Posts tagged "partners"

Value Creation

“The true mission of a business is to create value. Any business muddled enough to believe that its real purpose is producing profit is probably not long for this world. Profit is absolutely essential, to be sure, but it is a downstream outcome of creating value, and so it functions very poorly as an objective in itself.” Frederick F. Reichheld

Partnering is all about creating value. Organizations have begun to recognize the fact that by strategically partnering with companies who complement their core focus results in achieving greater sustainable competitive advantages and higher levels of productivity. For example Intel’s partnership with Microsoft shows how two very different firms strategically partnered together to push each other’s products and services more effectively.

When two companies make a conscious decision to adjust their strategies to complement the partnership that is when true value is created.Both companies must have the mindset when they go into this agreement it should be with a win-win attitude. If only one partner is adding most of the value the imbalance will result in a rapid deterioration in the relationship. When negotiating successful partnerships analyze how both companies can add substantial value to each other. You have to enter the agreement with an objective of increasing the overall market size that you are operating in. In this way both you and your partner will get a large piece of the pie.

Partnerships are all about focusing on your core competencies and leveraging off your partners competencies to make your product or service offering more attractive. We have to constantly strive to achieve a level of relationship where tasks will not be duplicated in either organization and the focus will be on creating new opportunities and value for your customers or clients.Next time you are looking at adding a strategic, start with a win-win point of view. Think a lot less traditionally and focus on the bigger picture to achieve maximum impact.

Together Everyone Achieves More

“Synergy is the highest activity of life; it creates new untapped alternatives; it values and exploits the mental, emotional, and psychological differences between people.” Stephen Covey – Author of 7 habits of highly effective people

Over the last couple of days I have got quite a few emails regarding my earlier posts asking me to identify and talk about some of the major benefits I have experienced working in teams. The answer to this question may seem relatively simple, it actually is. However being an entrepreneur I used to question myself before forming teams in my first couple of ventures. The common strain of thought would be, “Why should I team up with someone to develop my project when I am the one who thought of it?”, “What if the person I partner with doesn’t perform at the level that is needed and sabotages the project.”, “What if one of my team members learns about my idea and quits the team to form his own company with the same idea.”, “How will I find the ideal partner? Its so difficult.” I have experienced all these emotions in the past and if you are just starting out and find yourself thinking along similar lines it is perfectly natural.

The topic of partners and teams was selected this week to address these issues. I feel it is a critical aspect of starting new business’s and relationships. If not done correctly you find yourself in a lot of sticky situations which have negative effects on your morale, passion and confidence in the ability to succeed. Teams are a group of people doing something together. We put a lot of emphasis on the “something” when the most important word in that sentence is “together”. Outlined below are some of the key benefits from my experience with working with lots of teams.

A. Teams improve communication. Supposing you have several people in your team and are working on developing a business model. The proposed business is an online real estate consultancy. Talking about your ideas with your team mates adds value through their suggestions and opinions. You get a flow in communication which helps you to crystallize ideas which you were having difficulty in conceptualizing. When the overall level of communication increases you will see productivity soar and you will accomplish in days what would have taken weeks on months on your own.

B. Teams increase productivity. Although this is a logical conclusion , it however depends on your ability to choose your team mates correctly. Once you have selected correctly and your team mates share the same core values and their goals are aligned with the organization, the multiplier effect will be put into play and you will find it much easier to accomplish complicated tasks by breaking them down and allowing every team member to work at their optimal level.

C. Teams result in better decision making. If you have selected correctly, your team becomes a knowledge bank which will help the business make correct decisions. When you are doing things on your own you will have a personal bias towards certain things which limit you from making correct decisions at times. When you are working in a team you can draw from everyones expertise and experience. This in turn will help you reach your goals and targets with much greater efficiency and accuracy.

These three factors are the ones which have convinced me that if you are going to be choosing the startup path then teaming up correctly is the best way to proceed. There is no doubt that sometimes team fail. There are a multitude of reasons as to why they do and I will talk about those factors in the coming weeks as well. At the moment if you are a sole proprietor looking to increase business or a someone with the next revolutionary idea to change the world, use the guides provided earlier to give structure to finding ideal team members. Then with a lot of passion, believe in your business and with a little luck you will be well on your way.

