Episode 01 | Part One: Pivot Don't Panic

Gregory Shepard, an entrepreneur who's built and sold 12 businesses, a recipient of 4 private equity awards, TEDx speaker, and Forbes author. This is The Boss Podcast with Gregory Shepard. That intro sounds really cool, but I actually came from nothing. I grew up in special education as a poor kid. I cut my teeth in Silicon Valley. Why am I doing this? I want to solve the problem of the 90% failure rate of entrepreneurs. I think it's unacceptable. By doing so, I think I'll also be able to help out with wealth distribution. I want to help more entrepreneurs succeed. We're talking to entrepreneurs, investors, and thought leaders. I want to introduce Randall Laveau. He's the best marketing guy I've ever seen. He was part of Magento when later sold to Adobe for almost $2 billion and then headed up a marketing practice at Sales Benchmark Index. Randall, how are you doing today?

Very good, Greg. Thanks for having me.

Randall and I are going to talk to Scott Tate. Scott is a retired captain of the most sophisticated ship in the Navy, and even though he's very, very humble, I have to tell you, some of the stories I've heard are heart-stopping. What he had under his command is just absolutely mind-blowing. He's currently the executive director of the National Security of Innovation Catalyst located here in San Diego at UC San Diego. I am really excited and I hope everybody gets the gravity of this guest. Thank you, Scott, for joining us.

Hi, Greg, thanks very much for having me.

Scott, before we get started, can you tell us a little bit about what Catalyst does?

So Catalyst is essentially a network of networks and its mission is to connect national security users or practitioners with innovative technology from the region's entrepreneurs and research universities. And to do that, we bring in investment as needed, and then we help them craft a path to acquisition so that those become enduring capabilities that are available to the end users.

I'm sure that people are asking why Catalyst would be based in San Diego and not Washington, D.C. I think most people think of San Diego being, you know, beaches and bikinis.

Well, beaches and bikinis are obviously a big part of the decision, but there's a bit more to it than that. You know, we have a unique position here in San Diego on one of our nation's most challenging land borders. There's a lot going on on that border. We also have one of the most challenging maritime environments where you've got commercial shipping, commercial fishing, research, all sorts of different types of recreation there that have to be managed and balanced. Then we've got the port and the airport. So if you put all that together, what it means is that we have a really unique blend of national security practitioners that don't just include DOD, although the Marines and Navy are here in large numbers, but we've got— It's a pretty unique presence by the FBI, the Center for Disease Control, Department of Interior, Department of Justice. And we found that there is a large overlap of the technologies that all of those customers are looking for and what's resident right here in our natural ecosystem.

So Scott, you served 27 years in the Navy. And before I go any further, thank you so much for your service. How does the military background that you have prep you for and translate to, you know, the world of business? You know, how did you make that leap and how do they translate together?

Well, I think fundamentally, yeah, you're right. I had the privilege of serving 27 years and fundamentally there's a lot of commonality there. You have an objective, you have something you want to get done, you have to plan to do that, you have to organize a team, you have to lead that team, they have to have trust, you have to communicate with them and constantly be able to receive feedback and then Iterate on your plan. So aside from the fact the mission is a little different, the process of achieving it is very similar.

Yeah. I think a lot of the stuff translated across when we met, you know, we started talking about Boss and the military and it was just a really cool blend of experience that you had and the stuff that I was talking to you about. A lot of the listeners may not know, but Scott commanded the Navy's largest, most expensive technology advanced warship At a time. Can maybe you could talk about, about that a little bit? Because for me, I was really entertained by that.

