Thirty-two percent of Inc. 500 CEOs say their biggest mistake in the first year of business was either a bad fit with an employee (20%) or a partner (12%). The only other startup problem that was more common was not having enough capital (45%). And these are the problems of successful entrepreneurs. If that's not a stark example of how important the people element of business is, I don't know what is.
If we're talking about partner fit, I think there are two major ways people get tripped up: one mundane and one more nefarious. The mundane is when there's a miscommunication or lack of communication about the business. The nefarious is when one party is willfully withholding or distorting important information from the other. I would love to see the data to find out how many CEOs would attribute their problem to the mundane and how many would identify the nefarious. My concern is that the mundane would be prevalent, which means that we're simply not spending enough time on important questions with our business partners.
I've seen this more times than I'd like to admit. One partner is betting on a quick exit, while the other prioritizes sustainability. One partner finds a natural role that allows him to grow, while the other gets pigeonholed in a spot that feels limiting. So, what can you do to better your chances for success?
For a start, try answering these questions to see how truly aligned you are:
- Why does this company exist? (This video of Southwest Airlines core purpose is the best example I've seen of how relevant and useful this question can be for your business.)
- What does this business look like in one year?
- What does this business look like in five years?
- What exactly does (will) this company do?
- What behavioral values are most important to this company?
- Are these values nonnegotiable? (Will we actively get rid of people who don't exhibit our values?)
- How important is culture to us? Do we want to invest in it? At the expense of other investment?
- What's the most important thing we need to accomplish this year?
- What roles will we each play (be as specific here as reasonable)?
- Will our roles change over time? How?
- Do we have a preferred exit plan? Timeframe?
Next posting, I'll address the question of hiring for fit. Stay tuned.