles in the Silicon Valley in my career – and I use the word “opportunity” with the following adage in mind: that which does not kill you makes you stronger.
The first bust followed the dot-com implosion in 2001, and the second was the recent recession. In both cases, I went from hiring people to letting people go.
After working through two nuclear winters in the technology space, along with some normal turbulence in between, I’ve learned a few things.
Here are three leadership lessons for “boom” times.
1. Unless you’re reducing your workforce, assume you’re in a boom.
People rarely think they are in a boom when they’re in one, because of the unrelenting pressure to produce. For most people, booms only look like booms after the fact when historians talk about what a boom it was. But for the 99% that didn’t cash in millions in overvalued stock, it was mainly a lot of work, with the occasional promotion and big bonus check.
When, as students, we learned about the Roaring ‘20’s that preceded the depression of the 1930s, we’re often presented with images of women in flapper dresses and people drinking champagne while they danced the Charleston. Probably most people in the ‘20s weren’t dancing the Charleston. Probably most of them were working all day to put food on the table. But it was still a boom.
2. Separate the Real A Players from the Faux A Players. You’ll need the real ones when your fortunes turn.
During booms, C players look like B players, B players look like A players, and the “Real A” players are hard to separate from the “Faux A” players. After the boom of 1999, I saw resumes from candidates touting that they exceeded 300% of assigned quota at Oracle in 1999. I felt like saying to them “Congratulations – that makes you one of a thousand”.
One thing that separates the Real A players from the Faux A players is culture. Real A players contribute internally as much as they produce externally. They provide great insights from customers – not just complaints.
Real A players won’t bolt at the first sign of trouble – and trouble is always just around the corner.
3. Booms come and go, but customers drive valuation. Keep the main thing the main thing.
During booms, companies spend more time thinking about investment bankers than they do about customers. A type of gold-rush mentality tends to seize management teams and their boards.
If you were to look at a pie chart of a CEO’s brain during a boom cycle, you’d see a huge slice tied to “valuation” and a small slide tied to “customers”. This, of course, is always a challenge, but the unfortunate results of this pie chart imbalance come into sharper focus after the boom, which is of course, is the bust (more on leading in bust cycles later this week).
I could easily come up with ten more observations, but three is enough for now.
What you add to this list?