Partnership

keyser söze

Bad decisions are invisible in the short term. 


A concession here. A short-cut there. A reaction justified by a passionate argument. Followed by the need to solve the next problem. Answer the next call. Get to the next meeting.


Big and small companies alike do not undermine themselves intentionally. They do so by choosing to see the world falsely. 


And protecting themselves from the wrong threat. 


While leaving Keyser Söze to wreck havoc without distraction.


Successful companies confront the issues that are really controlling their business. 


For small businesses, that is often the partnership. Do you all want the same outcome? And what are you sacrificing to keep everyone happy? 


For mid-size companies, look at your staffing. And get rid of those people that you love and adore, but who don’t have the talent to let you be the company you want to be.


And for large companies, confront your client contracts. If the advertising industry is typical, they are one sided and driven by factors that provide no value to either party. 


"The greatest trick the Devil ever pulled was convincing the world that he didn't exist."


Success comes when you discover he does.


And that beating him is easier than you think.



Consultancy in Action

A potential client asked me yesterday what I mean by Plan The Last Day First. Rather than give her our well honed explanation I pointed her at yesterday's post on Jerry Solomon’s blog.

We don’t disclose our work with our clients unless they choose to do so. So everything here is information that Jerry or his partner Mindy Goldberg have already openly discussed on Jerry’s blog  or on our website.

When we first met Mindy, Jerry and Jeff Preiss they were engaged in a process of redefining their partnership. A process that challenges the most self-effacing and self-aware by demanding that you compare your value with that of other human beings.

Conversations about better or worse anything quickly become emotional. Add to that the financial stakes of sharing the ownership of a business and you get, as Jerry described it, a recipe for impasse.

They hired us to help. We were able to do so. And the impasse was resolved.

Which is part one of the story.

Part two manifested itself in Jerry’s blog yesterday.

We believe that the best companies are built from passion, and towards a purpose.

Most business owners depend heavily on the passion part of the equation. And spend little time defining where they want to end up.


Which seems to miss the opportunity to apply one of the few constants in the life of an entrepreneur. The absolute inevitability that there will be an end.

Some entrepreneurs love what they do so much that they want to die doing it. Others want to capitalize on their success by selling their business one day. In either case, leaving behind a legacy of all the effort, thought and personal investment becomes increasingly important to owners over time.


Many business owners treat the end as an issue to be avoided until their own enthusiasm starts to wane. By which time their ability to affect their own outcome lies somewhere between limited and non-existent. We see this particularly in creative companies, whose founders have a difficult time separating their own value from that of the business.


However, it is the ability of an owner to ultimately make themselves irrelevant to the success of the company that creates the most dynamic future for any business. By empowering the employees left behind. Increasing dramatically the value the business has to potential buyers, or a new generation of owners. And ensuring the DNA of its founders lives on in the soul of a business long after they have ceased to be its daily heartbeat.

In Jerry’s blog yesterday he describes the decision to hire Lisa Margulis as his replacement as, “a conscious choice on whether to remain a life style business or build a company that lasts beyond the partners.”

This is the essence of Plan The Last Day First.


And the key word is conscious.


Every business owner makes a choice about the future of their company every day. Many times they don't recognize it as such. But in all aspects of life, the absence of a conscious decision to do something is an unconscious decision not to.


Deciding to take control of your future requires that you be willing to give up some control of the present. By involving others and helping them to grow. A win-win on a thousand levels.

I don’t know Lisa personally. But I suspect that she will enjoy working at Epoch a great deal.

Both because it is a company filled with extraordinarily talented, inquisitive, genuine people.

And because its owners are building a business that is committed as much to her future as it is theirs.

Why Ownership Is Not A Salaried Position

Companies are started by people with a willingness to invest.


Money and talent usually. Supported by passion and pragmatism. Both are required.

For those investing talent, the commitment is a full-time one. Sometimes paid. Often not. Or at least not until everyone else is.

When compensation comes, it does so slowly to begin with. And always below market rates. A sacrifice on every level. One made in the hope of a more rewarding tomorrow.

For some, this investment is part of the deal. A small cost to pay for the benefit of owning your own business.

For others, it forms part of an emotional ledger. A debt to be repaid in full as circumstances allow. Often in the form of reduced effort for the same pay.

This is not a malevolent point of view. But it is an entitled one.

A difference difficult to separate for those founders still fully committed to the day to day. And for whom a growing company has brought greater responsibilities. An imbalance that can lead only to resentment and mistrust.

The solution is simple. Based in two age-old economic truths.

1. Pay profits based on ownership.

2. Pay salaries based on current contribution.

A formula that aligns interest to effort.


And keeps everyone focused on long-term success.


Five Things Entrepreneurs Would Like To Change About Their Business

1. They don’t know where they are financially today. Either because their system (people and software) can’t tell them. Or because they have no one to find the story inside the numbers. 
The solution: simpler systems and a short education.

2. Their partnership agreement doesn’t reflect the value each partner is providing. But to raise the issue seems like opening Pandora’s box. With a big bill to follow. Financially and emotionally. 
The solution: courageous conversations, historic vs future value and fast action.

