Survive, Reset, Thrive, with Dr. Rebecca Homkes – Episode 487 of The Action Catalyst Podcast

High-growth strategy specialist, executive advisor, and lecturer at the London Business School, Dr. Rebecca Homkes, explains how growth is a loop, not a line, and lays out the 4 C’s that threaten a business, the 6 questions to ask in the middle of a strategy reset, the 3 things thriving organizations have, the difference between a teaching and a learning organization, and how to establish your MUST-WIN battles.

About Dr. Homkes:

Dr. Rebecca Homkes is high-growth strategy specialist and the founder of a boutique consultancy firm, advising CEOs and executive teams focused on growth and success through uncertainty. She is a Faculty at Duke Corporate Executive Education, Lecturer at the London Business School (LBS) Executive Education, Advisor and Faculty at BCGU (Boston Consulting Group), and previous Fellow at the London School of Economics (LSE)’s Centre for Economic Performance.

Dr. Homkes is also the director of the Young President’s Organization (YPO) global Active Learning Program (ALP); a former partner with GrowthX, a Silicon Valley investment ecosystem and innovation consultancy; and the faculty lead of fintech scaleup accelerators.  A global keynote speaker, she is a member of several advisory boards, directed the joint McKinsey & Co and LSE Centre for Economic Performance Global Management Project from 2007-2014 and has written for publications such as the Harvard Business Review, Businessweek, Fortune, and Forbes.

A Marshall Scholar, she received her PhD and MSc from the London School of Economics in International Economy.  Prior to LSE, Dr. Homkes received two degrees at Indiana University: BS (Honors) in business administration alongside a BA (Honors) in Political Science where she was a Wells Scholar and graduated as the schools’ top graduate in 2005 and its sole Herman Wells Scholar.  She previously served as a Fellow at the White House’s President’s Council of Economic Advisors and has worked in strategy consulting with Bain & Co. She lives between Miami, San Francisco, and London.

Dr. Homkes partners with leaders, organizations, and educational institutions to provide counsel, training, and game-changing advice. A secret weapon for CEOs around the world, Rebecca is known for her focus, dynamism, and unflappable demeanor. She brings a professor’s approach to building learners’ capacity, capability and confidence. 

Learn more at RebeccaHomkes.com.

The Action Catalyst is presented by the Southwestern Family of Companies. With each episode, the podcast features some of the nation’s top thought leaders and experts, sharing meaningful tips and advice. Learn more at TheActionCatalyst.com, subscribe below or wherever you listen to podcasts, and be sure to leave a rating and review!

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(Transcribed using A.I. / May include errors):

Stephanie Maas
How are you?

Dr Rebecca Homkes
Excellent!

Stephanie Maas
Let’s start with your book, Survive, Reset and Thrive.

Dr Rebecca Homkes
Yeah, I’d love to thanks so much for asking. So Survive, Reset, Thrive was written in starting in the spring of 2020 but it was based on frameworks and guidance that I’ve been using for for a decade before that, you know, most of the book is things that I’ve been doing with companies who are looking to go on a growth journey, and what happened in that period of time, which was not dissimilar to happened in Brexit in 2016 here in the UK, or in 2022 is that entrepreneur leaders were calling me and saying the same thing they were saying. Why me? Why now we had this growth pathway. Things were working, and now we’ve got this crisis right. And I found myself saying the same things over and over again, like, yes, we’re facing kind of a change situation, so we have to survive and stabilize. Then we need to reset, because the strategy we had before needs to update for the changing time, and then you can go back to being a Thrive company, but we’ve got to go through this loop, and after repeating the same guidance for weeks at a time, you know, I just finally wrote it down in an email. It was sent out on a Saturday night. I got, you know, 100% response rate on the Sunday saying, this is the most useful thing I’ve read. I’m going to send it to every CEO I know. And that article kind of became a workshop. The workshop became a program, and then about a year and a half, two years later, it became the book.

