Human beings are pretty good at falling in love. So why is it that politicians and business folk are so bafflingly bad at choosing the right partners?
Red or white?
in 1951 the two main political parties in the UK polled 48% and 49% of the vote. It was a straight them or us choice. And since then we got pretty used to this winner takes all/first past the post system. Easy choices, one winner, one loser.
But nowadays it’s all changed. The two main parties gravitated to the “we’re for everyone” centre, leaving room for lots of exciting minor parties to stake out clear positions to the left and right (and sometimes both at the same time). In 2015 25% of the vote will be for one of these so called minor parties, and whoever ends up with the most votes will have to go into partnership with one or other of them.
And that’s where the trouble starts.
Because it seems that political parties are almost as rubbish as business at choosing the right partner. Favouring short term expediency over long term vision.
Come 8th May (or more likely 15th if there’s a lot of “horse trading”) we’ll end up with a coalition (or equivalent) of people who really, really didn’t want to be in power together. Almost any constellation is possible, meaning we’re all in for a pick’n’mix set of policies for the next 5 years (because one of the first things the current mob did was to pass an act ensuring that whatever inadequate government we get we’ll be stuck with it for 5 years – unless there’s some kind of revolution……)
You’ve got the brains, I’ve got the looks, let’s make lots of money
Put anyone under pressure to pick a partner and they’ll probably make a bum choice. Ask them to do it when they’re sleep deprived and over caffeinated and they’ll a worse choice.
Put a small growing business under pressure to pick a partner and they’ll make an equally bum choice. I see so many businesses suffering from having made expedient choices of partner – board member, distribution partner, supplier, investor – at a time when they really needed to make a quick decision, only to suffer the consequences later.
Working out how to collaborate well is the most crucial skill a business needs to learn nowadays. Getting together with people who believe the same thing, and who just happen to have a skill or capability or set of resources you don’t, is a wonderful piece of alchemy. Collections of like minded business people, especially if focused on a big higher purpose like tackling inequality or eradicating pollution, can achieve extraordinary, magical, positive impact (in a way that non-business entities like governments simply cannot).
But time and again otherwise brilliant business folk make rubbish decisions when it comes to choosing partners. Terrible choices are made over board positions, key partners, and – a new one for me – initial investors.
I once dug into the tools that headhunters were using to find board candidates, and, sure enough, found that the whole process lacked any kind of “brand fit”. It began and ended with “competence”. There wasn’t any screening of candidate based on compatibility of belief or vision – which was a bit gob-smacking. But explains a lot.
And then there are terrible partnering decisions around things like distribution. A very cool automotive start-up (sadly no longer with us) had a brand that was – potentially – one of the most cutting edge in any industry. Highly advanced engineering and propulsion, with cutesy design, made for the kind of early adopters who (round about the same time) were shelling out for the first iPhone.
What it didn’t have, in a story wearily familiar to anyone who works with these automotive start-ups, was any idea at all about distribution, relying instead on a “if we build it they will come” approach that just won’t work anywhere, and especially not if you’re in the back of beyond.
When this hole became clear they panicked and teamed up with a low rent cash and carry outfit to sell their high tech cars, “because they had shops and we don’t”. Unsurprisingly it was a disaster.
The newest (to me) yet the most worrying example of bad partnering is inappropriate investment partnerships. This one really worries me because I think it may be the hardest to fix.
This year I’ve seen 3 very exciting businesses close up that are failing to meet their full potential because there’s a mismatch between business vision and initial investor. In one case the initial investor is not happy to let the business seek new, diverse investors at a time when it is just about to scale. In another the initial investor was super generous, bestowing family money to a very ambitious project that needed not just money but strategic nous and industry connections. Because the initial investor had been so generous there was no need for the founder to go out and seek the “right” investor with the experience and ability to partner her through the most critical stage of the business’ early development. In the last case the initial investors turned out to believe in the (extraordinary) vision a bit more than the founder did, and when it came to the crunch they wanted the business to succeed a lot more than he did.
In each case the losers are us. In each case there was a business that was designed to achieve something transformational for the common good – helping us to live and work in new resource efficient ways; to move in a way that does not consume natural resources; to redesign finance to make it work for everyone not just the few. Yet in each case the business and the investors had got together without having done enough to check that they really, really were a great fit.
Because the businesses all needed money so very badly they were prepared to do or say whatever was necessary to get it.
This isn’t just “what it takes to be a start-up”, this is somehow part of the system. I’d never seen it first hand before – but the investment advisers are actively encouraging these (needy) start-ups to twist their story to be more attractive to the target investor.
Which is the worst kind of way to find the right partner – if you’re under pressure you make bad decisions; if you try and attract investor partners by telling them a spin version of who you are it will end up badly.
It’s the business equivalent of lying about your age. It’s wrong. But it seems to be common practice. This isn’t a problem that resides with investors – it emanates from the people running the start-ups egged on by advisers who should know better.
They lose their identity in pursuit of money.
Here’s an idea. Maybe we should fix it. Wouldn’t it be great to hardwire in a little bit of brand into the due diligence process before making any kind of partnering decision? In business or in politics? Could be helpful come 8th May……