Resetting stakeholder expectations when things change at your business

In this episode, we discuss how to reset expectations with stakeholders when things change. Rick shares a challenge he is facing at one of his companies. While we worked through a specific situation, the general concept applies often. Here’s the general framework that emerged:

• Clarify what needs to change and why
  • Frame the problem(s) thoughtfully
• Identify the stakeholders and where do they stand
  • Identify who has decision-making authority and who can be an ally
• Decide who to talk to first and iterate from there as a team
  • Be open to feedback
• Get everyone aligned and move forward together
  • Be aware of fundamental differences; these may require you or someone else to leave

Takeaways include: 

• Change happens all the time and resetting expectations is critical when it happens
• Some companies die because they never change their expectations
• When you're going through change, the minimum time investment isn't enough. You have to talk a lot more
• Start with the problems, but be thoughtful about how you frame them so that they're generalized problems that don't cause defensiveness
• As a leader, people don't see the world like you do. Your job is to get them to see it like you do, and that takes communication and it takes patience
• It is critical to get everyone to see the problems and talk about the problems
• When you can talk about the problems because they're emotional, you can't talk about the solutions and get on the same page
• When there is a fundamental disagreement you can’t get over, someone has to go (and it may be you). Get aligned on fundamental values and expectations before forming new partnerships

The problem

Rick: In life, change happens all the time. That's especially true in the workplace. Once you've been in business for more than a couple of years... even in the first year... lots of things that you thought were true are no longer true, and you have to change your mindset around what the truth is and what's going to happen next as a result of that. When you're on your own as a solo entrepreneur or you're an early founder, you just have a couple people that are all working pretty well together. It can be pretty easy to make those changes happen because the people in charge are able to make the decisions necessary to change their expectations. When you grow and you have multiple hands in the pot at different levels and it's been a longer period of time investment, you get to this place where resetting expectations is critical when a change happens, but it gets a lot harder. It gets a lot more emotionally complex. It gets a lot more complex just from sheer volume.

Tyler: Different stakeholders who all want different things and they think they know what you're doing and things change.

Rick: Multidimensional complexity increases over time. This applies to employees, partners, board members, investors. Even at home, when I was thinking about how to frame this problem I was thinking, "Well, this a Sable and Rick..." Sable is my wife. We deal with this constantly, especially in our first year of marriage where we're trying to talk about when do we have kids, what's our budget for certain things? I got fired a week before our marriage from my CEO job. It's one of those things that's like that had to go through a lot of expectation changes. Mostly, what I want to talk to you about is dealing with this at work with the stakeholders that you deal with, specifically at a nonprofit. At GroupCurrent, we focus on helping member-based groups reach sustainability. Most of these groups are nonprofits. By design, most of our customers or nonprofit customers come to us because they've not been successful sustaining themselves. I don't want to say it's a shit show, but it's not a good situation.

Tyler: To clarify sustaining themselves, you're saying they start out where they're getting donations from various places but it's a one-time donation. They can operate for a while, but what they want is an actual business model that they can count on, and that's where they come to you to help with.

Rick: Yeah, and donations can be sustainable if you have a way of predicting them and continuing to receive them. When we starting GroupCurrent and deciding whether or not we wanted to be in this business, the thing that got me really excited is I discovered this problem that nonprofits often face, and it's not too different from a lot of founders... serial entrepreneurs, in my opinion. The situation is called the organizational starvation cycle. Some people call it the nonprofit starvation cycle, but I like organizational because I think it applies to more than just nonprofits. It starts with some unrealistic expectations from founders. In the nonprofit world, founders are called funders because generally the founders just provide the money and some guidance at the board level. They don't do the work. A lot of times, what they do is they hire a managing director or bring on some fellow board members to help run it, and they have super high expectations, unrealistic expectations. Those people that they hired feel a significant amount of pressure to conform to those expectations, which leads to either overworking, which leads to burnout, or it leads to fudging certain accuracy of things, whether it's maybe omitting when it should be said or rounding up when it should be rounded down. I speak to this stuff sensitively, because it is sensitive, but it leads to bad behavior to meet those expectations, which in turn leads to more unrealistic expectations because you're not dealing with the problem, which is unrealistic expectations. This cycle typically continues from the early days until it reaches a breaking point, which one of two things happen. Either there's no money and management gets fired and the nonprofit gets into this zombie land of, "What do we do next?" Maybe they shut down. Most of them just kind of live without doing much. Or the management goes, "Screw you guys. I can't do this anymore. I quit." There's some actual good things going on, but no one there to do the things anymore. To be successful at GroupCurrent, our clients are going to come to us because they've been in this situation, which is extremely complex emotionally. You've got founders who put a lot of money into it. You've got former people who have worked at the company who probably didn't feel like they were treated the right way. It's extremely complex. In order for us to be successful, we've got to be really good at coming in and resetting those expectations and getting all the stakeholders... the founders, the board members, and the employees that are currently working there, any current donors or community partners, any customers... on the same page with what to expect going forward. Those expectations could be mission, vision, values. It could be business model. It could be, "Hey, board members, you've got to start doing work now. You can't just sit." Roles are changing. We're dealing with this with one of our clients. We're very happy with our customer. This isn't a talk about how much the situation sucks, it's just there's a reality of the situation where the organization has gone through different renditions and it hasn't gotten yet to that place of sustainability. And it's not there yet, even with the work that we've done so far. I guess... go ahead.

Tyler: I was just going to say I like this topic because we're going to talk about it specifically in your case. But this applies very much to the topic of...