According to a study by Harvard Business Review, nearly 70% of joint ventures fail.
Over the past decade, I’ve experienced both the highs and lows of joint ventures, each promising alignment with my mission of ethical and sustainable business growth. And yet, despite my best efforts, four have not lasted a year!
Here, I’ll share my most significant lessons from four failed partnerships, hoping fellow business owners can gain insight and avoid similar pitfalls.
The First Failure: Ego Over Integrity
The first venture began with a pre-revenue startup, seeking my expertise to create a multi–seven-figure online business. I provided nearly nine months of coaching and support, using much of the #ADDAZERO Methodology, which helped achieve an eight-figure intellectual property (IP) valuation within that timeframe.
However, as the business received such news, the founder’s ego began to overshadow the core values we had established together. My role throughout this, had been as Coach/Mentor to the founder. Yet when I challenged him to live up to these values, he became affronted and made all sorts of unfounded and quite unrealistic allegations as to my wanting to take over the business – which ultimately led to being removed from my role as Chief People Officer (CPO) with the suggestion that “I hadn’t backed the right horse.”
Lessons Learned
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Aligning on Core Values
From the outset, it is crucial to ensure that all parties involved in a joint venture are not only aligned on the mission and vision but also deeply committed to the core values that will guide the business. These values should serve as the foundation for all decisions and actions within the company. In this case, although we had established core values together, the founder’s commitment to these values wavered as the business began to grow.
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Managing Ego and Interpersonal Dynamics
Ego can be a significant barrier to collaboration and mutual success. It is important to address interpersonal dynamics early on and establish clear communication channels. In this venture, the founder’s ego led to a breakdown in our working relationship and, ultimately, to the dissolution of the partnership. Ensuring that all parties can handle feedback and challenges constructively is essential for the long-term health of any business relationship.
This scenario is reminiscent of the infamous split between Steve Jobs and John Sculley at Apple in the 1980s. Despite their initial alignment, differing visions and egos led to a significant fallout, underscoring the importance of maintaining values and managing interpersonal dynamics.
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Recognizing and Addressing Red Flags
As the business progressed, red flags indicated the founder’s shifting priorities and attitudes. And, as the valuation came in, a shift from being of service to others, to that of egocentric “Look wat I’ve achieved”. It is important to recognize and address these signs early rather than allowing them to fester and lead to more significant issues down the line. In this case, addressing the founder’s behaviour sooner might have led to a different outcome or a more amicable parting of ways.
With these lessons in mind, I approached subsequent ventures with a greater emphasis on alignment, communication, and early intervention. However, each of the next three ventures presented its own unique challenges and learnings.
The Second Failure: Greed
The second joint venture involved partnering with an individual who had established an online community but had no practical experience in hosting Mastermind groups.
Recognising the success of the Mastermind groups I hosted, he invited me to collaborate and offer this as an elite offering for his community. Initially, the collaboration seemed promising, with both parties able to collectively offer their combined expertise and resources.
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Beware of Greed
Yet, after just nine months of the successful operation, the partner made the decision that he could replicate the success independently without my involvement. And as such not have to share the revenue. He cancelled our agreement and attempted to host the Mastermind groups independently. This abrupt decision disrupted the trust and value we had built with the clients, who recognized the unique offering we had provided together and subsequently moved away once the offering became so diluted.
Greed can be a destructive force in business, as seen in the Enron scandal. Studies show that partnerships often crumble when individuals prioritise short-term gains over long-term collaboration. Similar dynamics played out in this venture, highlighting the need for clear, binding agreements.
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Establish Clear and Binding Agreements
One key learning from this experience was the importance of having clear, binding agreements in place that outline the terms of the partnership, including the process for dissolution. This can help protect both parties’ interests and ensure a smoother transition if one party decides to exit the partnership. In this case, a more robust agreement might have mitigated the abrupt termination and its negative impact on the service offered to clients.
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Continuous Value Alignment
Regularly revisiting and aligning on the value each party brings to the table is crucial. As the venture progressed, the partner’s perception of value shifted, leading to the belief that he could manage the Mastermind groups independently. Continuous dialogue about the value proposition and each party’s role can help maintain a balanced and mutually beneficial partnership.
The Third Failure: Overcommitment
The third joint venture involved another individual with a successful online community with whom he provided a plethora of training courses. Alongside numerous other commitments both personal and professional. He saw the potential to add Mastermind as an additional elite offering to the community and invited me to collaborate. However, as the venture progressed, it became apparent that he was already overcommitted to his other responsibilities and hadn’t dedicated sufficient time to the joint delivery of this agreed partnership. This lack of commitment determined clients were uncertain as to who provided what, and where they should go to raise questions or concerns. This eventually prevented the venture from progressing as planned, resulting in us closing down the offering just one year after it launched.
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Assessing Time Commitment
One of the main issues in this venture was the partner’s over-commitment to other projects. It is essential to assess and ensure that all parties have the necessary time and resources to dedicate to the joint venture. In this case, the partner’s existing commitments took precedence, leaving our collaboration without the attention it required to succeed.
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Setting Realistic Expectations
Having realistic expectations about the time and effort required for a joint venture is crucial. At the outset, we should have established clear expectations regarding the time commitment needed from both parties. This would have helped in identifying any potential conflicts with existing commitments and allowed for a more balanced approach to managing responsibilities.
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Establishing Accountability
Creating a structure of accountability can help ensure that all partners stay committed to the venture. Regular check-ins, progress updates, and clearly defined milestones can help maintain focus and dedication. In this venture, a more robust accountability framework might have helped keep the partner engaged and on track despite his other commitments.
