Can this Partnership be Saved? (2)

(This is the second in an occasional series. Don’t miss the first installment.)

Sam and John are working together on an app they hope will dominate in its category on iTunes. Actually, John is doing most of the work. Sam is more an “ideas” guy. He also put up some capital to seed the project. Besides, Sam doesn’t have the time to do the actual development work. He has a family, a full-time job, and plays guitar in a pick-up band on the weekends. This collaboration with John is just one of several side projects. John is the “execution” guy. He’s single, has a part-time job to pay the bills, and spends the rest of his time on the app.

At the start, Sam and John agreed that they would share future profits from the app on a 50/50 basis. A couple of months in, both are unhappy about the arrangement although neither has said anything to the other. Sam is frustrated that the app isn’t ready yet and feels that John hasn’t worked hard enough. He also believes that, since the idea for the app was his and he put up the initial investment, his profit share should be greater than 50%. John feels like he is the one doing all the work and that Sam is treating him like an employee rather than a partner. He doesn’t see why Sam should be eligible for half of the profits, based solely on the strength of his idea and a little start-up money. Neither has any idea that the other is unhappy with the arrangement.

Can Sam and John’s partnership be saved?

Probably not, and almost certainly not without some drastic change or an outside intervention. Sam and John have two major challenges to overcome: Differing ideas as to what is “fair” and a pattern of conflict avoidance.

The perception of unfairness is one of the main sources of workplace conflict that I see. The idea that one person is working less hard or less effectively than someone else in the same role, or that rules are being applied in an arbitrary manner, can be corrosive of workplace relations. Similarly, the perception that a partnership structure is unfair, if not addressed, is likely to result in the dissolution of the partnership.

Sam and John are making different kinds of contributions to their business, and different kinds of contributions are notoriously difficult to measure against one another. Each of us has a bias towards thinking that our own contribution is the more valuable. So Sam thinks that ideas are the core of a successful business, and John thinks that the elegant software  development is the key to success. And if they were to join forces with a designer or marketer, that person would likely believe that her contribution was the most significant. This is only natural. Each of us knows how hard we’re working and what kind of a contribution we’re making. And we all too often have little insight into the work that goes into contributions made by others.

Now, this difficulty in itself can be overcome. There are lots of successful partnerships where the partners make different kinds of contributions and they’re able to come to a distribution of profit that seems fair to all. But it is unlikely that Sam and John will be able to overcome their differences and come to a shared understanding of what is fair if they continue to avoid the issue.

I can think of at least three ways in which their story might end.

1) Sam and John continue their pattern of non-confrontation. Neither tells the other how he feels. Sam doesn’t talk about his frustration that his ideas aren’t yet a reality. John doesn’t talk about how he feels undervalued. Resentment builds on both sides. John stops working on the app and the friendship deteriorates. Sam looks for another developer and chalks up the loss of time and money to experience.

2) Sam and John continue their pattern of non-confrontation until the app gets built and is a huge success. Money starts coming in. John’s friends tell him that the deal he made for half the profits wasn’t fair and advise him to get a lawyer. The lawyer files suit. Sam is outraged and hires his own lawyer. The former friends now only speak through their lawyers. A large portion of the money that the app has brought in goes to pay legal fees.

3) John tells his girlfriend about his frustration with Sam and with bringing the app to market. She advises him to confront Sam and tell Sam what he’s been feeling. She reminds him that not speaking up has cost him in the past. John realizes that, as much as he dreads conversations like the one he needs to have with Sam, knowing how to handle them is important. Another friend puts him in touch with a coach. They work together. When Sam finds out how John has been feeling, he’s pretty taken aback. Yet the two of them are able to sit down and work out a new delivery schedule and a profit sharing agreement that works for both of them.

Which ending would you rather see?

Posted in Mediation.

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