Powerful startup relationships require a mix of cooperation, competition and retreat.
To explain how you weave together cooperative, competitive, and retreating shared objectives with individuals that play a big role in helping you make your dreams come true, I will use a real example: me. My success as an entrepreneur would not have been possible without a deep and productive relationship with my second-in-command.
My chief operating officer (COO), Lloyd, ran day-to-day operations at iSuppli, and was somebody with whom I had a long-term, powerful, successful, and mutually supportive partnership based on a spectrum of specific relationships. These shared objectives influenced how we worked to create a valuable global market intelligence company from scratch.
Lloyd and I cooperated on an overriding shared objective: to build the valuation of the company.
I made sure I understood Lloyd's core motivations for joining iSuppli even before I extended an offer to work together. We talked frequently over lunch about how the success of iSuppli tied into fulfilling his dreams of being financial independent to the point that he could pay off his mortgage, pay for his two kids’ college tuitions and help their future families have homes, with still enough left over for he and his wife to live comfortably for at least 40 years. No small aspiration. It was sometimes a struggle to envision our shared objective having good enough payoffs when our business was under financial stress. The fact that I demonstrated how critical this objective was to me by doing whatever I could to meet it, including sometimes foregoing my salary so he could receive his, built enormous trust between us.
Other shared objectives were subservient.
We frequently competed on the shared objective of how value would be created in order to test the quality of our ideas. We would openly debate our points of view before our leadership team so we could listen to their analyses of whose value creating strategies were strongest, which we would then set off to do.
I often retreated on shared objectives relating to how we set pay levels or commission structures. To make sure Lloyd felt autonomous and motivated, I needed to share these objectives but retreat from making decisions that involved Lloyd's areas of expertise.
We competed on the shared objective of setting a reasonable compensation plan for Lloyd. We always had different opinions, and we always had to find ways of adjudicating between us so we both felt the outcome was good for the company.
We cooperated on the shared objective of creating a specific corporate culture. We both understood the importance of having a coherent culture at iSuppli, which meant we had to have similar visions of the culture we were working to create. We always coordinated the important actions we took so everyone at iSuppli could see we acted consistently with our vision.
Lloyd and I often competed with how to deal with specific employee issues, and would set up tests to determine the best way to handle each issue for the company and the employee.
We cooperated on shared social objectives, with each of us doing the social tasks with which we felt most comfortable. (Lloyd always did the golfing.)
We cooperated in keeping our board of directors informed, because we both understood the importance of effectively sharing information and emotions with this critical group.
This is not a complete list, but it is representative of the shared objectives we felt were important.
The list of distinct relationships that formed our general CEO-COO relationship grew in complexity as the company grew in size and scope. I was thoughtful, although not always successful, in creating specific new shared objectives with Lloyd. I wanted the competitions to be confined to areas where we did not agree but were important to increasing the value of iSuppli. The competitions were structured to be tests for which of our proposed solutions would be best for the company.
We competed frequently, as we had very different perspectives on how to market our services and how much time and money we needed to invest in expanding our product offering. These disagreements always resulted in getting other people or groups to choose between our alternative visions.
If I had simply mandated my solution, then if it wasn't considered best for the company by either Lloyd or others with better perspectives than mine, that could call into question the trust we had that we all were working toward building the biggest valuation for the company.
As you would expect of unbiased competitions, Lloyd would sometimes win, when his desired outcome was objectively judged better than mine. Because the rules I set were judged subjectively “fair” and objectively “effective” by all those affected, the results were well accepted. The company benefitted from these competitive tests, and I learned through the judgments of others more expert than me. Ultimately you want to construct your competitive relationships such that the competition filters out inferior outcomes, leaving the superior shared objective outcome as a benefit to others and as a learning experience for yourself. Setting up fair tests of ideas did not mean handing control to Lloyd or some committee of judges. I retained full responsibility for the outcome of whichever solution we implemented.
In many cases I acted selfishly with Lloyd by retreating on objectives that we absolutely shared but that I didn't want to spend time doing. As part of the important requirement of maintaining trust, we let each other retreat from activities if it would help keep us refreshed for more critical ones. We never retreated when either of us asked the other for help in achieving any specific shared objective.
The evolution of our relationship was consciously implemented but was not planned—it evolved as required by the exigencies of the moment. I kept close tabs on Lloyd's objectives and desired outcomes and made sure he knew where we were in making progress toward achieving our objectives and realizing the expected benefits. To have withheld information would have harmed the cooperative relationship. Sometimes the news was bad, which led Lloyd to question his commitment to achieving the shared objective—that is natural and to be expected and is not traitorous; fortunately he never did retreat.
Changes or additions to specific shared objectives were always made on an as-required basis, in a way consistent with improving the chances of achieving our most important shared objective. If at any time either of us had felt the other was no longer committed to doing everything possible to maximize the value of the company, the web of interrelated relationships would have begun to unravel, which in turn would have led to a crisis in our ability to work together.
We had to survive many crises over the decade we worked together: two economic meltdowns of the technology market, the September 11 attacks, unforeseen rapid changes to our end markets, intense competition, completely unreasonable requests from clients, and so on. Only a web of thoughtfully constructed cooperative, competitive, and retreating relationships could have taken us through a dozen years of value creation.
My partnership with Lloyd serves as a role model of relationship building. By using these methods of identifying shared objectives and forming relationships using the right category of cooperation, compete, or retreat, we created over 100 million dollars of value.