Yeah, it was entertaining. So just to set the record straight, not quite the largest, not quite the most expensive, but USS Zumwalt is probably the most technologically advanced ship we have out there. She's, she's not as big as a carrier, and she's not quite as expensive as one of the ballistic missile subs, but she came in at somewhere around $4.2 billion. She also has 20 years of design and development in her and 12 truly new technology groups along with a very unique manning principle. So we had a much smaller crew size than the average ship. So we had to rely a lot on automation. I guess if there's any corollary of things that you could learn there that are applicable to businesses, that we've transitioned from an age where it was about training, where you used to take your human beings and say, all right, when you see this stimulus, I want you to have this response. And we now live in a world that's all about education. People have to be thinking for themselves. They have to be sensing their environment, responding to it, and working with technology instead of just thinking of themselves as users of technology.

Oh, that's interesting. So one of the things I wanted to ask you in your place of business and what you guys are doing in your platform of platforms and network of networks, how has this pandemic impacted what you're doing and what sort of changes and pivots are you seeing out there?

So it's really been wonderful to see the Catalyst network come together in the face of the COVID crisis. Within the first couple of weeks, we were able to bring investors together as donors to prototype some unique ventilators that UC San Diego's School of Medicine and School of Engineering got together to design, and those are now being produced and available here, not only in California, but for developing nations also. We were able to find some Companies that got together and came up with some disinfectant, which doesn't sound like a big thing, but when you look at disinfecting electronics and airplanes and ships and stuff, you don't want things that are chloride-based because it's too corrosive. So they were able to put together a solution based on iodine. It's in production already and it'll be in use. And then we found some training companies to help our National security practitioners stay sharp while they can't do their traditional training. So brain training, a company called Neurotrainer that specializes originally in professional sports has adapted their product to help folks across the first responder community stay sharp while they can't train. Now, if there's anything that we've learned in helping to manage the companies, kind of the 4-phased approach that Greg and I have talked about in the past that mirrors what we would do in the military in this type of crisis. You know, the first is help the company to do damage control and just kind of set boundaries, figure out what they've got that they can work with and staunch the bleeding. The second one would be to stabilize their situation, get their people informed, get, you know, repurpose whatever they can repurpose to keep cash coming in and keep customers connected. The third one being seize opportunities, because there never is a crisis that doesn't present some opportunities. There's going to be new pain points. There's going to be new things that they can go after, new ways to do it. The opportunity to insert technologies in a way that might not have been possible before the crisis. And then finally, a deliberate transition back to whatever your new normal operation is going to look like. Starting on day one, thinking about what that new normal is and being very sensitive to your market is kind of key. Then making the decision to get out of crisis operations and get back to business as new normal permits. So we're working with our companies specifically to kind of help shepherd them through that process and help leadership internally guide their company through those phases with the understanding that different parts of the company are going to be in different phases at different times. So for example, your finance folks may be in damage control mode for quite a while, but the second you start to see new opportunities, you want to be pushing your sales folks and your development team into that area as quickly as possible.

That's interesting, Scott. We've seen that actually within our portfolios. the increased risk of misalignment as they tackle this crisis in front of them. In your 4-phased approach to crisis management, how would you encourage people to maintain a level of alignment that doesn't end up ultimately negatively impacting the business?

I think leadership in any crisis is about communications. You gotta be communicating not only internally with your team to keep them aligned, but also with your external stakeholders, whether they be investors or your customers. The single most important thing in times like this is communicate, communicate, communicate, because it's better to overcommunicate than to undercommunicate and leave people guessing.

In that 4-stage process that we broke down, so Scott and myself and Randall worked on this crisis management process. Maybe for the listeners, you could walk through this in a little more detail. So Randall, maybe you could start on the front end. And then hand it over to Scott so that people could sort of get a, as much as we can, a visual for these people as they listen to this.

Well, you know, and we had the luxury of Scott walking us through this. And, you know, that's the great thing about BOSS and the framework itself is that it is open source. So we've already applied this methodology to our process. And in the first stage or first phase, the initial assessment and damage control. The way we dimension this is we looked at it in 2 kind of circles, so to speak. And one is the circle of concern and the other is the circle of influence. So this, this comes from Stephen Covey's 7 Habits of Highly Effective People. And in the circle of concern, these are factors that we cannot control. So when you're initially making the diagnosis of the crisis and assessing the damage, you want to quickly Move the things out of your field of vision, the things that you're focusing on, and move those things that could potentially reduce activity efficiency or decrease productivity. Put those in the circle of concern, the factors that you can't control. And then what you do with your circle of influence is you contract it. So you narrow down a list of the things that are most critical, and we actually have a process to go through that. And once you dimension all the missions and objectives and tasks that are associated with those factors of control that you have, at that point, you're then able to move to the next step, which is stabilization and crisis pivot. So, Scott, you want to talk about crisis pivot?

