Podcast 40 Transcript: Managing the transition curve roller coaster

Written by Ian Portsmouth

Ian: Welcome to the Business Coach Podcast, an advice-oriented series that tackles the top issues and opportunities facing Canada’s small businesses. I’m your host, Ian Portsmouth, the Editor of PROFIT Magazine and we’ve developed this podcast in cooperation with BMO Bank of Montreal.

In this episode of the Business Coach, we are going to turn our attention away from day to day management issues and toward the emotional intricacies of being an entrepreneur. Specifically, we are going to explore the manic-depressive cycle that all entrepreneurs go through as their companies expand and of course we’ll identify tactics for managing your business and yourself at key points in this cycle. We are going to do all of that with the help of Cameron Herald. He is founder of BackPocket COO, a coaching and mentoring practice founded in 2007 to help entrepreneurs grow their companies. Before launching BackPocket COO, Cameron was the Chief Operating Officer of 1 800 Got Junk, an award-winning company that’s also among the fastest growing in Canada. He joins us on the line from Vancouver. Cameron, welcome to the Business Coach.
Cameron: Hi Ian, thanks very much for having me.

Ian: So when did this concept of the roller coaster transition dawned on you because it is quite novel to me?

Cameron: I was actually in a company about 22 years ago called College Pro Painters, that was really where I got my start in business and multi-unit operations. We had a mentor come in to work with the leadership team at College Pro Painters back in the mid eighties and he introduced us to something called the transition curve. And since then, I have been teaching it to dozens and actually now in the hundreds of entrepreneurs around the world. And I have always used it in building all the companies that I have also led. So it is a concept that he introduced us to but I’ve really taken it to a whole new level. He just talked to us about the different stages of the curve that I can talk to you about and how we might feel. But he really never told us what to do. So I kind of took it and, just over the years really started to see the pitfalls of being at certain stages and the opportunities of being at all the certain stages and really took it to the next level.

Ian: So we’ll get into some details about this transition curve in a minute but briefly, can you give us an overall idea of what the transition curve is?

Cameron: Sure. And a guy, Marc Andreessen, who’s the founder of Netscape really I think said it best is “Being an entrepreneur is like being on an emotional roller coaster ride unlike anything anyone ever experiences. You have to flip rapidly from day to day, you can be euphoric at one minute and completely depressed at another and he said, if that sounds like fun, then you’re ready to be an entrepreneur”. And really entrepreneurs are almost clinically bipolar. In fact bipolar disorders have even called their nickname the entrepreneur disease. So this transition curve or this emotional roller coaster ride is something that every entrepreneur is going to go through regardless of how well they can keep their emotions in check. Just because of the stresses and the excitement of running a business, it really takes us on this massive up and down roller coaster ride that never seems to stop.

Ian: Now a lot of entrepreneurs really obsess over the technical and the logical aspects of business, things like sales, marketing, supply-chain management but they don’t spend a lot of time thinking about the emotional repercussions of being a business owner. So how important is the emotional aspect relative to the technical aspect?

Cameron: From my experience it is huge. And I actually got exposed to the opportunity to share the feelings that I was having as an entrepreneur. About 12 or 13 years ago, I got involved in an organization called YEO which is the Young Entrepreneur Organization. And through that, we were meeting with other entrepreneurs and sharing how we were feeling. And it became very therapeutic to actually tell people when you were feeling depressed or when you were feeling sad or terrified or even where you were feeling really really excited. It’s kind of, by doing that every month, they got to be ok with sharing those feelings and then from that, I kind of kept reexamining this transition curve and how I have been coaching entrepreneurs around it. So really, it became kind of the unconscious competent.

Ian: So what are the components of the curve?

Cameron: The first stage is really the top of the roller coaster, it’s kind of when you get the physical €¦ you know, if you were actually riding a roller coaster in the theme park, just before you get to the very top. It’s called uninformed optimism. And that’s when you are really excited and full of nervous energy and everything feels really great.

Then you kind of go over the top and you’re just getting ready to start going down the big first hill and that’s called informed pessimism. And that’s really when you’ve got more information and you’re starting to get a little bit more nervous, you’re starting to get a little bit anxious, you’re starting to get a little bit €¦ you know, maybe this isn’t really the best part of the business to be working on or the best business to even be in, you’re starting to get a little pessimistic.

And then at the third stage, you get to the bottom of the curve and it is just before the roller coaster hits the very bottom and that’s called the crisis of meaning. That’s really when you are pretty darn sure that everything is going to end, the business is going to implode, you know, you are not going to be successful, you are going to go bankrupt, all that stuff. It’s called crisis of meaning.

And then you kind of go around the corner and you hit this hopeful realization or informed optimism. And that’s really kind of like the little engine that could is when you go, ok maybe I will be ok, I got more information. You are not full of exuberance but you are optimistic so you are more hopeful at that stage.

And the last stage, but I really never spent any time on it is called crash and burn. And that’s really when your roller coaster goes straight off the bottom and you never really make it around to the informed optimism again.

Ian: What are the signs that you are in any given phase?

Cameron: What I try to teach entrepreneurs is to recognize the feelings that you are having. So it is to feel and to be able to express those feelings. If you’re feeling excited, if you’re feeling energy, if you feel like, you know, you are unstoppable, you’re really in uninformed optimism. If you’re feeling depressed and down and sluggish and nervous, you’re in informed pessimism. And if you’re feeling crisis of meaning, it’s almost like business suicide. You know, you’re standing on the edge of a building read to jump. You know, you just know for sure that you are never going to be successful, if those are the feelings you are having, that’s crisis of meaning. And then it’s just kind of the “Well I think I might be able to pull through this, I am feeling some confidence”, you’re back over to the informed optimism stage. So what I try to do is get people to understand how to express what they’re feeling and how to feel what they’re feeling at each stage. Because you’re not going to get any metric or any numerical indicator that’s going to show you where you are. And it is just as dangerous to be excited as it is to be, you know, depressed. You can make very dangerous decisions at each stage.