Stephanie Maas
Super cool. So one of the things you just mentioned that I want to pull on this string a little bit is you mentioned it’s a loop. Walk me through that, because I think when most folks hear this, it’s more of a checklist. Okay, we survived that check. Now we’ve reset check throughout, but you mentioned the word loop, so walk me through that.

Dr Rebecca Homkes
Absolutely. You know, everything in growth is a loop, not a line. And that sounds really simple to say, but we really love checklists as human beings and send us managers and leaders of companies we love to be done with things right when you finally check something off, you know, develop strategy done, communicate strategy done, execute priority done. And that’s not how a changing world that we’re facing and executing our strategies are in. It’s constantly going to be moving and evolving. So we need to move from this checklist mindset of how we approach strategy and growth into this loop mindset. And there’s a lot of power in doing that, right? So survivors that thrive is a loop, and what happens, let’s make it more practical, is you can be in Thrive mode, and everything can be going great, and there can be a shock to the system that sends you back to survive. These can be external shocks. You know? You can have a surprise interest rate a surprise election, you could have a big macro event like war or COVID, but you could also have an investor pull out or lose a major customer, and when that happens, you’ve got to go back into survive mode. And we don’t want to do that. We feel once we’ve gone through the steps to thrive, we’ll stay there. But there’s real humility in losing the ego and saying it’s time to survive. Then they can go back to reset again. Then they can go back to thrive. So we need to embrace this loop mentality be able to grow through these different changes that we’re facing as we’re trying to lead our companies through this uncertainty.

Stephanie Maas
So let’s start with, you know when, and I really love how you said you have to, you know, embrace the humility to recognize, hey, we’re in survival. How do you know, other than you coming in saying, Hey, by the way, you know, or the profits tanking, what are some key characteristics that, you know, okay, we need to go back, or this is where we’re at.

Dr Rebecca Homkes
I think most of us intuitively know when our organizations are in that mode. And part of what I’m trying to do with survive, reset thrive, is give you permission to make that pause to say, hey, the survive mode is actually not only opposite of growth, it’s part of growth, right? Going through survive and restabilizing is a critical part of the growth journey, not antithesis of it. And like giving you permission, I know that sounds overly simple, Stephanie, but that’s a key part of it, right? Is you’ve got to take that pause, because most of us know we just don’t want to admit it without kind of the reason for it. So what happens when some of your basics are compromised? And I call the basics the four C’s or cash cost customers communication. You know when something starts impacting our cash flow? You know when our costs are growing faster than our revenue for a reason, outside of hyper growth or doing something like a land grab, when we’ve lost a customer, or seeing customer churn, or having issues with our customers, or communication becomes broken or spotty, or lots of friction, because kind of go through your four C’s. And what I recommend organizations do is set the baseline, not the goals, but the baseline, like, where’s the minimum any of these four C’s should be at any point in time? And when those get triggered, that’s the pause point to go into survive mode. And there’s real power again in knowing when you’re in it and admitting it. Now, I always feel like I’m badly paraphrasing Fight Club. You know, the first step is kind of admitting it, but the first step of being survive is admitting you’re in survive, because now we can handle it right now, we can take all those proactive steps to stabilize and move again out of survive, because you don’t want to be in survive longer than you have to. But, and there’s a big but, this is a yes, but not a yes. And the longer you refuse to admit that you need to take that stabilize, you’re actually losing a lot of things that you need across those four C’s. So the simplest is set those baseline triggers for cash cost customers and communication, and when you start approaching them, then it’s time to take the pause.

Stephanie Maas
So when folks take the pause in your experience, where have you seen leaders just really handle this well, like, what have they done to handle this pause, recognition of survive, etc.

