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In this series, we address some of the thorniest challenges founders face over the course of the company-building journey. This month, we’re sharing some of the toughest questions our investment team was asked in 2023, along with the insights most relevant as we head into the new year.
“After a few years of up-and-to-the-right growth, our curve has flattened. I’m coming to the hard realization that we need to change strategies: what got us to this point is not what will get us where we need to go. How do I steer my company through a pivot while keeping my team motivated?”
2023 was a destabilizing year for so many companies: interest rates climbed, venture deals slowed, and buyers across industries went into conservation mode. If you’re a founder who decided to pivot this year, you’re far from alone.
But no matter how many other founders are navigating similar terrain, executing a pivot can still be a lonely and grueling experience. You’re responsible for putting out multiple fires at once: creating a new strategy, reorienting your team around that plan, letting go of people who helped build the company, and, more often than not, fundraising against a new story. You’re also racing against the clock: markets move, conditions change, and you need to start executing ASAP. Your job is to rally everyone around a belief in the company’s future, even as you’re looking down a long and bumpy road.
We’ve worked with countless founders who have stood in that difficult place and made the call to pivot. From what we’ve seen, the leaders who guide their teams most successfully do three things well:
- They huddle with senior leadership early to shape a new plan
- They motivate their team with authenticity and openness
- They look beyond “crisis mode” and plan for the next 12 months
Huddle with senior leadership
Your first order of business is to assemble your management team—in person and as soon as possible—to build a new plan. When you meet, you have three objectives: acknowledge the change, get buy-in, and get moving. Once you have an updated plan, you can refine it with your board, then start rolling out the new strategy to your team.
Convene as soon as possible, IRL
The earlier you invite your senior leaders into a huddle, the easier it will be to get them bought in, emotionally and intellectually. If you’ve done a good job of hiring, your leadership team will already know a change is needed, and they’ll be relieved to know that you’ve accepted reality. As soon as you face that reality, you can get into problem-solving mode.
Gather in person—an offsite can be a good setting—and get on the same page. Start by sharing your point-of-view: as the CEO, you cannot say "We have to pivot," and then ask your leaders to solve the problem of how. Assert your opinion on the new strategy and ask for your leadership team's help in refining and realizing it. Discuss your shared view of the world and the implications for your company's growth. Set clear goals based on what the team can realistically accomplish. What needs to happen in the next week, month, quarter, year?
Share a roadmap with your board
Meet with your board as soon as you have a plan to present. You don’t need to get into the nitty-gritty of execution with them. Rather, focus on what you’re changing, why you’re changing it, how long it will take, and how much it will cost. Be realistic about the time it will take and ask directly for what you need, whether it’s more capital or the waiver of a financing document.
Create a communication plan
The timeframe for communication is condensed when you’re undertaking a pivot. At best, you’ll probably be able to communicate directly with six to seven people. From there, parts of the story will seep out—and once it does, you’ll lose control over the message. Once the plan is set, communicate the new strategy as fast as humanly possible.
Lead with transparency
Leading your team through a pivot is a delicate balance: you need to keep people motivated while taking responsibility for the decisions you made in the past and acknowledging the challenges ahead.
Be real
If you’re not open with your team, the best people will leave. In order to do their jobs, people need to know where you’re headed, how you’re getting there, and why that path is right. And in order for you to be credible, you have to acknowledge that the strategy you set early on isn’t working anymore. Be open about why you made certain decisions in the past and why they no longer serve the business. Take care not to say anything that could be perceived as blaming other people or diminishing the parts of the business that your team helped build.
In most cases, you’ll want to have these conversations live. Slack and email are awful for big announcements. Meet in person or, at a minimum, on Zoom, and make as much as space as possible for questions, honest dialogue, and even 1:1 follow-ups.
Set a new path forward
Help your team envision the future while celebrating the contributions that have brought you this far. Recognize the values, goals, and blueprints that remain intact, and describe how you’ll build on that foundation going forward. If your vision has evolved, help your team imagine what that future state looks like. If your vision is unchanged but you’re taking a different route to get there, explain why you believe in that course. In either case, highlight the prize that awaits you if you’re successful.
Acknowledge the impact on your team
The path forward after a pivot is likely going to be harder and longer than your employees expected when they signed up to work for you, and their roles may expand to encompass new responsibilities. Recognize that you’re going to have to do things with less headcount, and what that will require of them; also consider reminding them that with hardship comes opportunity—opportunity to learn more and do more.
Support the people you’ve let go
An unfortunate reality of pivoting is that in most cases, you must say goodbye to people who helped build the company. When sharing the news with your remaining team, be clear about the reason for those departures: an evolution of the business, not a reflection of individual performance. Extend support to the people you’ve let go—for example, by helping them find roles within your network—and make those actions visible to the people who are still at the company. Your employees want to know they can count on you to do the right thing when times are tough.
Pair words with action
Actions often speak louder than words when it comes to showing solidarity with your team. Some founders choose to forgo their salary or bonus until the business gets back on track. Make commitments that feel authentic to you as a leader.
Plan beyond the pivot
Pivoting involves a million urgent tasks, but occasionally you need to stop whacking moles and plan for the mid- and long-term. Actions you take now will set you up for success in six to twelve months. Create a system for open and ongoing feedback, motivate folks to keep growing with the company, and be aware of dynamics that can undermine the future success of your team.
Make space for feedback
Build a culture where people can come to you with honest critiques and questions. Make yourself available for Q&As and coffee meetings, ask your team to share their concerns with you, and encourage senior leaders to raise issues that bubble up on their teams.
Create a talent retention plan
As you meet with your leadership team, ask how to keep your best people engaged. How can you reward and challenge top performers? What new responsibilities might motivate them? Are there different leaders they could learn from?
Watch out for an “us vs. them” dynamic
As you begin to grow again, you’ll eventually need to bring on new people. The risk is that the original team hardens such that newcomers remain on the outside, and the body rejects the organ. Be open with more tenured people about why you’re hiring and why you need new roles and expertise.
There’s no wrong place to start
A pivot is daunting. Most of the time, it feels like everything is on fire—because it is. Don’t expect to prioritize perfectly or come up with the ideal plan. The longer you wait to get moving, the harder it becomes. Start by putting out one fire, because one is better than zero.
At General Catalyst, we help founders work through their toughest challenges and most uncomfortable topics. If you're looking for a thought partner as you build the enduring change you want to see in the world, please reach out.
