I was lucky to attend Central College a private, liberal arts college in Pella that afforded time and flexibility to connect to faculty beyond the traditional lectures and grades. Friendships developed then and remain true today. So, it was a mixed emotion with which I attended Dr. Jann Freed’s retirement party recently. Even though I was a Computer Science/Math major, Jann’s Organizational Theory and Behavior class made a huge impression. During her retirement ceremony, as speakers came and went, honoring (and eulogizing!) her career, I was struck with her reference to the 5 stages of a team.
Psychologist Bruce Tuckman first came up with the memorable phrase “forming, storming, norming and performing” in 1965. He later added a 5th stage – adjourning. I truly believe that all of these stages apply amazingly well to the concept of business as they do to a team.
When you start a business, you love the idea of others coming along to share your risk, passion, glory, money, and more. The team forms with 2 people and grows to 10, 20, 50… As the team storms its products out the door, normalizes strategy into tactics and performs beyond its own wildest imaginations, the human element creeps in slowly and quietly with tiny steps. Partners lives, passions and goals morph and often in separate directions. And then comes a time when partners have to separate. AND THE TROUBLE BEGINS.
As many of my friends in the legal profession tell startups dozens of times–plan and formalize a legal document. Don’t leave anything to verbal. Don’t assume anything. Your partnership, like all others will break. If you are the rare duo and no business reason breaks it — human mortality will end one of your lives someday — and it will break. Plan for it now while all is nice and comfortable, happy and with a bright future.
To plan for such an adjourning, you have to have a basic buy-sell agreement. It may be something 1/2 a page long or 10 pages of details that cover esoteric elements of trusts and estates. It may contain formulae or simple instructions. It may go into trigger events or the desire for a breakup. Whatever it needs, it needs to be formalized and memorialized in your corporate paperwork while you’re still dating each other, in love and with roses dotting the path to success. Sit down together as partners, write down your priorities and share them with your lawyer. Then file the document away in the safe for the unfortunate day when you will separate.
Remember, even marriage, the global partnerships practiced worldwide, formalized in front of family, friends, religious leaders, co-workers, sometimes accompanied by vows, break. All you have is an idea that germinated over a beer in a restaurant and the plan drawn up on the paper tablecloth on which your food was served. It needs an adjournment plan.