Work place conflict

Stopping Founder Fallout from Turning into Start-up Failure: Supporting Structures

The statistical failure for new start-up companies is disheartening. Depending how you define ‘failure’ in this context it is estimated anywhere between 70% – 90%. The shear stress involved in starting up a business, inadequate appreciation of who the potential buyers are and, basically, running out of capital are often cited as major reasons for failure.

But another contributor to the failure of start-ups, particularly those involving two or more entrepreneurs, is fallout among the founders. Stella Fayman suggests conflict between founders early on in the process of establishing new companies is a major factor in start-up failure. (http://www.forbes.com/sites/stellafayman/2013/04/19/what-happens-when-startup-founders-disagree/) (accessed 30/07/2013)

The ability to work with conflict should rank alongside those skills essential to successful running of a business. I would suggest that these skills need to be complimented by some practical structural factors at the beginning of any new venture.

Attitude is fundamentally important. In my workshops on conflict resolution I often refer to the two characters that combine to make the Chinese word for ‘crisis’. Ji and Wei respectively refer to ‘danger’ and ‘opportunity’. Like ‘crisis’ conflict provides not only a dissonant moment in a relationship but also an opportunity for growth and learning. As Fayman comments in the above article, ‘conflict is good’. A positive orientation toward conflict – along with the realistic expectation that you will have it – may go a long way in providing the positive energy for weathering those early differences you may experience with your business partner(s). Of course attitudes around respect and the ability to listen is equally important. I will talk more fully about these and a particular skills set that will contribute to the success of a start-up in another blog.

Here I want to say a few things about the importance of basic structures incorporated into a business early on. Awhile back I was working with staff involved in a newly launched business providing an alternative education. The enterprise was actually in its second year when I was invited to work with staff and founders in regards to a conflict threatening to bring the business to an end. What surprised me was to discover that no solid policies had been in place regarding conflict resolution and disciplinary procedure. All power devolved to the founders (a married couple) and they were (absurdly) the arbiters in disputes between themselves and their staff. The situation was made more delicate by the relationship between the founders. Short of a mature capacity to bracket personal interests and listen to others’ concerns – which was much in lack – a foundation of clear policy defining procedures for resolving disputes would have provided a solid base for engaging with differences whether among founders or between founders and staff members.

At the very outset of a start-up it would be helpful in the long term if partners could agree on basic policy covering eventualities of differences between them or between them and other workers they employ. The document might identify a third party process for resolving differences and also cover some of the critical co-founder questions posed by Dhamesh Shah: how should shares be divided? How will decisions get made? What happens when a partner leaves the company? Can a partner be fired? By whom? And for what reason? Etc.. (see http://onstartups.com/tabid/3339/bid/99/, accessed 31/07/2013)

Clearly written policy documents outlining processes and procedures or addressing difference will go far in placing a start-up on a more secure footing in a venture that holds enough challenges without conflict between founders.

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