As we head into an economic downturn, founders are all thinking about the same thing: becoming default alive.
Default alive means that companies make it to (or maintain) profitability with the money they have left.
To do this, they can either raise more money (hard), grow revenue (very hard) or cut expenses (the easiest).
In practice, we’re seeing several real companies double down on core revenue drivers and reduce spending on offshoots.
This includes Uber (full memo):
Meeting the moment means making trade-offs. The hurdle rate for our investments has gotten higher, and that means that some initiatives that require substantial capital will be slowed.
And Facebook (full memo):
The short answer is that we’re not trying to build a lot of new tabs right now - we’re focused on making our core products better and more integrated
This seems like good advice for founders — but how should employees navigate the downturn?
I think the answer is analogous to default alive - it’s to become default essential.
Essential means you are 100% critical to the core business and/or the most important company bets. Non-essential means the business would continue to operate without you.
As an employee, you want to work on essential initiatives. Not only will these be the safest for job security, but they are also the most likely to receive additional funding and have the most growth opportunities.
Now how do you get to the essential initiatives?
Below, I’ll share an unintuitive strategy. There are three steps:
Audit your portfolio of work
Find essential scope
Globally optimize
Let’s dive in.
1/ Audit your portfolio of work
It’s important to understand how you’re allocating your time. For product managers, it’s even more important to understand how you're allocating your team’s time.
A breakdown of your personal capacity plan may look like this:
For a team, it may be:
From here, identify what portion of the effort is going to essential initiatives versus non-essential initiatives.
Essential means that the initiative is 100% critical to the core business and/or the most important company bets. Non-essential means the business would continue to operate without this initiative.
This is hard — it’s tough to admit that part of your plate may be non-essential. But having this view will help ensure your team becomes default essential to the company.
This is what it may look like:
If 100% of your and your team’s plate is essential then congrats, you are default essential to the company. If not, it’s time to find essential scope.
2/ Find essential scope
Your goal is to devote 100% of your personal and team capacity to essential initiatives. I’d suggest tackling this in two steps.
The first is to find essential initiatives at your company. My favourite way of doing this is to map your company’s investments on the BCG Matrix. It’s a simple 2x2 matrix that organizes bets in a portfolio by two axes:
The market growth rate
The share of the market that a company captures
Let’s use a company we all know to better explain this grid — Microsoft.
⭐️ Star: Microsoft Azure (high growth in cloud with high market share)
🐮 Cash Cow: Microsoft Office (lower growth rate but enormous market share)
❓Question Mark: Hololens (high growth rate but low market share)
🐶 Dog: Bing (low market share in a lower growth area)
You want to be on the Stars or the Cash Cows during hard times. Question marks can be important but there is a high risk. Avoid dogs at all costs.
The next step in finding essential initiatives is finding a way to work on Stars.
My suggestion is to speak to the product managers working on them. Chances are that they have important initiatives that are understaffed and in need of more support.
There may be an opportunity to support these — both with your team’s resources and your own capacity.
Reach out and have the conversations. Mention a desire to understand the gaps in the key areas. Here’s how I would do it:
Hey Jane. We’re planning for Q3 now and I’d love to understand the priorities for your areas. I’d also be interested to see if there is anything me or my team could help with.
After speaking with the relevant product leads, you may come away with a handful of essential, unfunded product areas.
Do a rough scoping of this work and create a second option for how you could better allocate your time and team’s resources. This may look like this:
If you can successfully do this, you’ve now created a roadmap that makes you and your team default essential.
3/ Globally optimize
It’s time to tell your manager and/or leadership team about your options. You may be thinking:
Wait so you want me to tell my manager that part of my work is non-essential and then dedicate my team’s resources to someone else’s scope? That’s crazy.
Yeah, this plan makes no sense if you’re playing political games. These include growing headcount for no reason or posturing about the importance of your work.
But this is what leaders who truly care about the success of a business should do. This is how your CEO is thinking and aligning yourself with that mentality shows strong character and long-term instincts.
So proactively share the options you’ve uncovered with decision-makers. In doing this, be sure to include the following messages:
Your desire to optimize for the company’s outcomes versus being tied to your scope
The work you’ve done to identify crucial areas
Your recommended roadmap for the highest impact
Here’s how I would approach it:
Hey all. I want to make sure that my team is ruthlessly prioritizing the most critical initiatives at the company — especially given the macro need to focus on profitability.
This is why I began understanding what crucial parts of the business were underfunded and in need of greater support. I also audited my team’s roadmap and noticed that we would create more value if we changed our roadmap to support some of those areas.
I’ve outlined Option 1 and Options 2. I recommend we pursue 2. What do you think?
This will require some discussion and alignment. But if you can successfully land this roadmap with the relevant stakeholders, your entire team will now be focused on the most important areas at the company.
In other words, you’ll all be default essential.
Closing Thoughts
As founders think about being default alive, strong employees should think about becoming default essential. Not only will this make your and your team job’s safer, but it will also demonstrate that you are a committed leader with a strong strategic sense.
I’d love to hear your thoughts and feedback on this strategy below.
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Love this. Thanks for sharing!!
Awesome thought!!!