Case: Managing Partnerships
Leader: T.J. Duane
Topic: Difficult Conversations
Case Challenge
When the relationship with his co-founder unravels, Duane finds there is little legal protection in place for them both to make a clean exit, leaving him with no other option than to start negotiations around structuring a partnership agreement with exit plans.
Summary
Duane launched a company with his best friend without a formal partnership agreement. In spite of the company’s success, deep frustrations emerged between the co-founders. Duane attempts to discuss terms amicably but soon learns they must resort to contentious litigation, teaching him many important lessons along the way.
Context
At the time of the case, Duane was co-founder and leading a legal jobs platform company that had launched in partnership with a college friend. When the partnership unravels, Duane regrets not having set up terms when they launched the company and recognizes the importance of communication. T.J. Duane currently leads two companies with very healthy partnerships - Bright Crowd and Index Solutions. Duane is a four-time entrepreneur with a Stanford MBA, Harvard JD, and BS from Cornell.
Case Design
These leadership cases are designed to be discussed in a group so that divergent viewpoints can be debated. This enables participants to broaden their perspectives and gain insights into the values and instincts that drive decision- making. Each video pauses to allow for discussion at key points in the leader’s presentation.
Keep in Mind
The cases do not always provide the correct or ideal solution. Rather, they present one person’s experiences and judgment based on the circumstances faced at the time. Some critical facts may also have been unintentionally omitted.
Facilitation Tips
To help create a trusting, open atmosphere:
- Establish ground rules for the discussion, such as setting up a safe space.
- Feedback should not be personal but directed at behavior.
- Encourage participants to state and defend his or her opinion.
- Refocus participants by raising broad questions and themes.
- Reassure your group that leadership is an art that can be learned through practice, feedback, and experience.
- In closing, provide a theoretical context for the discussion and takeaway lessons.
Teaching Insight - Leadership Background Content
A healthy partnership takes strong communication skills, commitment, and a willingness to proactively address issues.
This video case is about a leader who must balance personal and team success with his relationship with his supervisor. Regardless of the support a leader may have within the organization, it is still important to establish trust and communications with a direct manager. In contrast, some leaders may think simply getting the job done is the only thing that is important regardless of relationships. Groberg realized the importance of having a relationship with his boss and had to use empathy, communication, and commitment to earn his trust.
Video Segment 1: Challenge Discussion
Background and Challenge: When the relationship with his co-founder unravels, Duane finds there is little legal protection in place for them both to make a clean exit, leaving him with no other option than to start negotiations around structuring a partnership agreement with exit plans.
Discussion Questions:
At the first Discussion stop (time 2:48), ask these questions to the class at large or to particular students. Encourage everybody to participate by seeking a variety of different opinions.
- How would you prepare for the negotiation process if you were in Duane’s place?
- How is negotiating with friends and long-term colleagues different from negotiating with someone you hardly know? What would you do differently?
- How would you manage the negotiation? (Consider if you would be alone? In person? In a casual setting?)
Video Segment 2: Decision
Decision: Duane meets with his co-founder after thinking through a range of scenarios when three minutes into the conversation, he is presented with unfavorable terms, making him realize the partnership is over and litigation is the only possible next step.
decides to meet with him in person and role play different scenarios of the negotiation, while considering what he wanted from the discussion. Arrived the evening before, went to a concert with a new hire but kept things amicable although there was still tension. That night he thought the different scenarios. Three minutes into the conversation, his co-founder sets his terms. Duane realizes the partnership is over and it was going to be messy. He leaves and calls a law school friend to be his lawyer knowing ther would be litigation. A
Discussion Questions:
Ask these questions to the class at large or to particular students. Encourage everybody to participate by seeking a variety of different opinions.
- What other possible strategies does Duane have for managing this negotiation to avoid litigation? Discuss.
- What are the advantages and disadvantages of Duane’s immediate next step to engage a law school classmate to represent him in litigation?
- Have you ever been in a situation where you could not reconcile disagreements through discussions and had to proceed with legal action? If so, what did you or would you do differently? (Note: consider partnership agreements, intellectual property, contracts, etc.)
Video Segment 3: Results and Lessons Learned
Results: The litigation was very contentious, making it personally and professionally painful especially since the co-founders had been best friends.
- How do you raise “pinches” and proactively address issues with colleagues or business partners to keep communications open and productive?
- Explain how a business partnership can be like a marriage, beyond the time you spend together?
- Explain what Duane means when he says, “the two worst things that can happen to a partnership are one it fails miserably or it succeeds fantastically.”
Lessons Learned:
- When entering into a business partnership, invest the time and money on the front end to set up and contractually structure the terms to avoid future issues.
- Create a culture and space for people to say something is bothering them and have open communication.
- Build a habit of checkins and appreciate the time spent building relationships.
- Especially in business partnerships, build an open relationship of communication and learn to raise “pinches” proactively in a disarming way.
Lessons Learned Discussion Questions:
- Do you agree with the lessons learned here? (Note: An instructor will need to mention the above lessons learned.)
- What specific terms should be discussed at the beginning of a partnership to avoid future issues? (i.e., Exit strategy, ownership shares, time and travel investments, etc.)
- When working remotely, how do you maintain communications while building the relationship with your colleagues, supervisors, and/or business partners?
Considerations
The lessons shared by this leader are based on his own experiences. These lessons are not necessarily substantiated by academic research but are shared to spark consideration and insight.
Research Reference
Neale, Margaret A. and Lys, Thomas Z. Getting (More of) What You Want. Basic Books, 2015