The Pros and Cons of the “Just Do It” Mentality

I’m showing my age with this one, but hopefully most reading this will at least vaguely remember the old Nike ads urging you to, “Just Do It.” They were filled with pictures of great athletes “giving 110%,” “going the extra mile,” and otherwise living the “no pain, no gain” mantra. I’m a big believer in that portion of the message and note that it would seem to have equal applicability and validity in the business world as well as the sports world. After all, it’s not easy to excel or reach the top (or even your own best) in any activity – without extremely hard work and complete focus and dedication, you’re not likely to get there in sports, business or life.

However, the other message that some people got from the “Just Do It” slogan is extreme urgency – the need to move immediately, take unreasonable chances and bet it all to succeed – throwing caution to the wind in exchange for moving quickly. While that may (or in fact may not) be a reasonable thing to do in your sports and fitness training, I believe this approach is both imprudent and generally unnecessary in your business matters, and sometimes leads to disaster.

The bottom line is, I think “Just Do It” is a great mantra for buying shoes – and even for bringing out the inner athlete, inner entrepreneur, or inner risk-taker of virtually any kind in all of us. After all, great ideas, great people and great companies usually start with someone discarding the status quo and opting instead to take a risk by introducing some sort of “disruptive” idea or concept. However, I don’t think it is a great strategy for running your business. In that regard, I prefer one of the famous quotes by the late John Wooden – “Be quick, but don’t hurry.”

Know Where You Want to Go Before You Start

You’d never leave on a family vacation without knowing where you’re going and what you’ll do when you get there. So, why would you begin a business negotiation without knowing what your objectives and acceptable outcomes are? My answer – you shouldn’t.

So, am I saying you need to know exactly where your negotiations must conclude before you even begin discussions? Of course not – negotiations necessarily involve multiple parties, all of whom have their own goals and expectations. It would be foolish to think you can predict and control all possible outcomes, and short-sighted and unrealistic to believe the only successful outcome will be exactly the one most beneficial to you. After all, successful negotiations almost always require give and take from all parties to ultimately arrive at a win-win arrangement. Without this, at least one party will, presumably, have no incentive (or not enough incentive) to do the deal.

What is critical, however, is that you not enter into negotiations without giving careful thought to what your objectives are, the ways that you might be able to achieve them, and the outcomes that would be acceptable. Note that I’ve said objectives, ways and outcomes – plural. Just like the old saying, “there’s more than one way to skin a cat” – there’s almost always more than one way to structure a business deal.

I recommend you follow these basic suggestions before entering into business negotiations:

• Identify your ultimate objectives – the primary reasons you’re considering this deal.

• Consider the various ways that you might be able to achieve those objectives.

• Identify your secondary objectives – things that would be nice to get, but are not essential.

• Consider the various ways that you might be able to achieve those without compromising on the primary objectives. Also consider things that you would view as deal-killers.

• To the extent you’re able, go through the same analysis from the other party or parties’ perspective – see the deal through their eyes.

• Now, once again, consider how you can achieve your primary (and hopefully secondary) objectives AND how the other parties might also achieve theirs. Hopefully there are several ways to get there – some of which may be more or less desirable to you, but all of which would be acceptable.

• Having gone through this exercise, it’s now time to negotiate.

Remember, your best way to achieve a successful outcome is to consider what that might look like before entering into negotiations, rather than looking back and wondering what went wrong.

Negotiating a Deal? Be a Mediator, Not a Gladiator

What’s the primary goal of most business negotiations? I don’t mean negotiations in the context of a dispute – I mean in the context of a prospective business deal or relationship. In that setting, the primary goal is to reach agreement. And that generally means emphasizing mutual benefit and necessary compromise to reach the desired outcome for both parties, not just one – after all, if your negotiations are so “successful” that the other party has lost everything, there’s really no reason for that party to proceed at all. In other words, you may “win” the negotiation battle but “lose” the deal.

So, how should a business person (and that business person’s lawyer) approach negotiations? Simply put, I think it’s better to assume the role of mediator than that of gladiator; be a problem-solver not a competitor. That doesn’t mean that you must avoid confrontation and disagreement in all cases. What it does mean is you should pick and choose your “battles” carefully; and where possible, avoid them entirely by finding creative solutions.

Negotiation is not generally possible without some level of disagreement. If that weren’t the case, we’d never need to exchange multiple drafts of an agreement, since all parties would simply agree to the first draft. Disagreement is not the problem. Confrontation, however, often times can be – particularly if it’s not handled with professionalism and diplomacy. If disagreement is necessary, try and explain to the other party why your position is reasonable, and why the issue is important. If it’s a potential “deal-breaker,” explain that too. In the end, I believe it’s most productive to avoid confrontation when you can. Disagree when it’s important, but even then seek compromise where it’s possible and makes business sense. Be creative and seek to find win-win solutions. Remember, the goal is to get the deal done on terms that benefit everyone – not walk away after “fighting a good fight.”

The Agreement is Signed – Now What?

Ever heard someone say, “Now that the contract is signed, we can put it in a drawer and never look at it again.”? I understand this thinking – if it means the business terms are so clear, and the relationship is so good, that they don’t need to obsess over contractual minutia. In other words, compliance is sort of on auto-pilot. What I’m opposed to, however, is not knowing, or directly ignoring, the requirements of your contracts.

Businesses ignore their contracts for a variety of reasons, including:

 • Things are going so well from a business standpoint that they don’t care what the contract says.
• Conversely, things are so bad that they don’t care.
• They’re too busy, or compliance is too much of a hassle.
• Or, finally, the contract simply doesn’t accurately state their business arrangement.

None of these are good reasons to ignore your contracts. Non-compliance means risk; risk means exposure; and exposure threatens the success (and sometimes survival) of your business.

