When Advice Conflicts, Lead

Originally a thread on X/Twitter:

Capital is less available than it’s been in recent years. So Investors are advising companies to make changes that reflect this new reality.

How should Founders deal with divergent opinions? How should Founders make decisions when there’s disagreement?

A few weeks ago I talked to the Founder of a high growth fintech startup that I would consider “well managed”.

The startup had missed its quarterly numbers which wasn’t a surprise given today’s market conditions.

The business was still healthy but the conversation that took place during the most recent Board meeting was tangibly negative.

The Founder wanted to talk because he felt attacked and abandoned by the very same Investors who praised and supported him in the past.

What I realized was that the Founder was struggling to figure out what to do next because his confidence was shaken by all the negativity coming from Investors.

This surprised me because he had already proven himself to be a talented CEO, leader and visionary.

But, because of the disappointing quarter and external environment, he found himself being given advice by every major investor on the cap table as well as from members of his leadership team.

To make matters worse, much of the advice was conflicting.

A Board member suggested reducing growth to control burn. A member of his leadership team thought raising prices was a good alternate to cutting staff. And an early Investor he hadn’t heard from in a long time insisted that all new product development efforts be shuttered.

My response to him was simple.

He was the CEO and in charge of running the company. The people surrounding him were there to give advice based on their experiences and perspectives. His job was to make the tough calls.

This is what CEOs do every day.

But not all CEOs are good at processing diverse opinions and making decisions when faced with conflicting advice. The best ones are.

They know how to systemically listen, study, decide, communicate and act.

LISTEN

Think of each opinion as an articulation of a problem statement and a solution statement.

The best Advisors can explain why they believe their solution is the right one (i.e. – cause, effect, action, reaction).

If an Advisor’s proposed solution lacks grounding or is based on flawed reasoning then the advice can be considered weak advice.

If an Advisor struggles to explain the “why” then the Advisor is a weak Advisor.

If an Advisor is active, knows your business, and has given you good advice in the past then their advice should be taken seriously.

If a relatively inactive Advisor suddenly offers unsolicited advice then you should treat it as casually as they’ve treated you in the past.

STUDY

Examine the advice you’ve been given with the goal of adding your own insights. Gather all available facts and don’t be afraid to ask questions that challenge the decisions you’ve made in the past.

The most important step is to identify and throw out bad advice.

But bad advice is everywhere

Bad advice can come from kicking the can downstream (i.e. – tomorrow will be better)

Bad advice can come from oversteering (i.e. – cash is more important than growth)

Bad advice can come from bad pattern recognition (i.e. – everyone is cutting 20%)

The beauty is that once the bad advice has been eliminated the good advice will stand out.

Reducing the noise will almost always create clarity and with clarity comes certainty and confidence.

DECIDE

It’s a fantasy standard to believe that complex problems can be solved overnight, but typically aggressive moves work best. It’s OK to be wrong, but it’s not OK to generate doubt in your organization through inaction.

And don’t forget that inaction costs time and money.

COMMUNICATE

Be able to articulate the “what” and the “why” for your plan. The “what” steers the organization and the “why” demonstrates that there’s logic behind the decision. If the “why” isn’t compelling then you haven’t done enough work.

It’s important to acknowledge the opinions that were considered, but it’s also important to make it clear that you’re the ultimate decision maker and the path forward needs to be owned by the group.

Once you’ve made a decision, everyone needs to get on the bus.

ACT

Rely on each other to execute the plan and squash negative behaviors. Making big moves is difficult even when everyone is marching in unison and distractions can crush a team’s chance of success.

Revisiting the past serves no purpose. Today is what matters.

TL;DR: All startups have to deal with the sudden shift in capital availability. There isn’t a perfect playbook for how to navigate this environment but advice seems to be flowing freely. Great CEOs know how to digest advice and how to move forward when faced with uncertainty!