November 19, 2007

Startup Communication - by Sanjay Anandaram

An irate customer sends an email to a startup company “….am disgusted with the quality of your service. I was referred to your company by my friend and I’ve just had the most unhappy time ……” The customer support department does not forward the mail (& others like it) to the executive leadership.

Response to the board of directors from a CEO of a VC backed startup “…we’re doing fine. I’m confident we’ll hit and perhaps even exceed this month’s targets…..” Of course, the board didn’t know that the two top customers of the startup were pulling out of contracts with the startup. The CEO knew but was scared to tell the board.

Board member writes a letter to the CEO of the company “….you seem to be stressed out lately. Why don’t you get more senior executive help around you to help reduce the pressure?” The CEO replies “…Thanks for your concern. Am doing fine actually. Am wondering if you had any other objective in suggesting that I surround myself with senior executive help?” The CEO was wondering whether the board was considering replacing him.

There’s great unhappiness & confusion in the company. 4 of the 10 call centre agents have been asked to go due to non-performance in the last 2 months. They do not know the reasons for their firing. They do not know what is the performance expected of them & consequently what constituted “non-performance”!

CEO to Board: “I really do not know what you want. A long term goal for the company or a short term plan on achieving break-even in the next 6 months. I am confused!”

The above scenarios are not fictional. They are all actual instances taken from different startups. There are of course many more cases involving communication between peers and across levels and layers. But these cases illustrate the critical importance of communication. Especially in the chaotic and ever changing environment of a startup. Communication that’s timely, appropriate, clear and direct. As in most cases, the culture of open & honest communication starts from the top. If the Board of Directors does not set clear expectations from the CEO, if the CEO does not share important company information with the Board and employees, if the functional heads do not share news with the executive leadership, it is quite easy to visualize the rapid collapse of such a company. A company that hides from itself, one that is afraid of confronting the reality of the situation and one that takes refuge in lies and half-truths cannot be expected to generate trust and goodwill among all stakeholders.

The first step in creating a culture of open, frank, free and candid communication is to encourage people (including employees, customers and partners) to speak out. And to not punish people who have views that are not sugar coated. To have clear and frequent meetings where people can voice opinions, suggestions, criticisms, arguments and the like. And to respond to these concerns and views of employees, customers, partners, and investors. . If there’s bad news, share it with the stakeholders. Don’t hide or gloss over it. Ask for help and suggestions rather than pretend that you have all the answers. If you are lost, stop and ask for directions. People value open and honest communication. Companies around the world and across different industries have had to deal with severe and expensive consequences resulting from no or poor communication. They’ve had to deal with terrible loss of image, product recalls, fall in stock price, and public firing of senior executives just because everyone pretended that a problem didn’t exist and that the problem would go away if ignored long enough.

Well, in today’s day and age, you cannot hide all your problems from all the concerned people for all time. Isn’t it therefore better to have the “people” on your side when things go wrong as they inevitably will?

What do you think?

Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.