The 3 Characteristics of Ideal Business Partners

I recently participated in the European Innovation Academy in Nice, France. It was a once-in-a-lifetime experience where students from around the world came together to form teams of 5 to try and start businesses in 3 weeks. My team had a fantastic range of skill sets and diversity – which stretched from an American Rhetoric student to a Chinese Machine Learning student.

I have reflected a lot on the experience since it ended. I've thought about what went right and what went wrong; and I've thought about how it compared to other teams I have worked on. Most of all, I've tried to identify common characteristics among the best teammates I have worked with in order to better understand what makes people great business partners.

The conclusion I've drawn is that although there are many types of business partners and not all of them ought to have the same make up, I do believe the best ones are all made up of some combination of the same three characteristics - which I will explain in this article.

Types of Business Partners

Business partners refer to all individuals or entities related to an organization, excluding – for our purposes – vendors and customers. Business partners can generally be bifurcated as either internal (e.g. employees, executives, etc.) or external (e.g. consultants, advisors, etc.). Types of internal partners can be bifurcated into low-level (interns through middle management) or high-level (middle management through Chairman of the Board). The following matrix illustrates these categories:

The 3 Characteristics

Trust

The first – and most important – characteristic of all ideal business partners is trust. In this context, the definition of trust goes beyond "the firm belief in the reliability, truth, ability, or strength of someone". It extends to the neutral or positive effect that person has on the psychological safety of the team they are a part of. That is to say, a business partner that has established trust is one who maintains or increases the degree to which everyone within the team feels free to collaborate and share their ideas. This means believing in one another, certainly, but also being compatible with one another communicatively. This is how the best ideas rise to the top and innovation happens.

A Google research project discovered there are two key factors that attribute to the establishment of this type of trust: 1) partners have an “equal distribution of conversational turn-taking” (equal voice in discussions) and 2) individuals within the team adequately adopt the team’s norms (i.e. fit the culture). My boss describes forming business partnerships as a courtship. It’s a pretty good analogy, I think. Much like a courtship, it takes time to assess compatibility – without which, there will inevitably be stress and dissonance.

Passion

The second characteristic of ideal business partners is passion. I joined my first startup because I was excited about the opportunity. The founder had raised a bit of money and had traction; and I was thrilled about the chance to start something from scratch, while also improving my engineering skills. The founder and I had a high degree of trust. In fact, he was one of the most compatible business partners I have worked with. Trust proved to be inadequate, though, because I was not passionate about the problem we were solving. I worked really hard but didn’t get much done. When you are passionate about your work, it is amazing how much you get done in such little amounts of time. When you are not passionate about your work, it is amazing how little you get done in such vast amounts of time. I was not passionate; not because I didn’t want to be but because the problem we were solving was not a problem I had experienced to a meaningful degree. Eventually, there came a point where we agreed that if I was going to leave the company it was the time to do so. So I did.

When you are passionate about your work, it is amazing how much you get done in such little amounts of time. When you are not passionate about your work, it is amazing how little you get done in such vast amounts of time.

I believe every co-founder has to be deeply passionate about the problem their startup is solving. Otherwise, they will lack the resolve to persist through the forthcoming years of trials and uncertainty. In an ideal world, the ten thousandth employee would have the same level of passion as the first. In reality, marginal passion of each new hire tends to decay as the company grows. Still, I firmly believe some degree of passion is a critical component of all [internal] business partners.

Competence

The final characteristic of ideal business partners is competence. In the beginning, most entrepreneurs source their co-founders and hire new employees based on trust and passion, not competence. First time entrepreneurs tend to be especially terrible at evaluating competence. It is the reason so many decide to go into business with friends or family. They trust one another and blissfully agree, “we’ll learn as we go.” Even an entrepreneur who is motivated to bring on competent people may be entirely unequipped to do so. They have no experience testing whether the programmer their friend recommended actually knows what the hell they’re doing. They’re just thankful they found someone who can code – and who is willing to build it at such a low cost!

Incompetence in leadership cannot persist forever. Eventually, bad decisions lead to consequences. Consequences may come in the form of poor product quality, lost customers, employee turnover, financial loss, or other things. Ideal business partners – both internal and external – who operate at the high-levels of an organization must be competent.

How to Identify Ideal…

Internal, Low-Level Business Partners

When it comes to interns, entry-level employees, and even some middle managers, cultural fit and potential are paramount. In terms of the characteristics I defined earlier, cultural fit and potential exist at the union of trust and passion. They care about the problem(s) the company is solving, such that they have deeper motivation to climb the learning curve and stay with the organization than a paycheck. However, their passion is insufficient if they do not conform well to the culture of the company. If they can establish trust with those around them as a result of their compatibility with the company’s norms, however, they will realize their potential and become competent as they progress. They will be coachable and open to criticism because they will not fear their leaders and peers. They will also welcome the chance to mentor others as they move up because they will not fear the success of those they manage.

They will also welcome the chance to mentor others as they move up because they will not fear the success of those they manage.

External Business Partners

Ideal external business partners – mentors, advisors, consultants, and some board members – are able to offer wise and intelligent insights as objective third-party council. Because of thier external displacement, passion is a negligible characteristic. Competence – on the other hand – is of great importance for obvious reasons. Nonetheless, there are many experts in the world. What sets ideal external business partners apart from their peers is trust; their ability to collaborate effectively with the team.

Effective collaboration does not mean seeing eye to eye or appeasing one other all the time. It means having both agreements and disagreements, but doing so in a way that tends to elevate the best ideas. An expert with whom there’s trust will support you when you’re right, correct you when you’re wrong, and work together when you’re unsure. A competent partner with whom there isn’t trust is a very dangerous counterpart, which I will discuss in a moment.

Internal, High-Level Business Partners

The final type of business partners are internal, high-level business partners. These may include: VPs, SVPs, C-Suite executives, co-founders, and some board members. With regard to the framework I outlined, ideal business partners at this level possess all three features: trust, passion, and competence. They must be compatible to collaborate with, they must care about the problem(s) the company is solving, and they must have the expertise to make good decisions and execute well.

The Most Dangerous Types

The most valuable partners for our businesses tend to be those with expertise about either the industry we operate in or a critical activity necessary for us to execute well in order to operate and grow. We are excited when we find such people because they may be hard to come by. However, such partnerships can be a double-edged sword. Competent partners may be the most valuable and difficult to find, but they are also the most dangerous to do business with - particularly if trust has not been built.

It is easy to infer trust from competence. It is easy to come across an accomplished, skilled person and conclude they would be a perfect [Analyst, Manager, VP, Co-Founder, Mentor, Investor, etc.] only to find out they clash like titans with your style or that of your organization. Their competence is rendered all but useless in light of the material negative impact they have on those around them. This is a problem that can arise at any level of any organization. It is a problem that propagates itself because it is so difficult to identify early, and even harder to fix later. As a result, the common resolution is to sever the partnership. So beware of competent partners who you do not trust.

Beware of competent partners who you do not trust.

Two Final Points

There are a couple final points to note about the framework I have laid out here. The first is that it is fluid. Low-level partners within the organization will [hopefully] become more competent as they grow professionally. A trusted mentor who did not initially care deeply about the problem the company is solving, may find passion for it later on as they see the effect it has on the lives of customers or experience the problem themselves. And co-founders may one day find they do not have the managerial competence to lead such a large company.

The second point is that a partner will necessarily be categorized differently by different roles and organizations. A person may be passionate, trusted, and competent in a particular role at one company, but none of those things in a different role at another company. It is in no way a reflection on their morality or character, it is simply a determination of their fit for a particular partnership.