The first critical discussion for most teams

“Coming together is a beginning. Keeping together is progress. Working together is success.”
Henry Ford

You have come a long way since discovering yourself. Realizing what is important to you. Finding people who share the same core values and ambitions. A business concept is agreed on and you find yourselves prepping for one of the most important discussions that will shape how the team operates from here on out. Who does what? How much do I get for it?. Early on in my first couple of businesses we were usually all friends. So we would reach very vague agreements that pretty much everyone would be doing just about everything and we would split the equity of the company equally between everyone. At the time this seemed like a great idea, there was no conflict and this was the fastest way to get going. This is the greatest advantage of using this method when answering these questions. With experience though I have witnessed the dark side of this option as well.

Among the first things that usually happens with this agreement will be; some team members are pulling more than their own weight. This is also a natural progression as clear objectives for each team member are not given. Resulting in some team members realizing that they don’t have to do too much and can just tag along for the ride. I had this happen to me quite a few times. It becomes like Survivor , the TV show. People begin to form alliances and plan to oust members out of the tribe. It becomes unpleasant because before this venture we were all friends. Friendships are lost forever, confrontations are a common occurrence and usually something like 5 months down the line you have lost friends, money and even your passion to ever do business again.

After I learned this lesson the hard way a couple of times I decided to do research on the topic and find a better way to go about it. I have been using a method which I am still perfecting along the way. It provides a more structured approach to this common problem and it has resulted in reaching agreements which set out clear objectives, expectations and commitment.

There are a couple of key concepts that need to be agreed upon first. When starting any business every team member should understand that they are taking a substantial risk. Everyone in the team should believe 100% in the idea or concept. Before the business starts the idea is worth exactly $0. So having heated arguments about the millions of dollars you are going to make in the coming years is a bit premature and frankly making castles in the air. Once we have reached this stage we can move to the next.

There are a 4 key components which are involved in equity split up:

1. Commitment: Will the team member be full time, part time, work over the weekend or on a consultant basis.

2. Experience of the partners: Partners who have successfully sold companies, worked at a startup companies, have experience working in the corporate world, have gained expertise in a given field or skill set, have had international exposure in multiple markets.

3. What skills are they bringing to the table: Is a team member bringing a critical skill set to the business model? Do they have substantial experience in managerial skills, sales and marketing, public relations, technical/IT, customer support. Every team member should identify how they are going to bring value by being part of the team.

4. Money: Every team member needs to have skin in the game. Without it team mates feel you are free riding. So every team member has to decide what sort of money or sweat equity he/she is prepared to put into the venture.

Each component can be a allocated a particular weightage. Depending on what type of startup venture it is. Some are capital intensive others are experience dependent. Once a weight has been allocated you will be able to gauge in a much more practical way “how much should you get?”. After the venture begins you have to put into place performance benchmarks to ensure that team mates are actually doing what they committed to. This will be talked about tomorrow.

I hope this system helps makes the process of “who gets what” a little simpler and I wish you all the very best in your new ventures.

8 characteristics of ideal business partners

“When the character of a man is not clear to you, look at his friends.” Japanese Proverb

After you have made a concentrated effort to understand as to who you are, you are now ready to go out there and start looking for the right individuals to partner with. This is a critical stage which will have a substantial impact on achieving your goals. Over the years I have either started or joined many business teams. There is a mental checklist which I run through when meeting my prospective team mates for the first time. This check list is made up from my own past experiences and also Jim Collins view on who “The Right People” (courtesy are.

1. The person must share the core values of the business or organization. These are the values which determine how the organization interacts, communicates and operates to reach it goals and objectives. For example there was a charity project for protecting the environment I was part of during my university days. There was a sales and marketing director who didn’t share the fundamental core value of compassion. He was in fact looking to profit from the project. Needless to say he didn’t last very long in the team. This just goes to show how important it is for you to probe and ask whether your prospective team mates core values are aligned to ensure that you are all on the same page and headed for the same goal.

2. The person should not need to be “managed”. When building your core team you need to find those individuals who are confident in their own abilities. If you are the more experienced partner then most definitely you will provide some guidance along the way. However if you are find yourself molding the individual into what you deem are the right behaviors then you have probably made a mistake during selection. These types of individuals who require constant support are draining and slowly become huge speed bumps for the organization. Make sure you select those individuals who have shown a capacity to operate on their own and have been successful at doing so.