Sure. The crisis pivot is really how do you adapt your business on the fly with the assets that you have to not just deal with the demands of the crisis, but also to to serve your customers and take care of your stakeholders as you figure out how you're going to adapt to a post-crisis world?

You know, we asked ourselves that same question or went through a similar process when we got to that phase. And the 3 questions that we kind of looked at are, what is your service and how does it add value to customers in this crisis that we're living in today? How has it shifted? Why should they engage with your company or product or service? And why should they do it now in light of this pandemic? And then who are the target buyers and what are their new motivations? And so when we asked ourselves these 3 questions, when it came to actually shifting into crisis mode, we knew the areas that we needed to focus on. So one, we definitely needed to have a new message. The buyer behaviors and motivators of our core audience had absolutely changed. So reestablishing the brand message, Updating and optimizing existing content that's out there, right? Those are all things that, that derived from this process. Another area that we had to look at is the go-to-market shift. Clearly, any businesses that are accustomed to face-to-face selling today need to make a significant adjustment. So this virtual aspect of the go-to-market plan is paramount for most companies today, and it's a big shift. to take on. So, you know, identifying the channels that you can now push your message, your product through, and making sure that you have the support around it, meaning the systems, the resources, and the infrastructure to be able to handle that. All very critical.

Yeah, I mean, we have put together, just so people know, we put together a whole webcast for this. It's gregoryshepard.com/covid19. And on that website, you can register and we give you the templates and we give you a webcast in order to try to help people out with this pivot. And what we're talking about is the change between business as usual and, you know, in the BOSS Formula, having your North Star and having your strategy and your execution process and going through that and then having something interrupt that, like a pandemic, something that just sort of steps in the way and T-bones you on a random Tuesday afternoon. I had In 2008, that happened, even though you see it coming, it's sort of, it snuck up really fast. And at that point, I had a business with a couple hundred employees, and it was very difficult to pivot something like that at that time. And then we had 9/11, which was a setback for us. And then before that, the dot-com was the technology version of the 2008 recession. So, when you have business as normal and you have to sort of set back Right? You have to stop for a second. I did some interviews with some firefighters. And the interesting thing that I learned from them is I said, you know, when I was trying to figure out, how do you guys do business? You know, how do you go through it? My terminology of doing business. And after they finished laughing at me for saying that, they said, well, there are fires that happen. And we don't actually try to put out the fire. The first thing we do is we try to prevent the fire from spreading. If we try to put out the fire, then we just chase it.

Right.

And it just keeps running ahead of us. So they said, you have to let the fire burn, and then you have to get containment. If the containment area is a square, then one line is 25% containment, 2 lines is 50% containment. And so the most important thing is to draw those fire lines, right, so that the fire can only go so far, and then sort of zoom in and focus on that. And I'm assuming that, because it seems like in the interviews that I've done, that the military has similar strategies. And I'm wondering, you know, if you get caught in that oh shit moment, because I have a lot of businesses that are just caught there going, holy shit, you know, just out of nowhere. And how, you know, how would you handle that in the position that you're in? And I'm assuming you've been in many times, Scott, out there in the field.