3. Their staff doesn’t do what they want, how they want. Usually because they haven’t been told. Or have been told excessively.
The solution: company purpose, personal ambition, responsibility and accountability

4. Their potential is greater than their success. Because they don’t understand their value. Or can’t articulate it.
The solution: a walk in the customer’s shoes and a single line without the use of the word ‘and’.

5. They keep having the same conversations. Proving that the first sign of insanity is repeating the same behavior and expecting a different outcome.
The solution: Plan The Last Day First®. A practice that focuses on where you want to end up. Analyzes where you are. And connects the two points.

Partnership

We are regularly hired to resolve partnership issues.

Having managed an ownership structure of seven partners ourselves, it’s an area we understand practically and emotionally. Two components that play heavily in every case.

Partnerships are formed at times of hope and expectation. Too often they end in discord and angst.

There is no reason they should.

Partnerships focus too much on the benefits of working together. And too little on the needs of each individual.

Only by planning for your differences, can you build a partnership that ends as well as it begins.

Courageous Conversations

At the heart of the problems faced by many companies, is that the owner has so far avoided a Courageous Conversation.

Instead of identifying and exposing what's really going on, owners resort to analyzing the company's strategy, a debate that is often substituted as an alternative to confronting two primary questions.

Am I still in love with this business? What am I trying to achieve?

Entrepreneurs build extraordinary businesses when their talents meet their passion. When their passion fades, the business suffers.

Unless it has been built to thrive without them.

Most are not.


And when owners bury the real issues - consciously or sub-consciously - the interests of the company, its staff and ultimately the owners themselves are seriously damaged. Often permanently.

The situation is complicated a hundred-fold when a partnership is involved. Then, the absence of an exit strategy and an ownership transition plan becomes a noose from which many companies never escape.

A Courageous Conversation is needed when you see these conditions appear in combination:



  • A business without a clearly defined Purpose.

  • A partnership that used to work effortlessly but is now increasingly disjointed.

  • Employees taking sides.


Employees smell lack of ownership interest instinctively. And even if you’re kidding yourself, you won’t kid your employees for very long. In the absence of a company Purpose, great employees will stick around in this economy only long enough for the unemployment numbers to start falling.

Sometimes, a Courageous Conversation results in a genuine re-commitment by the owners to the business. Madonna Badger of Badger and Partners and Jerry Solomon of Epoch Media talk about this on our website.



Other times, it highlights the divide, and requires the negotiation of a fair, equitable and practical separation. No small feat. And often hardest for close partners who tie themselves in knots trying to be reasonable at the expense of reality.

The good news is that Courageous Conversations are the fuel of empowerment. And liberation.

Two traits on which both companies and lives can prosper.

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Note: The concept of the Courageous Conversation was brought to us by our newest
associate, Jamie Gutfreund.

Jamie was introduced to us by Dana Astrow, our first.

Their background and expertise speaks for itself. Their insight is extraordinary. Their enthusiasm infectious. We’re a much better business for having them be part of it. 

Doing What It Says On The Tin

Building a better business means first doing what it says on the tin.

An English expression I have come to value. Simply put, it means stating your intention. And then acting towards it.

Too many business owners do the first. But not the second.

With the result that instead of building a business, they’re expending a lot of energy giving themselves a job.

Here are four ways you can tell if the company owners are interested in creating real value for themselves and their key employees. Or just satisfying a need to be needed.



  1. The original founders are the only people with real ownership

  2. They are essential to the company’s ability to earn business

  3. No one else in the company has responsibility to make meaningful decisions

  4. No one can envision the company without them


If a ten year old company exhibits more than two of these, the chances are it will stay in business only as long as its founders want to work.

When they’re done, so is the business.


Planning The Last Day First / STEP 5: EXIT

A business with four offices spread across 5000 miles doesn’t lend itself naturally to a single company Christmas Party.By the summer of 2003, however, it was feeling increasingly important that we have one. The Whitehouse had coordinated over 1000 employee travel nights that year. As a result a lot of people knew a lot of people. But Chris and I had come to realize that we were the only two that knew everyone in the company. It was time for that to change.If you’re going to throw a party for a group of people aged between 18 and 45, there’s really only one city in the world to choose. Las Vegas.

Planning The Last Day First / STEP 3: MERGER & ACQUISITION

As a very junior account executive at Ogilvy & Mather, I heard Kelly O’Dea - who went on to become President of three different worldwide ad agencies - describe trying to get to a new business presentation in Miami from a snowbound New York. With every airport in the Tri-state area closed, it was apparent that the Ogilvy team wasn’t going to make it in time. “We’ve tried everything,” Kelly was told. “You can’t get there from here.”Kelly paused and then said, “where can you get there from?”

Planning The Last Day First / STEP 1: START-UP

Someone asked the other day why there was so little background on our website about our own experience as entrepreneurs. A very good question, without a good answer.We've been involved in a lot of different businesses, but the story of the Whitehouse stands out because it embodied the entire business cycle. From start-up to exit with everything in between. You can't compress that into a single post. So, I've turned it into five chapters. I'll add one each day this week.