As part of our series about the “Five Things You Need To Be A Highly Effective Leader During Turbulent Times” we had the pleasure of interviewing Don Scherer, CEO and co-founder of CrossBorder Solutions.
Donald founded the original CrossBorder Solutions in 2001 and co-founded the new iteration. As Chief Executive Officer, he is responsible for determining the strategic direction of the company.
Prior to CrossBorder Solutions, he was an Attorney in the transfer pricing group at Ernst & Young in New York and London.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I am originally from New Jersey, but I went to college and law school in New York City. After getting my JD, I took a job as a tax attorney with Ernst & Young. While doing transfer pricing as a normal Big 4 type, I noticed the repetition in various tasks. I knew then that technology could automate many of the tasks that I was doing. Because of that I decided to leave and start my own software company to solve some of those very problems. My mom — a very successful developer for JP Morgan in her own right — joined me a year later and we created the first iteration of CrossBorder Solutions. Over the next several years, we grew the company to $20 million in revenue. In 2007, we sold the company to Thomson Reuters for $80 million
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
The funniest mistake I’ve ever made is thinking that it would be easier than it really is! In all seriousness, I probably shouldn’t say this as a tech CEO, but the biggest takeaway I’ve learned throughout my career is that data is imperfect, and you need to trust your gut.
In 2021, there’s more available data than ever before, but if you’re not interpreting the data correctly or not looking at the complete picture, data has the potential to lead you down the wrong path. Always look at and leverage the data you have available, but make sure you keep an open mind and listen to what your instincts are telling you.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
People often cite someone professionally that helped them along the way, or they refer to someone in their personal life who made them the person that they are. Mine is the intersection of both of those, because as I said, my first business partner was my mother.
She is a trailblazer. She earned her PhD in biology in 1962, nearly a decade before many of the Ivies even began admitting women. She got into tech/coding because she saw a database coding job opportunity and applied, even though she didn’t have any experience. Nothing if not a self-starter, she bought a book on coding, read it the night before the interview, and got the job. She is a relentless, practical, and steadfast worker, who instilled in me her work ethic and value of education. While she is not very involved in my current company, she remains a trusted advisor to this day. In fact, one of our common sayings is — when we don’t know what to do — what would Joan do?
Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
Long before disruption was a buzzword, I was always interested in opportunities to change the status quo. When I was a student at NYU, I founded the Center for International Relations (CIR). The group brought thought-provoking topics and speakers to campus. We focused on intriguing new perspectives that pushed us outside of our comfort zone.
In the world of corporate tax, things have been done the same way for decades, with very little innovation. With the first creation of CrossBorder, we developed a company that not only solves major pain points for our clients more accurately and efficiently, but also provides immense value to our investors and our employees.
This second go around has been even more exciting; tax software as a service — rather than the stodgy images conjured by the word tax — is able to pivot quickly in the changing world. We find incredible value, from both financial and mission-driven perspectives, in changing the status quo.
Thank you for all that. Let’s now turn to the main focus of our discussion. Can you share with our readers a story from your own experience about how you lead your team during uncertain or difficult times?
While CrossBorder Solutions has always been a data driven company, when the pandemic hit and our 200+ employees started working from home, using data to understand how things were operating on a daily, weekly and monthly basis became a priority.
We collected and analyzed data on every facet of the organization, allowing management to clearly see what was working and — more importantly — what was not. This allowed us to make immediate course corrections before potential challenges became major setbacks.
But data isn’t everything. When the pandemic hit, I realized that our hundreds of employees were feeling anxious about the future of the company and their jobs — not to mention their health and general happiness. With this in mind, one of the first things we implemented was a robust communication plan. Not only did we have weekly all-hands meetings, we also had weekly internal podcasts and newsletters, which attempted to answer employees questions and provide them with peace of mind.
Did you ever consider giving up? Where did you get the motivation to continue through your challenges? What sustains your drive?
No, not even for a second. At the end of the day, what drives me is what drives everyone — leaving a legacy, providing for my family and the families of my employees, providing value to tax professionals throughout the world.
I would return to my mother again as a source of motivation. When challenges arise, I think of what Joan went through to achieve success at the levels she did. She raised two kids, was incredibly successful in her own right, and then went on to create a business in her 60s. She instilled in me my drive, and I’ll never forget it. As I mentioned, in adversity I often think “what would Joan do?” and give up would never be an answer to that.
What would you say is the most critical role of a leader during challenging times?
When things are going sideways, the most important role of a leader is the ability to make the right calls and not wallow in indecision. Waffling makes employees and the market nervous. Indecision is death by 1000 cuts. Effective leaders need to look at the data, speak with trusted team members, understand the situation, and then make the tough calls.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
There are a lot of great initiatives out there designed to boost morale, but at the end of the day I think people just want you to be honest and talk with them, not at them. When there is trust between a company and its employees, people are far more likely to engage. If you make an honest effort to support your employees, they will support you in return.
