The Bull and Bear Case: a tool for optimising your annual reviews

By Joe White, EF CFO & General Partner
13 December 2018

Article5 Minute Read

I can’t believe I’ve never used this technique before — the bull and the bear case is such a simple trick that solves so many challenges in startup leadership, I wish I’d known it sooner.

Kudos to Matt and Alice for introducing it to me on our most recent Entrepreneur First leadership retreat. I’ve got a bunch of tricks and tips in my mentoring toolbox, but this definitely a welcome new addition. In fact I’ve used it again several times in the last month alone with teams I work with.

Why is this so important?

Creating something from nothing — the essence of all startup journeys — is incredibly difficult to do. You have to believe something that no-one else believes, and generate enough shared reality and momentum that you can convince customers, employees and investors that you’re creating the inevitable future.

If you waver in that belief, there are very few people you can share this with — it’s a confidence based knife edge and if you fall, everything falls. At Entrepreneur First we support hundreds of startups each year on this journey, and mastering creation skills is critical to their success.

Charismatic founders use their natural creation skills to great effect in maintaining this illusion until it becomes a reality. As the CKO (Chief Koolaid Officer), you’ll be getting everyone you can to drink as much as possible.

But there is a dark side to this — remember the late, great startup mentor Notorious BIG’s wise words, “Never get high on your own supply”. If you only sell or acknowledge the best case version of your startup, you miss out on opportunities to learn and risk alienating your own team.

Equally, you can’t dwell in the worst parts of your business everyday without damaging belief in the possible.You have to remain a quantum founder living simultaneously in both states of extreme optimism and extreme realism — which is no easy task.

When I was a founder alongside Wendy Tan-White and Eirik Pettersen I wish I’d used this technique more. Our company Moonfruit was a 15 year journey through boom and bust and eventual exit success. Wendy and I got married en route and played tag-team CEO during our journey while also having a family — like playing double or quits with your startup (but that’s another story!).

At times, as CEO I felt the pressure to always push the most optimistic case, when I wasn’t CEO I felt more inclined to push the realistic case and battle what I saw as over optimism.

The bull and the bear cases gives you the framework and permission to look at the extreme best case for your business and the extreme worst case. Neither of these are correct, but by expressing each fully you give yourself, your team and your leadership permission to voice and explore the full set of their beliefs.

It allows everyone to put it all on the table and see what’s really there from all angles. It stops a review from being personal and stops it being a debate.

As a leadership team (including a husband and wife!) debating exactly where you are on the ‘we’re amazing’ to ‘we’re lucky to be a business at all’ line can be a bruising and largely pointless debate. Both are true. Both are not true.

Denying either perspective, or dwelling on only one is damaging. Frankly it doesn’t matter where exactly you are on the spectrum, it just matters that you take the best from both ends — celebrate the true awesomeness, AND critically inspect the real risks, failures and challenges.

So when you’re reflecting on the year just gone or planning the year ahead, use the bull and bear case to help you do it — it will allow you the space to explore the full range of outcomes and performances and learn from them, without having to create only one narrative for your jouney. I definitely wish I’d done this sooner.

How to do it

  1. Frame the task in a way that’s easy to understand and finite, e.g how did we do in 2018 vs our goals?
  2. Create the bull case — create the narrative that describes the best possible interpretation of the results you achieved in the year. Don’t make things up, or change what actually happened, but explain everything in the most positive and flattering terms — every success is super charged, and every failure becomes a success, magnificently navigated by yourself and your team — you truly are awesome.
  3. Create the bear case — now go to town on the worst possible interpretation of your performance. Really enjoy this one. The incompetence, the failure to deliver, the lack of planning and foresight — you know the really good stuff — you really are lucky to even have a business 😉
  4. Share it with your team! Whether this is between founders, your leadership, or for those daring enough, the whole company. It can be even better if you let your team create their own narratives — hearing the greatest and worst interpretations from different people in the leadership team or wider organisation gives you more insight into the opportunities and frustrations that exist.
  5. Don’t take it too seriously! It’s all made up — by you, just a few minutes ago! None of it’s real, but it all has echoes of truth. I’m afraid you’re not the best company in the world, but gratefully you’re not the worst either.
  6. Listen for the patterns, both good and bad — dig into the detail, understand the frustrations and fears at different levels in the organisation. Also recognise the different perspectives on success — the nuance can be uplifting and surprising.
  7. Summarise, distil and most importantly, take action — the new year will be upon you soon, and if you get this right the bull and bear will give you a clear sense of what you can build on, and what you can correct in the year to come.
  8. Rest, reflect and enjoy. It’s a gift to lead a company, hard earned, and a lifetime of learning. Look after yourselves.
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