Ian: We’ll get into some of the tactics you can apply when you are in any of these given stages in a moment but first is it helpful to enlist other people to help you recognize when you are in a certain stage?

Cameron: It can be. What I try to do is also get all the employees in a company to really understand the whole area of the transition curve and all of the different stages of the transition curve. And what I have noticed is that if employees and co-workers and partners and even your peers can see that you are at different stages, they can help you identify it, if you may not be able to see it. Sometimes they can see the forest from the trees. Even spouses, I thought a lot of spouses of entrepreneurs this concept. So when their husband or their wife comes home and they’re all stressed out about the business or they’re all excited about it, the spouse understands why they flip flop from what they might have been feeling the day before or the week prior.

Ian: And is this phenomenon unique to entrepreneurs or can other people within the organization essentially fall victim to the transition curve?

Cameron: From my experience, I have only really been an entrepreneur or been at the level of a Chief Operating Officer, I can’t really speak to €¦ you know, in the last 22 years, I’ve never really been an employee or mid-level. My gut would be that it’s the additional pressures and the additional excitement and the additional upside and downside that really magnify this for the entrepreneur much more so than it would a team member. They don’t have everything at stake. You know, they have things at stake, they have a job or they have, you know, some opportunities of a pay raise but it is just not as magnified by everything an entrepreneur has on top of them.

Ian: Now let’s quickly get into each phase of the cycle and share some tips about what people should be doing at each of those phases. So let’s start with the first phase which is uninformed optimism.

Cameron: Uninformed optimism, remember, you’re very excited, you’re full of energy. At that stage, that’s really when you want to be out public facing, you want to be doing speaking events, you want to be recruiting, talking to the media, having town halls with your employees so they you can see all your excitement and enthusiasm. You want to be doing anything where people can feed off of your energy. You know, you want to be out talking to investment bankers because they will want to throw money at you. And there is classic cases of venture capital firms throwing money at the unbridle enthusiasm of the jaspezos who just had VCs throwing money at them. So that is what you want to be doing at uninformed optimism.

What you don’t want to be doing is you don’t want to be spending time doing any budgeting or purchasing. You know, if you are so full of energy and enthusiasm, the last thing you want to be doing is purchasing advertising for the next year because you’ll buy so much more based on these excitements and beliefs that you are going to blow the cover off the ball and do all these revenues. You’ll tend to overspend. You don’t want to be making hiring decisions when you are at uninformed optimism because you’ll think that you can coach anybody through it, you know you can take a weak candidate, be I can turn him into a superstar. So you want to be very careful.

Ian: The next stage, people are starting to get a little bit pessimistic, what should they be doing or not doing in that stage?

Cameron: At informed pessimism, you don’t want to be talking to the media. You know, if you are negative or a little bit nervous, you know, it is hard to exude confidence when you have that nervousness written all over your face or inside of you. But at that point, you really want to be spending time doing budgeting, doing planning, doing scenario planning, working on your strategy because you will have much more conservative and realistic plans, much more conservative and realistic budgets. You want to be doing the purchasing of your advertising, you know you won’t overspend, you will negotiate a little bit more because you have that built-in nervousness. So there are some really good things to be doing at that stage as well.

Ian: And crisis of meaning?

Cameron: Yeah, identify that you’re feeling, like you’re moving towards it and tell people that before you get there. You know, unfortunately the best analogy I’ve ever really come up with is kind of suicide. And the last thing you want to do is phone your best friend when you’re standing on the top of a building and you’re three thousand miles away and say “Hey, I am feeling like this”. There is not that much that they can do to help you at that point. You really want to be calling him and say I feel like I am moving towards crisis of meaning. So when you feel like you are moving towards it, it’s time to reach out to your friends, to your family, to your spouse, to, you know, your minister, to your support groups, to, you know, any entrepreneurial groups. And really, it is ok to be scared, it’s ok to be nervous, it’s ok to be terrified. It’s not ok to go through that all by yourself. So really, you want to be reaching out to people at that stage. At crisis of meaning, it is more about protecting your entrepreneurial confidence than it is about, you know, hiring or selling or PR or, you know, production. It is really more about just getting your mind set turned around again, talk to your support groups.

Ian: And finally, the informed optimism. It sounds like a good stage to be in. What should people be doing?

Cameron: Yeah. At informed optimism, that’s really where you really want to try to always get back to. It’s an ideal mix of a good amount of pessimism, but a good amount of excitement and energy. And that’s really when you want to be laying the ground work, planning the future, talking to people about where you’re going as a company, speaking insight with some of your employees and co-workers and suppliers. It’s really the good balance to get back into.

Ian: Cameron, very enlightening stuff and thanks for sharing it with us.

Cameron: Thanks Ian. Thanks for having me.

Ian: Cameron Herald is the founder of BackPocket COO, a Vancouver-based coaching and mentoring business that helps entrepreneurs grow their companies. You will find his website at www.Backpocketcoo.com.

Well, that’s it for another episode of the Business Coach Podcast. Be sure to check out other episodes which you can download from BMO.com, profitguide.com or iTunes. If you have any comments or suggestions about the podcast, then please send them directly to me at ian.portsmouth@profit.rogers.com.

Originally appeared on PROFITguide.com