Here are a few suggestions to ensure contract compliance:

• Keep your contracts as simple as possible.
• Try to match your contract terms with your general business practices and processes.
• Seek uniformity in your contracts (and make sure your lawyers do this when they draft them) on both business terms and more standard “boilerplate”terms.
• Have the same person negotiate the same types of contracts.
• Assign a specific person to be ultimately responsible for performance, oversight and compliance for each contract – preferably the person who negotiated it or someone who is directly involved in performance.
• Prepare executive summaries of the material terms, and review them periodically.
• Make sure those directly involved in the performance each contract know its terms.
• And finally, don’t enter into contracts that don’t accurately state your business agreement, and amend them if circumstances change so that they no longer do so.

Think of it this way – if the deal was important enough to enter into a contract, then it’s important enough to make sure that contract is accurate and to comply with it.

Strategic Alignment Goes Beyond Your Workforce

Business consultants frequently discuss the importance of having an aligned workforce – one with an identified and accepted culture, common values, a shared vision for the future, and a uniformly adopted strategic plan for getting there.  I would suggest for businesses of all shapes and sizes the need for alignment extends beyond your workforce to include, at a minimum, your legal counsel and other important advisers.

Why, you might ask, is it important that your outside advisers be “aligned” with you and your business?  In the simplest terms, having aligned advisers results in: (i) less wasted time; (ii) less wasted money in both consulting fees and lost opportunities; (iii) less frustration and misunderstandings; (iv) more productive negotiations and transactions; and (v) more meaningful and direct accomplishment of your business goals.

So, what does it mean to have aligned advisers, and how do you get them?  Here are a few thoughts:

•         First, choosing the “right” advisers is critical – different advisers have different personalities, approaches and philosophies – choose those that share yours from a big picture perspective.  But understand that this alone is not enough.

•         Remember, you set the course – not them.  Aligned advisers adopt your approach, not theirs – so they need to know what your approach is and what your objectives are.

•         In addition, your advisers must know what tactics and methods you want to use to achieve your objectives – overall and in each transaction or circumstance.  Make sure your directions are clear in this regard.  Think joint venture versus distributor, or even 50-page agreement versus handshake deal.

•         Make sure your advisers are informed as to changes in culture, philosophy, tactics, objectives, budget, etc.  They can’t execute what they don’t know.

•         Finally, periodically evaluate your advisers and their alignment.  If they don’t get passing marks, make a change.

The value of alignment cannot be overstated.  Make it part of your consulting and advisory relationships.

Joint Ventures Present Potential Rewards AND Risks

What are the most basic qualities characterizing a good joint venture?  I would argue that the most important keys are business synergies and a shared vision of what the companies want to achieve and how they can achieve more working together than working alone.  Equally important – and sometimes lost in the early optimism and desire to move quickly – is understanding and agreement as to:  (i) what each company is and is NOT bringing to the JV and what its responsibilities will and will NOT be; and (ii) what each company can do outside the JV – both during and after the JV’s existence.

Why is it so important to decide and define these things?  Because, chances are, if this is a truly strategic joint venture, these are the things that each party may want to pursue on its own (outside the JV), and they may very likely be directly related to, and often competitive with, the purposes and products of the JV.  This means that several key provisions of your JV documents must be carefully considered and drafted.  Some of those are as follows:

• Ownership of (and Rights to) Pre-Existing Intellectual Property – who owns the IP that each party brings to the table, and separate from ownership, does the JV (or even the other party) have any license or use rights to that IP during or after the JV’s existence?

• Ownership of Jointly-Developed IP – similarly, who owns the jointly developed IP, and what use rights do the parties have during and after the JV’s existence?

• Confidentiality and Use of Information and IP – what can the parties do with the confidential information and IP of each other and the JV?

• Assignment of Inventions – Are each of the parties (and their employees?) required to assign all inventions and IP resulting from their joint efforts to the JV?  Only those relating to the business activities of the JV?  What about after the JV’s existence?

• Non-Compete – what exactly can the parties do and not do during and after the JV’s existence?  Compete with JV?  Compete with each other?  And what does compete mean?

• Non-Solicitation – who can the parties do business with during and after the JV’s existence and what kind of business?  Pre-existing customers?  Non-competitive products?  Anyone and anything?  Etc.

Joint ventures present exciting opportunities. Just remember to carefully define the parties’ rights and responsibilities to avoid disagreements in the future.

Sometimes You Really Can Do It Alone

One of the most common questions asked by startups and more mature businesses looking to grow is – how do I raise money from outside investors?  There are a number of answers to that question.  However, before you ask yourself that question, I would suggest there is a more important one – should you raise money from outside investors?  The answer to the second question, in turn, requires you to ask yourself some others.  Don’t worry – eventually you’ll get to answers, but the point is, the decision to raise money from anyone other than yourself (even friends and family) should not be made lightly.

Some of the questions you need to ask are as follows:

  • What do I need the money for?
  • How much do I really need?
  • When do I really need it?
  • Do I have it on my own; and if so, why would others put their money at risk if      I won’t?
  • Are there grant funds or other public or private assistance available?
  • Can I borrow the money rather than diluting my ownership?
  • Am I comfortable with all that accompanies outside investment (e.g., loss of      control, dilution, etc.)?
  • And . . . only after answering all of those questions and determining that you      need outside investors – who are my ideal investors?

The point is, the most expensive, complicated, intrusive and dilutive money that you bring into your business is outside equity investment.  So, when you ask and answer the above questions, consider what you can do to structure your company and business plan to maximize the growth you can achieve with your own dollars before bringing in outside investors.  While it may seem more expensive and risky in the short term, you may find the opposite to be true in the long run.