HEC Paris’ Etienne Krieger reveals how a simple equation can resolve conflicts between associates
“Sometimes you win, sometimes you learn.” Learning from failure is what makes the entrepreneurial experience so thrilling and enriching. However, no one wants to see their business die because of a conflict. What are the main reasons for conflicts between partners, and how can you overcome them? HEC Paris Professor Etienne Krieger and two alumni from the HEC Paris and Coursera online MSc in Innovation and Entrepreneurship, Ara Fernezian and Azat Mardan, both highly experienced entrepreneurs, share their insights on the topic.
65% of startups fail due to disagreements between the co-founders. Choosing the right partner from the outset might save you from a lot of trouble in the future. For Azat, startup investors should primarily look into the story behind the founders instead of the financial status—who they are, how long they've known each other and worked together. Indeed, 75% of the investment decisions in venture capital are about the team, confirms Ara: “Many serial entrepreneurs in Silicon Valley succeed because they have a track record of launching and then selling startups, but also because they’ve known each other since university or their teenage years.”
Being mature and learning to put your ego aside can also help prevent disagreements. Arat was once asked: “What if one of the co-founders who has the minority share has a better idea than mine?” Arat’s immediate reply was: “Are you concerned about the future of the company or about how you look in front of other people?” Founders should listen and encourage people to come up with ideas and understand that it's not about who’s idea it is, but it's about enabling people to help you build and grow your business.
Long lasting relationships seem to be ideal when founding a company. However, just like in a couple, the longer the business relationship lasts, the more likely you will grow apart, disagree, and find yourself in conflictual situations.
Anxiety, lack of trust, lack of self-confidence, poor communication… can all generate conflicts. But people tend to forget that conflicts often happen when roles evolve within the company. As soon as the company becomes successful, the role of your classical skillset-oriented team changes: your developer spends more time managing a team of developers than coding. “But not everyone can grow from a designer or a programmer to be a good leader. And it takes years to become a good manager, epecially during stressful times,” points out Ara.
Ara also underlines that human beings are a very complex species. “What makes us very complex is our hunger for power, which can make us very aggressive towards one another.” Money can also make partners more arrogant, especially if they think they're working more hours than the others. This lust for power can lead to an unbalanced decision-making process and cause conflicts. In some cases, founders can even try to take advantage of the weaker partner who is too afraid to exercise his or her rights.
Not being able to manage your stress and emotions can also create clashes. Many entrepreneurs tend to keep everything bottled up inside until they lose control and explode. Often, there is no way back to undo the damage to the relationship, and to the business. Therefore, it is important “not to overfocus on every word, or overfocus on every emotion. You need to always think about the vision and how you are going to take the company forward”, insists Ara.
Many reports show that most entrepreneurs are more exposed to mental health problems than other professionals. “I went through two depressions myself, caused by burn out”, admits Ara. Today burn out is one of the biggest triggers of conflict in entrepreneurial relationships. How are you supposed to ease up when you are not at ease with yourself? Don’t neglect your mental health, and don’t hesitate to speak out and get some help if needed before it is too late, recommend the two alumni.
There isn’t of course a one-fits-all solution. However, integrating the following elements can play a major role in overcoming conflicts:
Learning to step back. Whatever the problem might be, and in order to keep control of your emotions, every founder should learn to step back and more specifically take some distance from the problem. “Just do something completely different: take a week off, go and meditate, practice yoga... Find what you need to release the tension so you can gain more clarity”. Being too emotional can blur your perception, and seeing a business fail because of an emotional issue is a real shame.
Your soft skills can also make a significant difference in solving conflicts. “Having a good track record in management and leadership, and showing empathy can help create a loyal, happy and productive team”, suggests Azat. This is how you will be able to empower people and encourage communication. “With time, partners can start to have divergent goals. If they have poor communication skills, things can easily escalate until no one talks to each other,” he adds. Active listening is key for entrepreneurs as it makes it easy for them to deal with an issue and dare to have difficult conversations.
Bringing in a third party can also be a way of solving a conflict. If the conflict is legal, a third-party lawyer may help but if it is a strategy conflict for example, you can call for a meeting with the founder, advises Ara. And if this does not work, and depending on what stage the company is at in its development, you can take the issue to the board.
Be happy. “Remember it all starts with you”, says Ara. Being a successful entrepreneur does not necessarily make you a happy entrepreneur. Make sure you do what you love and don’t put anything before your happiness. Being happy with yourself helps create a happy and healthy environment. “Prioritize what makes you good with people and with yourself, and you will see that magic will happen”, he advocates. Being happy gives you a different approach to conflicts, which makes it easier for you to manage any issue.
Finally, according to Ara: “It is ultimately a matter of building self-awareness.” Showing empathy, kindness and openness can only make both a partnership and a business stronger. Being aware of what's happening in the world, to your team, and to your company will help you reflect on where you want to go next and share this vision in the best positive way with your partner.
Knowing how to overcome conflicts is key to building a successful and lasting business. To do so, “know yourself, which leads us back to the quest for your ikigai - the synthesis of what you love to do, what you can do, what the world needs and what you can be compensated for,” concludes Professor Krieger.
This article is based on the MSIE (MSc in Innovation and Entrepreneurship) webinar: How to Overcome Conflicts Between Associates.