3. The passion to become the best at what they do. There was a IT company which I was a part of a couple of years ago which was developing inventory management systems for the paper industry. Being a startup company we were naturally bootstrapping and couldn’t hire the best developers. However when filling a key role for project management lead for the team we selected an individual who had shown great potential during his university days and had great passion for his line of work. It worked out really well and the team flourished. So when you are making a key decision and may be limited by budget or geographic boundaries do your best to fill the seat with the person who has show the potential and willingness to be one of the best in that field.

4. Understand the difference between a job and holding a responsibility. This tip has helped me greatly in making some key decisions in recruiting partners. Say you are going to be hiring a developer for a new website to collect feedback for your product. You get the best coder in town to make it for you. He does what you asked for but users are frustrated because the website is difficult to navigate through or impossible to submit feedback easily. I know I have been in this spot many times. This is when you got someone who doesn’t know the difference. A coder who takes responsibility to make sure that users will be able to submit their feedback easily and quickly would have approached the project differently. So make sure when you are getting a partner who understands the bigger picture and is in line with it.

5. Would you hire the person if it were a hiring decision? This question allows you to look at the person from a different angle. Given that you know a substantial amount of the person would you hire him/her? When I get to meet people outside the workplace say at my squash game or at a charity that I volunteer at, you get to know a lot about the individual. When I ask myself this question when thinking about asking him/her to become a partner with me in a project it puts things into perspective. You begin to look at the individual impartially and can reach a more informed decision.

6. Does the person have a regard for rules, regulations and personal boundaries? I have learned this lesson the hard way as well. I came across what you call a super star performer. He excelled at a lot of the businesses he had been at. So if it were a hiring decision it would have been an easy one. However after working with him for a while I realized he had the sense that he was above any level of authority and did things which were ethically questionable when securing contracts and sales. We started to get complaints about his attitude from staff and customers and had to part ways. So when you meet a person make sure you get a sense of what his point of view regarding regulations and boundaries are even though everything else may look to be in place.

7. Professes a commitment to goals. When you are going into business you are looking for people who share similar levels of commitment as you do to the project. If you don’t pay attention to this aspect you will find yourself in an imbalanced partnership which could result in permanently jeopardizing your project. When evaluating prospective partners look at their past history and whether they were committed to the last projects they were on. Ask them about some of the big decisions they have had to make. Lastly if you are planning to take him/her on as a partner make them commit to particular goals and objectives and use them as benchmarks when performance will be appraised.

8. Integrity. This is probably the most critical yet most elusive quality to immediately identify. A person who has a high level of integrity will be one which will you can rely on and grow a successful business with. To be a good of judge of this characteristic however will take time and experience. I take Jack Welch’s advice here that if your “gut” feeling about someone is bad or you don’t get the correct vibes then it is best to go with that first presumption unless you are shown to believe otherwise.

By running through this checklist I have been able to select business partners with a lot more subjectivity. I hope this list helps out anyone who is looking to start up a new project. At the same time if you or anyone else has any key characteristics that they would like to share please do so in the comment section.

How do I find the ideal partner?

“You are the average of the five people you spend the most time with.”
Jim Rohn – Successful author and Self-made millionaire

You have the idea,passion and ambition. However to get to your destination you will need help along the way. This question is thus the next logical step to get your project, idea or business moving. There is no definitive guide which will successfully help you answer this question. I refer to two sources this question pops up. Jack Welch – Winning & Jim Collins – From Good to Great. If you haven’t read these I would strongly encourage you to pick them up at the earliest.

Over the years I have been part of many teams and have selected multiple partners for business projects. I was having a conversation regarding Jim Collins point of view on “First Who“(courtesty He has encapsulated a concept which was very abstract to me “How do great teams come together?”. I used to think that luck probably plays a big role. Then this point of view completely changed that. Now it is clear to me that before you set out to find that partner whether it be in business, at your job or even a life partner we have to pay very close attention to the people around us first. What sort of core values do they have, do they share similar beliefs and principles, do they take responsibility for their life and action and are they committed to making the lives of people around them and their own extraordinary.

To do this practically over the last few years I have identified people who I respect and admire for what they have accomplished in this life. I have spoken to them at great length about the principles they follow and believe in. This has resulted in a positive impact on the quality of my life as well as the progress in my business ventures. I am a firm believer in the law of attraction which states that who you get is not determined by who you want. It is determined by who you are.

So before you set out to find your ideal partner take a step back and take a deeper look into yourself first and the people around you.