Friday, October 12, 2012

Partnering is toughest for entrepreneurs

 Vaitesh is a very good software programmer with more than 5 year experience. He worked with a friend for developing a software product in billing services, earned good money from selling it to a customer, and is trying to sell it to other customers. He met Unmukt, a 7 year experienced professional, who had started his company in services. Unmukt had some background in software programming. Unmukt and Vaitesh met. Their common friend suggested that they could work together and create a 'bigger product'. Vaitesh however rejected the idea saying that his product framework is 'very innovative' and requires a 'different approach' to selling. 

You will find many individuals like Vaitesh. On the surface, it seems that the root cause of not collaborating with a partner is only inside Vaitesh. But i have observed many entrepreneurs, like Vaitesh, refuse to partner with others primarily due to four reasons:

1. Fear of getting swindled by others: This fear is genuine, but when one reacts to this fear, one's emotion is using him. If one things objectively however, one can take several preventive and corrective actions to negotiate this fear. Preventive actions like knowing the person fully before committing to a partnership, increasing the stake in the partnership in a step-wise manner instead of one-shot, and other legal actions are possible. One can also take corrective precautions ( legal and otherwise) to reduce the damage that may happen when all the other possibilities fail.

2. Ignorance of Contribution of different experts to the success of a entrepreneurial unit: This requires understanding the value chain of a product, the business model of a product. Without understanding the value chain, Vaitesh cannot appreciate the importance of 'Sales or Marketing' in the business model. In 'developing a software product business', Vaitesh does not understanding the importance of sales function. This business model' ignorance causes many entrepreneurs to 'delay' their success, and in worst cases, also trigger their failure. Vaitesh is one example.

3. Misunderstanding of what one can learn through experience: This misunderstanding stems from the ignorance of how people develop knowledge and skills in any area. When they develop a technical product, they understand the value of 'technical expertise'. But when someone is selling a product, they think that 'selling' is just going to customers, suavely talking to them, and making them buy the product with promises and words that may or may not be fulfilled. Many entrepreneurs believe that 'selling skill' can be developed by anyone with some application of patience and practice. Sometimes, they themselves try to learn it.  Sometimes, they try to hire some smart people and expect that 'sales' will zoom, often ignoring the complexities of customer.

Misunderstanding the development of sales and marketing skill is perhaps one of the biggest reasons of entrepreneurial failures. Vaitesh is not alone in having this misunderstanding. I have seen experienced entrepreneurs who are novices in 'sales and marketing' skills'. Not only their progress is blocked due to this ignorance, but even their survival can get threatened sometimes !

4. Inability to talk and reason with strong willed people: When strong willed people work together, they naturally have differences. Individuals often find it very difficult to sort out these conflicts and therefore end avoiding each other. Instead of using the differences to surface the different underlying assumptions of the conflict, entrepreneurs tend to suppress them. Instead of benefiting from the complementary approaches two individuals bring, entrepreneurs seek consensus sacrificing the quality of decision making. Instead of using conflicts to learn different viewpoints, they seek individuals which have same viewpoints that decrease their chances of success. Entrepreneurs often do not learn this skill of using diversity and instead seek homogeneity which, although looks good on the surface, does not help in a deeper way.

Summary

Are you also avoiding partnering in your business because of the above four reasons? If you are, it is time to review your thoughts and do it differently. Remember, in every business that has produced stupendous results, it was the partnership that took it to different heights. It has been proved beyond doubt that partnerships have created more and better businesses than single-owner businesses. Be it a partnership of Steve Jobs and Steve Woznaik, or the partnerships in Infosys, or the partnership of Hewlett and Packard for HP, partnerships flourish better mainly because of last reason: the diversity function.