Dr Rebecca Homkes
You know, I actually had this experience. And, you know, you can just feel proud of an entrepreneur when they’re like, wow, like, you know, you can handle all these steps. Well, I had a company who, one of their major companies, you know, spun out a subsidiary. The subsidiary went bankrupt, so they were facing millions of, you know, euros not going to be paid to them at the end of the year. And when you’re a small to medium sized enterprise, a couple of million not coming in does impact you, right? When you’re not a major organization. So we’re going into survive mode. You know, a lot of that cash cost customer Well, actually, three of our kind of triggers, if you will, have been broken, and they had a Strategy Workshop scheduled to reset the growth strategy for the next year. You know, the classic response, which is not the right one, by the way, is to cancel the workshop, you know, all hands on deck, focus on operational metrics. He still got his team together, and they repurpose that time to go through their survive metrics, you know, make actionable plans on what they need to do across all the four C’s look at their top priority and say, Okay, what still goes like? What pauses, you know, what changes? And the team left the most energized I’d seen them, you know, in a couple of years when what should have been, you know, one of the worst times they’ve been in the past five years. But they use the time to say, we know what to do here. We’ve already got the time scheduled. We’re going to go through, survive, we’re going to be stabilized. And they gave themselves a deadline, you know, by the end of key one next year. We want to see progress on all of these. We’re going to be back to growth mode at by the end of q2 and that’s what we want people to do. The temptation, I want to repeat purposely. The temptation is to cancel everything related to strategy and just tell people to be heads down, execution mode. In survive mode. You are still in learning code. You want people heads up, listening, learning, getting these feedbacks, emails from the market, incorporating that in so we can move into reset as soon as possible.

Stephanie Maas
Okay, so then we move into reset, and my mind immediately goes to, you know that that on your phone, when you can’t get it to work, you go to the Hard Reset, but the trade off is you lose everything. I mean, it’s like worst case scenario. You’re starting all over. Walk me through what reset looks like from your perspective and your counsel.

Dr Rebecca Homkes
You know that’s funny, because hard resets do happen, but like all of us with our phones, man, you don’t want them to right? But look, hard resets are, are not the normal reset. The normal reset. You turn the phone off, right? You gotta pause and wait a minute, which was probably good anyway, because you were getting frustrated, right? It turns back on, boom, you’re ready to go again, right? So in a reset, you pause and with the team, you answer some critical questions that you need to answer for growth. And those questions are six, what’s going on and how’s it going to change, and what is success? So where are we going to play? How are we going to win? What could stop us? So what should we do? Go through those six questions, reset the situation. What are changing beliefs about the changing time? Reset their right to win. How are we really going to compete in that changing world? What’s that mean for where to play choices define a new finish line or where you want to be at the end of the cycle, address the challenges and then figure out your top priorities. You know, a normal reset takes kind of a couple of months for any sort of mid size organization, a couple of weeks for a very small one could stretch longer for a big organization, though I’m never happy about it, but that’s just what scheduling happens, kind of in these large organizations, and the majority of the time. Stephanie, that’s what it is. You go through those six questions, you reset, you update, and there’s power in doing that every three years, even if you don’t feel the situation is fundamentally changed. Now, occasionally those hard resets do happen, and what happens is, as you start to go through those questions, you realize Everything’s changed. All the fundamental assumptions you had that went into your previous growth strategies have now changed. Completely different situation. Your right to win is eroded, your where to play choices all need to update the finish lines you had are now completely outdated, are no longer relevant. And when that happens, you do need to declare a hard reset and to make it more practical. We’re facing these. We’re watching these in the market right now. We’re watching Starbucks and Boeing and, you know, all of these companies, Nike, bur. Area going through hard resets right now, and that’s what’s happening. The board realized it wasn’t working. CEO out, new CEO in all of these challenges of being revisited. Now this process take a couple of months to a year. But you know what hard resets can be? The most powerful thing that happened for an organization, we sometimes see the most dramatic growth journeys after hard reset happens.

Stephanie Maas
Okay, so we’ve realized things have changed. We’re refocused. Now it’s time to thrive.