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Flexibility and Adaptability
While it is important to have clear expectations and accountability, flexibility is also key. Understanding that partners may have other commitments and being adaptable in managing these can help maintain the partnership. In this case, finding a way to adjust our plans to accommodate the partner’s existing responsibilities might have allowed us to continue working together effectively.
The challenge of managing multiple commitments is not uncommon in the business world. For instance, Elon Musk, who manages several high-profile ventures simultaneously, often emphasizes the importance of time management and prioritization. Learning from such examples, it’s clear that successfully balancing multiple responsibilities requires careful planning and commitment.
By understanding and addressing these issues, future ventures can be better prepared to manage the complexities of overcommitment and ensure that all partners can contribute effectively to the success of the collaboration.
The Fourth Failure: Misaligned Values
The latest failure in my series of joint ventures was ultimately rooted in misaligned values. We quickly became good friends, and in front of clients were often seen as a dynamic duo complimenting each other’s experience and abilities well.
And whilst everything client-facing worked exceptionally well, concerns began to arise regarding how decisions were being made and whose interests were being prioritised. This venture began with the promise of a true joint effort, where we would work collectively towards common goals. However, it became clear that our definitions of a “joint venture” differed significantly, both in terms of decision making, what we had committed to deliver and finance!
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Understanding Roles and Perceptions
Establishing a mutual understanding of both roles and perceptions from the beginning is crucial. In this case, my partner often referred to me as “someone he had brought in to…” as if I were an employee rather than an equal partner. This subtle but significant misperception undermined the spirit of our joint venture. This was further exemplified with buying decisions. It can be so difficult (particularly if you have multiple companies) to have ‘ultimate’ buying power in some businesses but joint responsibility within another. And whilst we communicated almost daily, there were several times when I was advised, “I’ve bought X” or “I’ve signed up for Y” after the event, rather than as a strategic and previously jointly agreed plan.
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Addressing Power Dynamics
Power dynamics can severely impact a partnership’s functioning. In this incident, there was an underlying suggestion of a hierarchical structure rather than a collaborative one. Which when I brought up for discussion, only added further strain to the working relationship. It is essential to address and equalise power dynamics early in the partnership to ensure that all parties feel respected and valued.
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Establishing Clear Decision-Making Processes
One of the critical challenges in this venture was the lack of clear decision-making processes. Despite entering a joint venture, I often found decisions were made unilaterally. This created frustration and led to decisions that did not reflect our collective best interests. Establishing clear, agreed-upon decision-making protocols from the outset can prevent such issues and ensure that all partners have a voice.
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Prioritising Transparency and Communication
Transparency and open communication are vital in any partnership. The repeated exclusion from decision-making processes highlighted a lack of transparency, which eroded trust. Ensuring regular, open communication and transparency in all actions and decisions can help build and maintain trust, even in challenging times.
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Defining and Upholding Joint Values
Perhaps the most critical lesson from this venture is the importance of defining and upholding joint values. While client-facing operations were smooth, the internal misalignment of values created a fundamental disconnect. Aligning on external goals is not enough; internal values and ethics must also be in sync. This includes agreeing on how decisions are made, how success is defined, and how each partner’s contributions are valued.
Successful joint ventures like Starbucks’ and PepsiCo’s partnership demonstrate the importance of aligning values and decision-making processes. Their collaboration on bottled Frappuccino worked because both companies maintained a clear, shared vision and transparent communication.
Knowing When to Walk Away
Sometimes, despite best efforts, a partnership may not work out. Recognising when to walk away is as important as striving to make it work. In this case, once it was clear that our values and expectations were fundamentally misaligned and that attempts to address these issues were met with resistance, it became necessary to step back. Knowing when to walk away can save time, resources, and emotional energy, allowing you to focus on more promising opportunities.
Reflections and Future Directions
These four failures have been profound learning experiences. They have taught me invaluable lessons about the importance of aligning core values, managing egos and interpersonal dynamics, conducting thorough due diligence, addressing self-doubt and insecurities, and establishing clear decision-making processes. While these ventures did not succeed, they have each provided insights that will shape my future endeavours.
Key Strategies
- I’ve now implemented a rigorous screening process for potential partners, focusing on values alignment, interpersonal dynamics, and long-term vision. And developed comprehensive partnership agreements outlining roles, decision-making processes, and resolution protocols.
- I will ensure we schedule regular check-ins to revisit and realign values, goals, and progress, ensuring continuous mutual support and understanding.
- In addition, I will insist on an environment of open communication where all partners feel valued and heard, addressing issues proactively rather than reactively.
- I recognise it’s important to stay flexible and adaptable, recognising that not all ventures will succeed but that each offers valuable learning opportunities.
These learnings are invaluable in a world where ethical and sustainable business practices are becoming increasingly important. The rise of B Corp certification and conscious capitalism underscores the need for businesses to align on values and long-term goals. By applying this learning, I remain optimistic about forging more robust, more successful partnerships in the future. The path to ethical and sustainable business growth is not always smooth, but each challenge brings with it the opportunity for growth and improvement.
The #ADDAZERO Audit
Before considering any form of partnership, it’s crucial to identify the opportunities and vulnerabilities within your own business. Completing the #ADDAZERO audit can provide a comprehensive analysis of your business, highlighting areas of strength and potential risks. This audit will not only prepare you for successful joint ventures but also help you scale your business sustainably and ethically.
By investing time in understanding your business through the #ADDAZERO audit, you can ensure that you are entering partnerships with a solid foundation, clear goals, and aligned values. Don’t leave your business’s future to chance—take the proactive step to secure your success and drive meaningful growth.
Visit www.addazero.co.uk/free-scale-audit to learn more about the #ADDAZERO audit and how it can transform your business strategy, preparing you for fruitful and lasting partnerships. Your journey to sustainable and ethical growth starts today.