During the pandemic I made it a priority to speak regularly and candidly with employees. My staff knows that my biweekly coffee chats are sacred, and now that our offices are open, I walk the floor daily and attend our regularly scheduled happy hours and food truck Fridays. My employees know I will always be frank with them, and that my door is always open.
What is the best way to communicate difficult news to one’s team and customers?
When needing to communicate difficult news, the only way to do it successfully is to be direct and fully transparent. Your workforce trusts you to do what is in their best interest and you owe it to them to be transparent. People see right through deception and know when they are receiving a lie of omission.
In the long run, keeping people in the dark (even if well intended) may be easier, but it will always come back to haunt you. Tell it how it is. Candor is critical.
How can a leader make plans when the future is so unpredictable?
The future has always been unpredictable. It may be more so than ever before, but it has always been unpredictable to an extent. I think that this is where being an entrepreneur is advantageous for business leaders. We are built for uncertainty and a lot more comfortable playing in a space with less predictability. Even the best start-ups still operate with a level of unpredictability.
When things are unpredictable, the only way to make plans is to examine the available data, speak with trusted advisors and make the call based on information you have at your fingertips. It’s also important to understand that the data you may have available is imperfect and often you are trusting your gut and relying on past experiences. Flexibility and communication are key, to make sure your plan reflects the current reality and everyone is on the same page.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
In very uncertain times, I think the number one principle is probably best said by Dory in Finding Nemo. “Just keep swimming.” You cannot pause or wallow in self-pity. It is necessary to choose a course of action and then execute on it religiously. You must move forward, decisively.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make during difficult times? What should one keep in mind to avoid that?
The most common mistakes I often see other businesses make are
- Becoming paralyzed in decision making,
- Getting tunnel vision when looking at data, and
- Cutting growth roles.
The best way to avoid these mistakes is to speak with people that have already been through turbulent times. Ask yourself, what are the best practices and lessons learned? How would I approach the situation differently?
Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?
In very uncertain times, you don’t have the luxury of picking one or two initiatives to get you through the tough spots. It becomes necessary to throw every idea on the wall, execute on them and then see what sticks.
When building a business, you have to prepare as though there will always be challenging times. It’s a matter of when, not if, and in those situations, you have to hope that the business you have built can shoulder whatever challenges come your way.
Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to lead effectively during uncertain and turbulent times? Please share a story or an example for each.
1. Over-communicate and instill a sense of accountability. When things are challenging, you need to clearly and effectively communicate your plan and expectations so there is little ambiguity. This will ensure that your vision is being executed exactly as you imagine. The pandemic forcing everyone to remote work really hammered this point home. Overcommunication is key, and having employees at all levels feel accountable, is the way to operate in uncertain times.
2. Foster Innovation. They say the definition of insanity is doing the same thing over and over again and expecting a different result. In bad or difficult times, fostering innovation and encouraging employee to think outside the box is crucial. For example, during normal times, we at CrossBorder might come up with a list of 10 new initiatives designed to drive sales, but only execute against one or two. With the uncertainty of the pandemic we decided to execute on all new ideas. This minimized the risk that nothing would work, and in fact yielded excellent growth.
3. Be data-driven, but don’t get tunnel vision. Get data from multiple sources and use this information to guide your decision making. At CrossBorder, we collected data not only on the business operations, but also on the pandemic. Truly understanding what was happening on both fronts guided our decision making and helped us grow 75% YoY in 2020.
4. Trust your gut. While data is great, it’s never going to tell the whole story. At some point in time, you are going have to make a tough call that is based on an instinct. Going into the pandemic, I believed that companies would eventually look for cost-saving opportunities and that governments would eventually step in to provide stimulus for the economy. As such, CrossBorder launched a product nine months ahead of schedule that allowed companies to claim R&D tax credits for the innovations they put into place. While the real-time data did not support that decision, it turned out to be the right call.
5. Indecision will kill you. Make the call. If it winds up being wrong, fix it quickly, but you need to make decisions with lightning speed. When the pandemic hit, I was uncomfortable with our cost structure due to slow payment cycles. Almost immediately we furloughed 10% of our non-growth roles and asked everyone in the company to take a temporary 20% pay cut. The moment that we had better clarity on the situation, we brought the employees back to work, restored pay and made up the difference. It was a hard decision to make, but hesitating would have hurt our bottom line, which would have hurt our employees even more in the long run.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“More is lost by indecision than wrong decision” — Tony Soprano
How can our readers further follow your work?
I wrote a book called Assembly Required: How to Hyperscale Your Sales, Dominate the Competition, and Become the Market Leader, which is still available in bookstores and Amazon. They can also follow me on LinkedIn and keep up with our podcasts.