With the Going Getting Bumpy, Don’t Let Fear Drive the Bus

Photo by Ash Gerlach on Unsplash

How startup founders can become more mindful in their decision making when market volatility clouds the future.

I was having a call with several founders the other day, and the topic of the current financial environment, with gas prices and inflation and the potential for recession, came up. One of the members who sold, oh, let’s say ingredients to snack food companies, noted that he was seeing orders for his ingredients skinny down. Was this a sign of impending recession, he wondered? Should he resign himself to a drop-off in sales?

The more we talked about it, the more I could see the fight, flight, freeze, and fawn responses began to creep in among the group — myself included!

“Do we fight the market or support it?”

“Do we just “keep doing what we’re doing,” or change things quickly to head off a crisis?”

“Should we actually be laying people off?”

“How should we be forecasting in this mess?”

Noticing the conversation was spiraling in fear, at one point — with me firmly along for the ride, I said, “You know, I’m feeling a little bit like we’re letting fear drive the bus right now. I’m not sure this is where we want to go.”

We talked about this for a while.

As founders, it’s up to us to make sure we don’t go–and stay–below the line in which fear is calling all the shots. Not that we should ignore the feeling. To the contrary, fear is a highly adaptive emotion, one that tells us something needs to be faced up to: in this case, the threatening situation is a changing marketplace in which fuel, shipping, and ingredient prices are rising along with the price of groceries. These aren’t just stories; they are facts we see everyday and need to take seriously.

So the first step that came to mind was to suggest we stop feeding the beast and recognize that the conversation we were having, either with ourselves or with others, was below the line; it comes from the amygdala, which is our lizard brain and operates to protect our survival. The first step is to recognize this and then take steps to move this issue from the amygdala, where fear typically rules the day, into the frontal lobe of the brain where reasoning and problem solving can occur.

One way to do that is by separating fact versus story. The Conscious Leadership Group offers a worksheet that can be helpful in separating them out. Ask yourself what are the actual facts? Maybe a newspaper article presented some facts based on research and interviews with industry representatives? Perhaps you walked into a store where you normally saw lots of people and saw only two people. Those are facts.

I suggested to the snack ingredient founder that he do some research on Nielsen to see whether unit sales were slowing in the snack food category. Or perhaps he should call the brand manufacturer to which he sold his ingredients to see whether she was trying to carry less inventory to store up cash or if she is really seeing a market slowdown.

In other words, the slowdown may have nothing to do with demand. So it’s going out and getting as many facts as you can, and writing those down.

I also suggested we seek out our biases. I’m not talking about prejudices but about Webster’s broader definition of “an inclination of temperament or outlook, especially: a personal and sometimes unreasoned judgment.” Biases aren’t always bad — they can be very helpful in supporting us as we look for our blind spots.

It can be helpful to compile a quick list of the stories you’re telling yourself when something goes wrong and dig a little deeper to understand where they came from — maybe it’s a bias, or an early experience we might have had. Adopt a skeptical attitude to these stories and look hard into precedents that might explain the thought or emotion.

One person on the call, like me, remembers the recession of the Jimmy Carter era, where things got really bad. This person watched her family business go under during that recession. It is understandable that this memory could be influencing her stories about today’s financial situation.

My own bias was on display as I got triggered by a story that I made up about 24 hour news using fear to drive ratings and advertising dollars. This put me in a place where I was combative, until I realized how below the line I was, came to my senses, and apologized so that I could climb back above the line and have a coherent conversation.

One way to replace old stories or biases with reason is to revisit your playbook and make sure you’re in alignment with your purpose, your customer and your market; then commit to gathering key facts to use in making any decisions about how you might adjust to inflation and slow downs.

For example, be clear about whether you’re prioritizing cash, growth, or profit during these hard times. If you are sitting on a lot of cash and have good margins, you may be able to offer your consumers a discount to help them through the volatile times. This would certainly build good will among your consumers, right? And would likely win you new consumers from competitors with smaller margins to work with. (Here’s a great example of that technique from Ryan Reynolds at Mint Mobile.)

Run some worst case scenarios through the hopper and prioritize your current resources, including headcount investments, to give yourself some options and breathing room if things get worse. Another input that would help you avoid panic would be understanding whether your consumer is price elastic or inelastic. Will your customer buy your product no matter what the price, or will even a small increase put them off you?

Find out. Don’t assume anything. It’s the best way to make sure you’re making good decisions when you get to your planning.

Be flexible and inventive when thinking about new product packaging, a place where you can cut costs, as well as inventories. If, for example, you’re used to selling a 30 day supply, you might want to sell a 20 day supply to allow people to buy it more frequently at a lower total cost. Many people are paid every two weeks, so helping them to buy more frequently but at lower costs might also be helpful for consumers and allow you to gain some more consumer loyalty as well in this difficult market.

And speaking of customer loyalty, consider rewarding customer loyalty in this window to create more trust and empathy for the customer in your approach to sales.

I know it sounds cliche, but the truth is that all cliches have a kernel, or in this case, a solid core of truth in them: every challenge can offer an opportunity of some sort. But you have to be in the right frame of mind–better still, the right mind, period–to see it and use it to make decisions. The stories we habitually tell ourselves have a way of coming true, so be sure you’re telling yourself stories based in fact.

It all begins with moving your decision making out of the amygdala, where fear drives the bus, and into the frontal lobe where reason and careful planning are the drivers.

Let me know how you’re navigating these bumpy times.

Sincerely,

Rob Craven, scalepassion

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All credit to my ghostwriting partner, Dave Moore, who is instrumental in getting my thoughts out in a coherent manner & into these blogs. Thanks Dave!