Here is why Entrepreneurs should never let a good crisis go to waste

The Italian Renaissance philosopher Niccolo Machiavelli (1469 –1527), lived through dramatic crisis, conflict and societal changes that redefined the way leadership, politics and businesses dealt with new power dynamics. He is believed to be responsible for the famous quote “Never waste the opportunity offered by a good crisis.” More recently, the Machiavelli quote was used by former White House Chief of Staff Rahm Emanuel, who said, “You never want a crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”

As we enter the fourth consecutive year of crisis, which includes the Covid 19 pandemic, the conflict in Ukraine, and economic recession, all our lives have been dramatically flipped up-side down. Covid has killed over 6,6 million people worldwide, the war in Ukraine killed 200,000 people, and caused over one trillion dollars of infrastructure damage. Additionally, the ongoing recession, fueled by high inflation and geopolitical tensions, is destroying households and businesses across the globe. Covid 19 alone shattered over $8 trillion of economic outputs in 2020, wiping out many families’ income and wellbeing. That is 10 percent of global GDP in 2020’s money.

Why does this matter for entrepreneurs?

On your journey as a CEO or entrepreneur, you will face setbacks, crises, and risk that undermine your path to success and your ability to make the right decisions. You will struggle to keep the light on as clients delay their payments, the banks don’t extend your credit lines, or simply because your product or service are no longer competitive. You will be forced into quick decisions, and you will have to “put out fires” without having enough data and experience to manage the crisis effectively. Also, once the fire-fighting ends, you tend to go back to the pre-crisis status quo as if nothing has changed and will try to re-establish the pre-crisis situation because that is what you know and what you are comfortable with. This is not only a mistake but a missed opportunity.

What I am trying to argue here is that crises offer unique opportunities to pivot, innovate and adopt new business models, skills and partnership that could not happen before the crisis. Furthermore, as the Inc. Magazine puts it, “sometimes the best move is to let the fire do its work so that you can rebuild something stronger from the ashes”. In other words, when a crisis hits, part of us and part of our business must die to never come back, to allow new solutions to replace the old ones. When you go through a crisis, your business will have to go through major changes it might not otherwise be capable of making without the crisis. Instead of rejecting those changes caused by the crisis, entrepreneurs should embrace them and build more competitive products and services based on new assumptions and market needs.

The solution

During a crisis, there will be many events that are outside the entrepreneur’s control. And the key to convert a crisis into an opportunity, is to let go of what you cannot control, or what would not matter in a few years’ time.

As you think through the ongoing crisis, here are potential changes that can help you absorb the shocks caused by the crisis and bounce back stronger:

Pursue new partnership: Think creatively about who your partner is as you will have to re-allocate resources and reinvent yourself. Joint ventures and partnerships are crucial to innovation and to competitiveness. Think of the Covid 19 crisis, where major healthcare companies and insurance products in the United States joined forces to address the medical emergency. Joint venture and partnership transactions tend to increase during economic crises, because they allow companies to lower prices and increase their market share while promoting best practices among the different new partners.

Embrace sustainability: Integrate sustainability aspects to the way you do business as this represents one of the biggest business opportunities of our time. This includes becoming more efficient in sourcing your product, being less wasteful in terms of energy and water, and understanding your Environmental, Social and Governance (ESG) footprint. Sustainability goes much further than the politics of climate change and I believe this represents one of the largest business opportunities of our generation.

Re-skill your business. If you cannot have a full time COO, CFO and Head of Sales, hire a part time C-suite, and bring in cheaper young hungry talent that you can incentivize with a combination of cash and stock options. These incentivized new hires could bring you sustained growth, new thinking, and impactful change. Keep in mind that growth cannot be developed without crisis and risk. Only through constant efforts for change, and re-skilling can motivation stay strong, resilient decisions improved and success achieved.

Conclusions

A crisis allows entrepreneurs and executives to bring about change at a much faster rate than you would normally be able to implement, which is why entrepreneurs should never waste a crisis. When you get some bad news, be it financial, operational, or market driven, don’t over-react, instead pause, and regroup. Take a step back to identify opportunities now created by the crisis which may require a drastic change you probably needed anyway.