The leadership practices that helped us survive as business ground to a halt

In the past two months, a lot has changed for Pathao. Overnight, our rides business dropped to zero and food orders went down by more than half. To extend our runway, we had to conduct salary cuts as big as 80%, and nearly all marketing spending were put on hold.

Photo credit: Benjamin Child

In this situation, it’s expected for company morale to hit rock bottom. But somehow, that hasn’t been the case for us. In fact, in the last few months, the team has launched five new product verticals, which together make up 70% of our current revenue.

Here are the leadership practices that helped us cope with and survive the downturn.

The lockdown

To curb the spread of the Covid-19 virus, Bangladesh imposed a nationwide lockdown on March 25, which was initially set for a couple of weeks. But after monitoring other markets, we anticipated that it would last for much longer and that recovery wouldn’t be immediate.

The reality turned out to be largely in line with our predictions: Our rides business, which represents a sizable portion of our transaction volume, was at a complete standstill. Food orders were down by 70% in the first week alone.

We knew that our balance sheet would become hugely lopsided, but we didn’t know for how long. We needed to take action to preserve cash and extend our runway.

Prior to the pandemic, the company had already been running promotions to grow its food business. But when the crisis hit, we immediately cut marketing spending – though not all of it. It was still a means for gaining market share, and we didn’t want to rule that out.

That left us with the elephant in the room: payroll expenses.

Salaries were our biggest operating expense, which is both good and bad news: Good news because it’s within our locus of control, but bad news since it meant tough decisions and sacrifices.

Here are some of the actions we took that worked for us.

1. Acting early and being decisive

Two weeks into the lockdown, we announced the implementation of progressive pay cuts throughout the company.

This meant that the hardest hit would be those with higher salaries so that lower-paid employees would be protected and job cuts could be avoided.

We were already running a lean team when the lockdown was imposed, after reducing our headcount by 50% over the past year; we didn’t think that layoffs would be productive.

Proactively cutting down payroll costs for the next six months seemed aggressive, but preserving cash was crucial for survival, and we were transparent about this with our team.

2. Telling the truth

In difficult situations, people instinctively tend to show false optimism and shy away from reality. But doing this would have led us astray and prevented us from making contingency plans or taking bold actions.

Instead, we aimed to be transparent and explained in detail how we were going to get through this crisis and what that meant for each team member.

When we addressed the company, we were upfront in admitting that we didn’t know how drastic or prolonged the effects of the pandemic would be. Our chief financial officer started by saying, “We are asking all of you to make a personal sacrifice.” It wasn’t a rosy beginning, but it was direct and called on everyone’s sense of responsibility.

The decisions were then outlined to the team:

1. C-suite executives would be on zero pay to show that we practice what we preach and foster a feeling of shared sacrifice.
2. Progressive pay cuts would be enacted for the next six months so that the lowest-paid employees would be the least affected.
3. Festival bonuses, which range from 50% to 100% of employees’ salaries, would be taken out, even though the Eid holidays are a big deal in our country.

When we announced these in April, we were among the earlier ones to do so in the ecosystem and in the country. We faced criticism, mostly from parties outside the company, and people questioned if we were going out of business.

After we had addressed the staff collectively, the conversation cascaded into team and one-on-one employee chats. Our CEO kept open hours to talk with anyone. Nothing was off the table.

3. Charting a course, creating purpose

It wasn’t only our finances that needed to reflect changing realities. We also needed to adapt what we were building.

So we asked ourselves three questions: What services will our customers need? How are they spending their time and money during the lockdown? What are the problems we can solve for them?

Based on this, and our assumption that recovery will take time, we changed our product roadmaps. Some features and products were accelerated while some were put on the back burner.

Next, we set goals for each product: How many transactions did we want to achieve? How much revenue did we want to earn? In how many days? This brought people together to work toward a common goal.

4. Forging partnerships, building momentum

For Pathao, the crisis produced an urgency and a momentum to get things done much faster. Deals that would have taken months to finish were negotiated in hours and executed in days.

And instead of building everything ourselves, we made strategic partnerships that helped us move fast and gave us access to the expertise that our partners possessed.

For example, we built Pathao Health, a new tool to connect people to health resources, in collaboration with partner organizations who were in a better position to provide quality content and better telemedicine services than we could have built ourselves.

And these partnerships aren’t relegated to just business deals; they involve technical integrations as well.

The truth is that in normal, predictable times, leadership is not that critical; the quality of the systems in place is more important. But in a crisis, even the strongest organizational habits, structures, and resources prove inadequate to meet new challenges. In these circumstances, strong leadership is crucial.