Dr Rebecca Homkes
Well, first, I appreciate your patience of asking about survive and reset first, because most people want to jump straight to the Thrive. All I really want to do is talk about thriving. Can I just skip to that part? And I originally joked with the publisher. I wasn’t joking, but they didn’t take me seriously. You know, let’s only send people the first eight chapters of the book. And you know, once they’ve read those, they can apply because you got to do the hard work of the survive and the reset first before you can get to thrive. Because I know my entrepreneurs, right, they jumped right to chapter 10 because that’s the part that they cared about. But look, thrive is not a given. It has to be earned. And just because you’ve reset the strategy, what you also need to reset is your execution capability. Now, different strategies demand different things from the organization, in terms of our hardware, like our processes and wiring, our software, like our culture and behaviors, the top team that we need to lead, it our distributed leaders to really guide execution in this shared understanding. So this transition from the reset to thrive is actually the really difficult part, and more friction happens there than the transition from survive to reset, because we assume that that’s the more simple pathway. But resetting a strategy means you need to reset your execution capability and capacity as well, and that could take some time, but you got to be super honest about what’s working and what’s not, be prepared to rebuild and reset, then you can become one of these Thrive organizations. And it’s a simple recipe. Thrive organizations have three things, strong balance sheets, strategic insights, and they execute with agility and learning, right? You bring your strong balance sheet through from the survive phase, your strategic insights from the reset phase, and then you execute with agility and learning, because strategy is a living, breathing document, and we’re going to learn and adjust and change as we go. And that’s a key part of being thrive is again, I’m going to say one of the things you can say to me that really makes me mad is two things. I’ll give you two things not to say to me. Thing one, just say, oh, Rebecca, we’re in heads down execution mode. My first response is, well, get out of that, right? I want you in heads up learning mode, right? And this second is, if you ever send me a document labeled strategy, final, all caps, I have this new thing now. I don’t even open it. I just reply back to the email and I say, No, it’s not never final. We’re going to keep updating and adjusting as we’re going.

Stephanie Maas
Very cool. Okay, let’s talk about that for a second, this continuous learning. I think that that’s a huge difference maker between leaders that really do thrive and ones that don’t. But oftentimes there. I think a lot of folks fight this natural state of, hey, we’re here. Let’s not rock the boat and just stay here. And they don’t come out and say, I’m done learning, but their actions show that. So walk me through this idea and concept about keeping learning a critical part of this process.

Dr Rebecca Homkes
Yeah, thank you for asking, Stephanie. It is not only a critical part. It is the most critical part is that in now close to 15 years of working with high growth and high performance organizations, I will say quite simply, it is the number one differentiator. Organizations that learn faster are organizations that grow faster. It is the ultimate differentiator, and frankly, differentiator because it’s hard. A lot of us pride ourselves on being learning organizations, because we do monthly webinars, or we have town halls, or we have share sessions, or we have book clubs, or we go to business schools, like all really cool things like keep doing them, but that’s being a teaching organization, not a learning organization, right? Being a learning organization is what you alluded to, saying. We don’t have all of the answers yet. So here’s the questions we need to ask, using your customers as learning partners, you know, not just transactional vehicles, encouraging kind of constant experimentation and testing and learning while executing, never assuming that every variable and every metric we have in the plan is the perfect one, right? Because things are going to change as we go. And this is a different culture. Now, being a learning organization doesn’t mean that we’re changing things all the time, right? Learning is actually very, you know, methodical, like engineers can do this learning velocity too. In fact, they’re quite good at it, right? You know, you can build all of these things forward, but you’ve got to kind of, again, break the notion that once something is in a plan, the plan must be executed. I know it sounds silly, but words matter. I’ve said, let’s stop calling them strategic plans. There’s something about the word plan, right? It just frames our brain. Everything in this must get done, and I want it framed as I’m going to keep learning as I’m going this strategy is just my best hypothesis of where growth is. Going to come from over the next three years. Like any hypothesis, I got a lot of it right and probably some of it wrong. So I’m going to keep learning and adjusting as I go.

Stephanie Maas
Okay, so now there are strategic hypotheses.

