By John Panaccione
CEO of LogicBay Corporation | Director of VetToCEO
This piece has been published in The Entrepreneur
I’ve had the privilege of serving in the military and experiencing life as a startup entrepreneur. As a leader in both worlds, I’ve learned that sound organizational decision-making is key to survival. I’ve also learned over time through my formal business education and work experience in corporate America that group decision-making skills are not stressed as much in the business world as they are in the military. Today’s coronavirus crisis is commonly referred to as a war. It may be valuable, then, to visit how military units make decisions in a real war
One hour to prepare
I was serving as a Company Executive Officer (XO, second in command) in the world’s only air-droppable tank battalion in the 82nd Airborne Division when Saddam Hussein invaded Kuwait on Thursday, August 2, 1990. The 82nd Airborne maintains a one-hour recall alert status that allows it to deploy anywhere in the world on 18 hours’ notice. It is America’s 911 military unit.
Most of us had no idea where Kuwait was as we came into work that early morning. The 82nd would never deploy to a desert environment, so we thought. Desert warfare calls for fast-moving vehicles armed with weapons systems that can shoot at targets very far away. We were too lightly armed. If you can’t jump with it strapped to your body or drop it separately from an airplane, paratroopers don’t take it to the battlefield.
On Monday night, August 6, my pager went off at 10 p.m. (this is before cell phones) while I was out at my favorite bar. I rushed home, changed into my uniform, and was in my unit headquarters within the hour. It was my responsibility as XO to manage the arming and aircraft loading of my company’s 100 paratroopers and 17 air-droppable tanks. We regularly rehearsed this sequence. This time it was for real.
Aircraft containing the lead elements of our Division Ready Brigade took off starting on the next day — 18 hours after notification. We were heading to Saudi Arabia to defend it from an imminent attack by Iraq. We were told that it was highly likely that the attack would likely begin while we were in the air. I found myself in a leadership position heading to an unknown, dangerous place half a world away. The world around me had changed overnight, full of uncertainty, stress, and not knowing what laid ahead. Not only was I personally concerned, but I had a responsibility to lead my organization through the situation. I was 26 years old.
The start of the startup
Fast-forward to February 2003. After leaving the military and then working a decade for a few large companies, I co-founded a startup business that I still lead. I started it with another friend, mentor and highly decorated Vietnam Special Forces veteran. He would serve on our Board but not be directly involved in the day-to-day management of the business. Our third co-founder had no military experience but seemed smarter than the two of us at the time.
As with most startups, everything that could go wrong did go wrong. Together with my management team and the periodic input of my military co-founder, we tackled a series of crises not uncommon among startups, things like the painful separation from the non-veteran partner, which soured the relationship with our early investors. Constant cash flow challenges. Two separate episodes of banks calling back their loans, dealing with the calamity of 2008 and many other challenges in the first 10 years. Each time, it seemed as if we had no options and the end was near; uncertainty and unfamiliarity surrounded us each time.
For instance, in 2006, we had a $500,000 line of credit with a regional bank I’ll call Regional Bank A. To his credit, my non-military partner had an excellent personal relationship with the loan officer when we initiated the line of credit. Keep in mind this was pre-2008, so obtaining a line of credit based on a personal relationship was possible and common back then. One day, National Bank B bought Regional Bank A. Our loan officer immediately lost his job. We quickly learned that the new bank didn’t have a small business–friendly profile. Within weeks, National Bank A informed us they were calling our note based on being out of compliance with one of our loan covenants relating to a profitability ratio. I never heard of the word covenant — it was in the fine print. I thought it was a place where nuns lived.
By then, my non-veteran co-founder was no longer part of the company. I had to take the lead on this issue. My mind immediately kicked into decision-making mode. After a couple of months of extreme pressure to figure a way out of what seemed like a lights-out situation, my team and I figured out a way to refinance the debt while under extreme duress using the process described here. Somehow we made it through this and the other challenges that came our way.
While going to war and starting and managing a small business seem like polar opposite experiences, they are similar in a compelling way. In times of crisis, the pressure of having to survive through seemingly impossible odds is something that goes with the territory. Unforeseen emergencies and the uncertainty that comes with them cause fear and anxiety in ourselves as leaders and our team. We call this the fog of war in the military. Similarly, the fog of business is alive and well today as we deal with COVID-19.
Decision-making is more science than it is art. The military needs a defined decision-making process to accomplish missions. It even has a manual for it. Soldiers at all levels of rank learn it and apply it in training consistently. It’s part of the culture. It’s quite simple. It has to be usable and scalable within the military in units at all levels, across all branches of service. Part of its value is its simplicity.
Modeled on the military
There’s a bit more to it than this (download the Army manual for more), but here is a summary of the model:
Step 1: Define the situation as best you can by defining and separating facts from assumptions. Facts are facts. Assumptions are critical components that any plan needs to succeed, but that we cannot confirm are factual. For example, a company may assume that their new account sales will be reduced by 40 percent in a crisis like COVID-19. It’s not a fact. It’s an assumption we’re going to base our plan on. We want to document our assumptions and monitor them as the world around us changes. If an assumption turns out to be false, we modify our plan accordingly. If it turns out to be true, it moves over to the fact list.
Step 2: Make two lists of tasks. Specified tasks are those tasks we know we have to do in a crisis. Implied tasks are tasks that we’ll have to do to accomplish the specified tasks. From these two lists, we identify a handful of essential tasks. These are our critical path, must-get-done tasks that are key to success. For example, monitoring cash flow may be a specified task in a crisis. The implied task is to put a reporting system in place so that everyone knows what the cash flow situation is like every day. This may be such an important task that it’s deemed an essential task. Once tasks are identified, they can be grouped, delegated and assigned to team members who can be held accountable for them.
Step 3: Establish an end-state goal and a clear leader’s intent. This step is critical. It becomes the North Star that everyone looks to when in doubt. Decisions can be and should be made throughout the organization as long as that decision supports the intent and the vision of the end state of the leader. Too many organizations become paralyzed in a crisis simply because no one feels empowered to make decisions. In a crisis, decisions at all levels must be made at lightning speed. To enable this without creating a train wreck, leaders need to clearly articulate their intent and what winning looks like in order for everyone can make decisions with that in mind — even when the leader is not around.
Step 4: Use the time available to develop two to three courses of action. Take what was learned from the situation analysis, the leader’s intent and associated end-state goal, and develop two to three courses of action on how to achieve the end state given the situation. This is not the domain of just the leader or the management team. This step should involve everyone in the organization as much as possible. Delegate parts of the development of different courses of action to junior members of the team. They’ll amaze you with their ideas. After comparing the courses of action, pick one as the basis of your plan. A common trap here is to rush to make decisions because making them feels like we’re doing something. There’s a saying in the military that you don’t want to run to your death. It means that even in war, we should take the time to think through courses of action before acting. It’s good advice.
These basic four steps go a long way to getting everyone involved in the solution to a crisis. They build a sense of ownership in the plan throughout the team, providing leaders with ideas from multiple perspectives. Ultimately, it contributes to providing some order to the chaos and uncertainty around us. Use it as a framework for action that drives a plan for survival through the current crisis, and for the ones that follow. If it works for the military in a real war, it will work for us small business owners in the COVID-19 war.