Featured in Alltop StartUpRoar

Thursday, March 1, 2012

If It Walks and Quacks Like a Duck, IT MUST BE A DUCK!

I am certain that all entrepreneurs will execute confidential agreements with possible business partners or other entities.  The agreements usually say confidential information will not be used for business purposes other than to evaluate a possible business relationship.  They may go a bit further to cover the restricted uses, because it is important for startups and other companies to protect their information.

Strange that signing the agreements does not always translate into one or both parties adhering to the agreement, sometimes intentionally and other unintentionally.   Businesses start-off indicating they want to play fair and that they are interested in Win-Win business relationships.  I have experienced the Win-Win opening dialogue as the case in the numerous conflicts resulting what appeared to be a breach of confidential information.  It always amazes me how attitudes change when one or both parties think they made a new discovery after having seen confidential data under a Confidentiality Agreement. 

Litigation is not usually the best way to resolve the conflict, but I experienced one prior episode that resulted in significant legal expense.  No attempts to resolve the issue by proposing a Win-Win scenario were successful. Writing the CEO of the company and the legal team for the other side continued during the whole confrontation.  The judge could not even force a settlement.  Costs on both sides were huge and largely unproductive to both parties.  It was resolved, but that is a story for a different day.

It is always the possibility that one can come up with a new ideas.  Coming up with a new idea after seeing the other side’s data looks strange to the revealing side.  This remains a concern even if the new idea was created without having seen the confidential data.  Keep in mind that it is nearly impossible to convince the revealing side that the new invention was invented fairly once they provide their confidential data.  Remember the phrase, “if it walks and quacks like a duck, it must be a duck.  Get it!

Developing great business relations takes much more effort than taking a great story.  Both sides must feel that fairness and logic are part of the relationship.  This also means sometimes having to give up more than you may feel is warranted.  Win-Win scenarios are a way to create a stronger alliance and team interaction.  Both sides must believe the other cares and will treat them fairly: even if the misuses or deviations are real or were unintended.

Heading off disputes is important at all stages of an alliance.  Having special individuals to work out the resolutions is one way to be ready to tackle dispute resolutions.  Waiting for problems to resolve themselves or kicking the can down the road only allows tenseness and anger to build.  The emotions only make the problem harder to resolve.  Fix the problem and not the blame but FIX THE PROBLEM SOONER AND FAIRLY.

Why do I bring this topic up today, because it comes up every day, including today.  I suspect you will see the problem a few times in your startup.   A few ideas on steps to take when it happens:

·        Agree in advance how the groups will handle dispute resolution.  This is not always so easy, but worth consideration.  Establish a way to engage in discussion once a problem arises.

·        Try to limit the members to work out a pre-resolution. Have them solicit acceptance from their side.  Large group negotiations are horrible.  

·        Make sure those working on the resolution do their homework before engaging. Try to clarify the issues that cause the dispute and to understand what led to the problem. Sometimes just understanding the other side helps.

·        When possible, try to have everyone be a winner in the dispute.  Maybe they do not win all they wanted, but everyone should feel they have a reasonable and fair resolution.

·        Avoid the bad stuff if possible; Legal action, anger & resentment are just a few.  Remember, teams working together can do far more in shorter periods.  Everyone has a chance to win and make money.