Dr Rebecca Homkes
Yes, I’m just dropping the plan word again. Frames matter, right? And as soon as our brains are framed that everything must get done, I get heads down, and I want people heads up, learning and moving as we go.

Stephanie Maas
Okay, I just have to go back and highlight two things that you said, because I think they’re so critical and we just don’t hear them. One is, you define the difference between learning and teaching. I’ve heard it 101 times. People say, hey, we do all these things, but the way that you turn that, nope, that’s when you’re teaching. But then going back to ask questions. I think that’s the second thing. And so many times when we get out of a learning mode is when we stop asking questions. And to your point, we don’t have to be in a constant change mode, but that’s real feedback. That’s how we know are we going to get to where we think we want to go, or do we need to change our strategy? Because where we thought we were going isn’t really where our demand is, and learning is asking questions, and continuous learning is not teaching. Talk to me about a must win battle.

Dr Rebecca Homkes
Well, first, I’m agnostic to the language that you pick as an organization, right? So my only thing is whatever term you use for your top strategic priorities. That term must have integrity, so you can’t use it for anything else. So if you’re going to have five strategic priorities, great. The word priority is now protected. It can only refer to those five things, goals. Rocks again. You do you right? I said not to recently at a summit, you know, some of the President was saying, Well, you know, the CEO doesn’t like the term must win battles. Can we call them so and so? And I said, Look, call them drafts. As long as you execute. It’s like pick one word, right? That’s all I care about. So I started using the term must win battle. I’ve got some colleagues at IMD who use it as well, because we have a massive language inside organizations. Now you go to any company from 10 employees to 100,000 they have goals, priorities, aims, rocks, OKRs, KPIs, targets. I could keep going and going, right? And this isn’t small organizations. That happens. So put yourself as an employee. If I’ve got all of these lists of things, which in the English dictionary all translate to most important thing, what am I working on every day? Right? And you need something that cuts about the noise and says, No, these are the must wins. And I love the language of must win battle, not nice to have battle, not business as usual battle, but these are must wins for growth. And there’s really power. The absolute clarity of this is what we must do to get to that finish line you want, the midterm you want them clearly focused on value creation, and you want them to cut across the organization. A great test for Do I have the right list of must win battles is that I just rename my departments. By that, I mean if you have a marketing one, a sales one, a product one, and a people one, you don’t have a strategy. You’ve just renamed your departments, right? A great must win battle cuts across the organization, because that’s how we truly create value. We pull from the best and do this integrated approach to what it takes to drive growth. And that’s what you’re looking for in a must win again midterm, two to three years, focus on value creation, market oriented cuts across the organization to bring out the best of what you have.

Stephanie Maas
Give me, if you can, don’t you to violate any confidences. But can you help us point to a real life example of a company, an organization that you’ve seen go through this loop successfully, just so we get a real life idea of what it looks like?

