Post COVID-19 pandemic, this world needs startup more than ever for their innovative solutions to pervasive problems, both big and small. But to make sure that this generation, and future generations, of new start-ups, have what it takes to take up major issues, the world also needs CEOs who can enable the next generation of startups.
During these times of global crisis, CEOs are focused on two things – cash flow and runway. Due to some catalytic events such as Covid-19, years of activity is condensed into weeks. Hence, the CEOs across the world need to make time-critical decisions that will make the difference between the company thriving or surviving, all under an incredible intense timeline.
It has been estimated by International Labour Organization (ILO) that nearly 400 million full-time jobs have been lost in the world in the year’s second quarter (April-June 2020) due to the novel coronavirus disease (COVID-19) pandemic. The labor organization has also pointed out that job losses in Africa were much more than its earlier estimates, while many more working hours were lost in Asia than earlier predictions.
Many companies are implementing cost-cutting measures, including redundancy, due to the pressures of COVID-19. We can see that world over, companies are looking to ease the transition of departing talent by offering outplacement services, yet with the job market in freefall, we need to offer alternative options for people, one in which they can create their future by building a startup.
This process is tried and tested. Nokia was faced with making over 40,000 job cuts a decade ago. It opened centers in Europe, India and the US to help those faced with redundancy to find a new job, either in the company or outside of it. It had also formed an entrepreneurial stream for employees and named it ‘Bridge’. Ever since it has been formed, Bridge has helped over 1000 startups get their beginning. The bridge scheme is credited for fuelling the rise of the Finnish tech ecosystem, which includes success stories like Supercell and Rovio.
The current economic climate is not propitious for startup success and this has kept many CEOs worried. However, they couldn’t be more wrong. When you look back across history, you will find several large companies that have started during times of economic downturns and that’s not a coincidence. Look at the recent examples of Uber and Airbnb.
These startups are not the only ones – companies like Microsoft, Disney, and IBM were all founded during deep recessions. It is just because times of rapid disruption provide ample opportunities for startups to take advantage. COVID-19 has presented a perfect opportunity and is reshaping every industry, which lowers barriers to entry and provides huge opportunities for startups to tackle new consumer demands.
There are several key factors which can help CEOs to pioneer the alternative options to make this a success:
Collaboration within the company : The best startups are those founded with teams that have complementary skill sets – but in a corporate environment the chances are people who work in tech development don’t know sales colleagues, etc. because they work, for example, in different locations. Thus, you need to create a space where employees can meet, make connections, and potentially form teams around common problems they want to solve. During COVID-19, this can be done virtually. However, the key is just to ensure that people correctly identify their skill set and areas of interest.
Involvement with your staffers: You need to be clear on the degree of your involvement – are you prepared to offer access to unused IP, assets or data, orare you just presenting the opportunity to develop the skills and mindset for ex-staff to create a startup, or are you willing to invest in ideas that could help solve your challenges? In the case of Nokia, the company had allocated a fund, and its program enabled ex-staff to pitch for seed capital of €25,000, with up to four ex-employees being able to combine to access a potential pool of €100,000. The company, however, needs to build a system for clear governance and measurement, but it also means that the corporate can reap the reward for startup successes.
Building Partnership: If you are investing in startups you need to make sure that the program is supported with a partnership that will provide the best experience for your people to maximize success. Purchasing a course of Udemy or having an hour’s discussion with a startup coach from an outplacement firm isn’t going to move the needle.
Entrepreneurs wanting to build new startups need access to the right training, coaching, and mentoring to develop the right skillset and mindset as well as being given the right kind of introductions to early-stage VCs and Angel investors.
Communicate: This is a prominentstrategy and can be used to attract new talent, build stronger relations with the communities and customers. Therefore, you need to have a communication plan to share the impact of this scheme with key internal and external stakeholders, showing that you believe in your employees when they leave the organization just as much as you did when they joined.
Objective: Remember, this is not about unicorn building, but empowering your people to create their future. Inthe case of the Nokia program, a third was focused on building high-growth startups but two-thirds used it to launch their freelance career or pivot into a new industry altogether.
Many People think that timing is the most important factor in success, and whilst that might feel counter-intuitive right now, COVID-19 is providing the perfect timing. Global CEOs have the opportunity to play a leading role in reshaping this future, not only through the people the company retains but also in the people it has to let go.