Well, probably more times than I would like. Everybody gets what we call Daffy Ducked every once in a while. You step on a rake and then you have to pull your beak back down on your face. Can't see them all coming. But when it does happen, the leadership's job is really to stay as cool as you can and keep as much perspective as you can rather than zoning in. You're going to have to dive in and get very tactical at times just to avert disaster, but you have to force yourself to keep the perspective of, okay, we're in crisis, we're going to set new priorities to get through this crisis. As you said, we're going to set boundaries, we're going to try to contain the damage. You have to get really comfortable really fast with things that you can't control. And as Randall hinted at earlier, focus on those things that you can control, identify them because they may not be obvious. Once you identify them, go all in with the things that you can control and use them to the best of your ability to get yourself on that road to post-crisis. But for the leadership, having the perspective of what does post-crisis look like, you know, which way are we going? In the Navy, we generally say that Any planning challenge can be handled with the navigation process. And you like the North Star. I love the idea of a North Star. The first question, though, is, where am I? You got to figure out kind of where you are first. The second question—

You're lost until you know where you are, right?

So yeah, and that's the most fundamental thing. Do I even know where I am? I got to figure that out first. And the second one is, where am I going? And then once you've established where you are and where you're going, you can chart that course to get there. And to use BOSS terminology, I don't think you necessarily change your North Star, but you may sail a different course for a while before you can regain your, your original intended course to that final destination that you seek.

In BOSS, we have this thing called prioritization, right? Prioritization uses Eisenhower's urgent and important matrix as well as the impact over effort matrix. The idea there is to say, okay, what is urgent? And what is important. And traditionally speaking, in the BOSS Framework, I say if urgent things happen, then you missed something important. But there are things like this that happen where the urgent thing is completely not your fault. It just T-bones you, like you said, Daffy Ducks you. And now you have this urgent scenario and you have the important scenario kind of at the same time, right? And then you have what has the highest impact at the lowest effort. When you look at the military and you have this scenario, is there a mechanism that you guys use for deciding the priority of all of these things that seemingly are all urgent and important?

I don't think there's one process. A lot of it goes back to communication because there's a good chance that you don't understand all the information that you need to know. So you got to talk to your people, you got to talk to your stakeholders. It really is about communication in crisis. Get as much information as you can, but also don't be paralyzed by the lack of information. That comfort with uncertainty and the acceptance of the fact that you're going to have to make decisions without perfect information is kind of a key thing. But get as much as you can. Don't assume that you know— your assumptions of yesterday are guaranteed to be incorrect today once you're in crisis. And consciously overcoming those and seeking new realities so that you can make the best decision you can with what you've got, and then getting people aligned to it and moving out.

I think one of the— I got to interrupt you because you said something I think that just sort of flew through that was really, really important. And that is act even though you don't have perfect information. Can you unpack that a little bit? Because that's, I think, a very important thing for people to know.

In crisis, people seek comfort or sometimes take comfort in this idea that they still get to choose. They get to choose whether to change or not. And the reality is that not making a decision is making a decision. You've chosen the status quo, which has probably already eroded out from under you. So you've got to get what you can get, make a decision and move. The Marines have a saying, do something because anything is better than nothing, even the wrong thing. Get your people focused, get moving, get some energy, some momentum. You know, Patton also had a great saying that the 80% solution violently executed today is better than 100% solution tomorrow.

Yeah.

And I think that's exactly right in a crisis situation. All right.

We're going to pause right here. Thanks, Scott. Awesome information and really appreciate you so much for joining the podcast. Coming up on part 2 of the episode, I'm going to talk to my partner Randall about what a business does when they're in critical condition during a crisis like this one.

Within each crisis, there is an opportunity and sometimes the opportunity isn't seen up front. And that's why they say it's about the journey, right? Not necessarily the destination, but it's important to be agile and vigilant while you're going through this process to make sure you understand the opportunity and capitalize on it.

That's in part 2 of my talk with BOSS Capital's Randall Leveaux and a real American hero, Scott Tate, the Executive Director of the National Security Innovation Catalyst located at UC San Diego. Thanks for checking out the BOSS Podcast with Gregory Shepard. Get more on Greg's Business Operating Support System, BOSS, at GregoryShepard.com. This has been a production of Forbes Books Radio.