Dr Rebecca Homkes
Yeah, you know, you know, I’ve named, you know, luckily, I’ve got wonderful companies that I work with, so almost all of them were willing to be named in the book. So, you know, Deputy 40 company has gone through this cycle a couple of times now. And I love that example, because they’re one of the, also the very few companies I work with where their culture is actually part of their right to win and their must win battles are focused on where growth is coming from, right, not necessarily where growth has been. So great example there Gorilla Glue company, another company based in the US, but of course, growing globally very quickly. They’re on their second cycle of muslin battles. So successful, we had to reset a year early right from the original plan, because they’re going to that next stage of growth. And the company I just mentioned, they’re smaller than in Primex, based in Latvia and Riga, Latvia one of my favorite places to visit, by the way, and they’re on their third cycle, and they’ve doubled every three years since I started this approach. And they’re in concrete and construction, and that’s about as much as we want them to double. You know, when I work with FinTech companies, you know, I just wrapped up one with one this morning, based here in Europe. You know, we want you doubling every year in the scale up phase. But if you’re doing anything hard, like construction, concrete manufacturing, I only actually want you doubling every three years. And so I’ve got lots of them who are having that kind of success. But this takes discipline. And what I’ve really realized when I look at companies who do this well and others who go through the process. And don’t is, growth is a commitment. And I know you’re thinking, of course, Rebecca, eye roll, growth is a commitment, but here’s what I mean, you can’t just commit to the strategy. You’ve got to commit to building the capability to execute the strategy. Now, I don’t care how smart people are in your organization, throwing a new growth strategy isn’t going to get it done. Are you as a leadership team saying, Not only am I committed to this growth strategy, I’m committed to growth, which means I’m going to slow down, to speed up, I’m going to make sure I’m building the capability of my team. I’m going to be prepared to change things as the situation changes. I’m going to make some tough decisions on people or markets or products, because that’s not where growth is coming from. Growth is an absolute commitment, and a lot of organizations aren’t prepared to make that commitment. Frankly, it’s hard, right? And I’ll share something with you. Stephanie, when I wrote the book, one of the first big feedbacks I got from one of the editors was Rebecca, you say stuff is hard, too much. No one likes hard stuff, and they wanted me to rephrase all of that language to make it feel more approachable. And I started to do that, and then I pushed back, and I said, I can’t do that, because this stuff is really hard. But you know what? That’s cool. Why? Because when you do the hard stuff, well, that’s differentiation, and that’s what we’re trying to do with growth strategies.

Stephanie Maas
Most people, when they hear commitment or discipline, I think the loop in the brain is going to the strategic plan and being committed to the check and the must dos. But what I just heard you say, correct me, if I’m wrong, is the commitment is to the growth. Yes, that might mean altering or changing, but it sounds like it’s a it’s a verb.

Dr Rebecca Homkes
Growth is a verb and a noun, right? Is it is constantly changing and moving. Go back to our strategy hypothesis. Now, people here that are thinking, No, Rebecca, we’re too big. We have shareholders, we have boards. We need to stick to the plan. Plans are hypothesis, right? This is not advocating for chaos. You’re having the strategy in place at all times, but you have the humility to acknowledge that we didn’t get everything right the first time, and our situation is going to change. We’re going to constantly be bringing that change in, and that means you’ve got to build this capability for an organization that can handle and adapt to this change. Now people try to do this, and they do this by cheating. What do I mean by that? Instead of five growth priorities, they have 10, or they have 15, or they have five, but each of the five have five sub bolts, each of which have 15 under it, they’re trying to caveat for every single iteration the market will give them right? Which means you’re actually starving any of those growth priorities of the time, treasure or talent they need to succeed. This is why it’s hard to be a high growth company. You’ve got to be ruthlessly prioritized on those few areas of growth, but build the capability of an organization that can adapt and change as the situation around you changes.

Stephanie Maas
Okay, there are so many additional strings I could pull on here to lean in on your expertise, I mean, but in the spirit of time, is there anything else you want to make sure that we address here today together?

Dr Rebecca Homkes
I think we’ll just repeat hard is great, right? So just because we’ve said a couple times things are hard or difficult or only a few people do it, if you’ve got any sort of entrepreneurial spirit that should light something in there and say, Hold on, like, Tell me more, right? Things that are hard are great, because when you do hard things, well, that is differentiation. Everything in survivors that thrive is doable. I’ve seen companies of employees from 10 to several 100,000 you know, from 10 million revenue or even smaller to, you know, over 30, 40 billion are working on, survive, reset, thrive, you’ve just got to make the commitment. And I think have an honest conversation with yourself and your team. You know, do we want to commit to growth? And not everybody does. That’s also Okay, right? But then, you know, I’m going to annoy you, Brittany, you have a conversation with me, because I am absolutely passionate. Wake up every single day on what we can do to do this lead high growth journeys.

Stephanie Maas
Incredible, incredible. Thank you so much for sharing such meaty content. Very energizing to hear you talk. Thank you.

Dr Rebecca Homkes
It was absolutely my pleasure to be here. Thanks so much for having me. Thank you so much for the great questions.