Many of my clients are company founders, and many of them have co-founders. A theme in my work with these clients is the importance of determining how certain decisions should be made. This is an issue that all leaders and executive teams must address, but there are some distinctive aspects of the co-founder relationship that merit special consideration. While this framework is highly reductive, I generally see co-founders relying on the following three methods--and when there's a problem, it's usually because they're relying too heavily on one mode or failing to apply it when it would be useful.
1. Consensus
This is the starting point for co-founders, because all parties had to agree to launch the business in the first place. It's also sometimes the case that in a venture's early stages the co-founders' areas of expertise may overlap substantially, and there may be relatively little hierarchical differentiation, so the other two modes of decision-making are less relevant or inapplicable.
But it's easy for founding teams to get stuck here and rely on consensus for too many decisions well past the point of utility. This is often the result of good intentions--such teams may have a high degree of social cohesion and prioritize inclusivity. And yet cultures like this can have a shadow side--the members may be uncomfortable with conflict, resulting in a lack of candor, or they may have an endless appetite for debate, resulting in circular arguments and paralysis.
The key is recognizing that as the company grows larger and more complex the co-founders' roles and responsibilities will diverge, so members of the team will have differing abilities to weigh in on certain decisions. And yet at the same time some decisions should be made by consensus, even when it would be more expedient to employ an alternative method. This can be codified through formal agreements or mechanisms such as Board seats, but it's not possible to cover every eventuality--there must be a shared willingness to prioritize collective agreement over efficiency when necessary.
2. Functional Expertise
Some co-founders have distinct and clearly defined areas of responsibility to begin with--the possession of complementary skillsets may have been one of the primary reasons for their decision to start a company together. But even when there's a degree of redundancy at first, this tends to diminish over time as individuals focus on particular functions, develop specialized expertise, and "stay in their lanes."
Here, too, co-founders can err in two ways. Some are too rigid about functional boundaries, demanding authority over decisions within their nominal sphere without sufficient regard for cross-functional or downstream implications. And others are insufficiently respectful of such boundaries, constantly questioning their colleagues' judgment and undermining their autonomy.
The arrival of the first non-founder in a designated leadership position tends to have a significant impact here. At later stages of company development this often involves the creation of a C-level role, but even without such a title it's usually the case that this person is being entrusted with a significant scope of responsibilities because of their functional expertise.
This sometimes causes friction between founders who expect to remain actively involved throughout the company and non-founder leaders who expect a degree of independence within their domain. In any case, the solution invariably entails finding the right balance between respect for functional expertise and acknowledgment of cross-functional interdependence.
3. Hierarchical Authority
Even on highly egalitarian founding teams with substantial levels of functional expertise, it's inevitable that some decisions will be made on the basis of hierarchical authority, typically that of the CEO. Contemporary business culture has an uneasy relationship with hierarchy--some parties view it as anathema and propose utopian schemes like holacracy, while others idealize the decisive, command-and-control, autocratic CEO. But in my experience the most successful teams find a middle ground, fostering a healthy respect for hierarchy while ensuring that their leaders rely on it judiciously.
And yet a challenge for many founding teams is that the hierarchical distance separating the co-founders may initially seem minimal or even non-existent. In some cases it was unclear who would be CEO, or more than one member felt qualified to hold the position (and they may still feel that way). Further, as noted above, on many teams the non-CEO co-founders have an equal say in certain decisions by virtue of their ownership positions or other explicit or implicit agreements.
So it can be jarring when a decision must be made and neither consensus nor functional expertise provides a path to resolution. The founder/CEO needs to exert hierarchical authority, and yet there's no guarantee that they have any particular skill in doing so. They may be clumsy and excessively forceful, or they may be hesitant and excessively deferential--whatever the cause, it's quite possible that they'll make missteps and generate frustration.
Here it's essential that all parties recognize both the necessity of hierarchy and the importance of employing it effectively. The CEO needs to learn how to wield authority with skill and grace, cultivating the capacity to influence rather than command. And the other co-founders must come to terms with the limits on their autonomy and learn to truly disagree and commit.
So if you're a co-founder wrestling with these issues, what can you do?
Raise Your Awareness
A first step is raising your collective awareness of your team's norms and preferences around decision-making. Many teams operate on autopilot and are surprised when they stumble into an intractable conflict. You needn't establish cumbersome bureaucratic procedures or give up the freedom to act nimbly. A little time dedicated to identifying the best mode of decision-making before you begin trying to make a given decision can go a long way.
- Work Style Differences
- Group Dynamics: Norms and Emotion
- Rules Aren't Norms (On Better Meeting Hygiene)
- Leadership, Decision-Making and Emotion Management
Enhance Your Skills
Successful team decision-making rests on each member's repertoire of interpersonal skills. These capabilities are eminently learnable, and every leader I've ever encountered had the potential to improve if they were sufficiently motivated to make the effort. Of particular importance on a founding team is the ability to exert influence amidst complex power dynamics.
- Learning How to Learn
- Force Isn't Power
- Power Struggles Among Nice People
- Compliance vs. Commitment (On Behavior Change)
Invest in Your Relationships
Some of the most useful questions I ask clients are, "When did you last see your co-founder/s in person? When did you last have a meal together? When did you last have a conversation about something other than the business?" There's no universal best practice, but it's all too common for co-founders to neglect their personal relationship, even if they were good friends before starting the company. The value of maintaining this connection is a greater sense of trust and the ability to empathize with each other, even (and especially) when you disagree.
- Huddle Up! (Building Group Cohesion)
- Brené Brown, Vulnerability, Empathy and Leadership
- Abilene: Loneliness and Belonging in Organizational Life
Photos: Handshake by Amtec. Lanes by Steven L. Johnson. Salute by U.S. Army Europe.
