How Oyo — and every stumbling startup — can win back its mojo 

I am amazed by the deluge of reactions that recent developments at WeWork and Oyo have generated. The extent of glee, "I told you so ", berating of the founders, investors and management of these companies is unprecedented.

After everyone's uncles and their neighbours have expressed their opinions, sniggered at the founders, trashed the investors and given in to schadenfreude on the Oyo developments, let's take a step back and see how companies can navigate such a situation. What should founders, board members, employees, partners do when challenges come up?

Could Oyo have avoided missteps? Could its crisis have been predicted?

No. It has been repeatedly observed that no progress is possible without trial and error. Whenever something big, audacious is attempted especially new business models, the failure rate is high. No one plans for it. No one expects it. No one wants it. But such is the nature of startups.

Without failure, there is no learning, no progress, no success and no breakthroughs.  This is bound to happen and is far more likely than stellar overnight successes that we often hear about.

Startups are always experimenting, trying new value drivers and are not geared to ensure zero failures in their attempts. They get valued not on how many times they have failed but how big they have won. It's like a team that wins in a football game — it's based on goals scored and not on goals missed or percentage of shots at goals that succeeded.

Companies are started with big dreams, desire to change the status quo and attempt something new and untried. The founders take a huge risk, leaving the comfort and cushion of stable jobs and enter into a life that is fraught with emotional, financial and mental stress.  It's a roller-coaster ride and it is not easy.

Let's see what the various stakeholders can do in such stormy situations.

It's never an easy situation … not an easy decision for a founder and management to shut down an initiative, let people go and take other drastic steps. Apart from admitting failure, it also leads to weakening morale and causes a ripple effect in the remaining employees.

1. Communicate clearly and unambiguously. Avoid rumours spreading through office gossip and water cooler conversations. Be transparent and share the full impact. Be as transparent and honest as possible.

2. Don't couch the communication in euphemisms. Most people are smart and will see through any cover-ups. Be frank and accept blame.

3. Don't blame the employees or non-performance. Even though some of the layoffs will be of people who would anyway have been fired, this is not the

time to bring up any performance issues. It creates mistrust and is unfair to others because market will perceive they have been sacked due to competence issues.

4. Think ahead!  Make the changes and announce the decisions in one stroke. Don't do it in steps, month after month. It creates more angst and uncertainty.

Share the full impact and announce all the changes in one go. Communicate clearly that after its implementation, the rest of the organisation is stable and there will be no more cuts.

5. Be fair. Ensure, at the minimum, that the contractual obligations of the notice period, severance pay, leave encashment, etc are met fully. Ideally, do a bit more than what the contract requires, as much as possible. For this, the company must act well in advance when there are funds available rather than wait until the last minute. Keep the cushion for restructuring, payouts due and start in advance before cash runs out.

6. Make the process of settlement simple. Pay the dues in time and ahead of time, if possible. Don't make the employees chase and follow up. Wherever

possible, add non-cash benefits such as medical insurance coverage for additional three to six months, accelerated vesting of ESOPS, giving extended time to exercise options, additional month(s) of notice period. Every bit over and above the contractual minimum helps.

7. Outplacement services and counselling: not everyone can handle sudden changes the same way. Though everyone is aware of the possibility of losing their job, having a support system, a helpline to counsel them, showing them ways to move ahead and helping them with alternative employment options will ease the pressure.

8. Handling customers, vendors and partners: In addition to employees, there are other stakeholders who get impacted adversely. Clear communication, with a specific new contact in your company going forward, an escalation mechanism, and an assurance of continuity of business and terms is important. Since social media very quickly spreads and amplifies any negative news, it important for the company to set the record straight through proactive reach out and communication.

9. Build confidence and morale. Share the new, revised plan, the vision, steps being taken to grow, why the company is confident of bouncing back post the reorganisation, the new opportunities and all the learnings from the past. While there are bound to be concerns, people often buckle up and rally behind the team when they are taken into confidence and feel part of the solution.

10. Empower people with new responsibilities, bigger roles and greater authority. Wherever possible, give additional compensation, cash and especially stock options. Show them the potential and new possibilities under the new structure.

11. Finally, treat each individual case humanely and with sensitivity. There will be lots of criticisms, negative sentiments, blaming and shaming going on. In

that noise, it's important to keep focused and ensure each person is dealt with sensitivity and respect. While there needs to be email communication, town hall, public announcements given the large number of people impacted

and geographical diversity, it's important to ensure personal attention to

each person. This needs planning in advance.

1. When things are going well, create a good network and ecosystem with the outside world — colleagues, peers, experts in your field, and mentors. This situation can happen to anyone, at any time, especially in a startup. It's important to have a group to go to and rely on.

2. Stay updated in your field, learn relevant and latest skills and don't get boxed into a super specialty in your organisation that makes mobility difficult. Even if you are in the same organisation for a long time, seek out diversity, opt for job rotation, different functional responsibility.

4. Don't trash talk your employer, manager or others — however strongly you feel wronged. Take up the issues with the company strongly at the right

forum, including legal action if needed. But, unnecessary emotions, giving vent to your feelings is not helpful.

1. Take prompt action, establish communication with the right person at the company at the senior level. Normally lots of rumours and false news float

around at such times. It is important to know the real status and the impact on the ongoing business.

3. Avoid over-dependence on one large partner or organisation as this can happen to any company. If that is the case, ensure that the terms do not leave you completely at their mercy if things don't go as planned.

The startup journey is a roller-coaster ride, exciting and fun but also scary and dangerous.  Being aware of the uncertainty and dealing with that is important to everyone — whether you are a founder, employee or business partner. Even things are not going fine, remember that lifelong relationships are important and it is important to not burn one's bridges.

The only thing certain in uncertainty.