Why 1 + 1 Should Not Equal 2

Why 1 + 1 Should Not Equal 2

When it comes to combining for professional and business purposes, 1 + 1 should not equal less than 2. Rarely it should equal 2. Ideally, it should equal at least 2. Let me explain, with some background, propose a framework and give a definitive answer to the equation.

I recently was involved in resolving a business partnership dispute. The disgruntled partner said: "We started out as a 2.5, we may have even reached 3, but now we are barely above 1." To my surprise, the other partner agreed, while I quietly was doing math in my head ;). What each was saying, that I now fully understand conceptually, regardless of the mathematical impossibilities, is that when the partnership began the combination of two together created something not only larger than the individual parts but also larger than the mere partnership itself. This is where there was value in the combination. Now, however, both the individual parts (the 1s) as well as the combination (the one time 2.5, or perhaps 3) have lost value. Inherent in disputes, and as is often the case, which "1" contributed to the loss of value is up for debate. Nonetheless, the point is that the combination no longer makes sense, and further diligence or consideration may have shown that the initial combination would not render the minimum value desired.

The below framework that can be deduced from this, not so much for dispute resolution purposes, for decision-making when it comes to combining for professional and business purposes is instructive. The framework can be helpful for partnership selection/continuation, company mergers, service provider/customer engagements and other combined relationships.

Here is how I break it down:

Inputs

  • 1: Individual with a skill set
  • 1: Another individual with a skill set
  • Skill set can include such things as capital-backed, high IQ, high EQ, financial savant, sales savvy, proven operator, robust Rolodex, customer loyalty and goodwill, invention or some other moat, etc.

Outputs

  • Sum(1 + 1) = 2: bare minimum necessary to justify a combination
  • Sum(1 + 1) < 2: time to consider alternatives
  • Sum(1 + 1) > 2: time to seriously consider combination
  • Sum(1 +1) ≥ 3: ideal combination

Caution, there is a temporal consideration to factor in here. The value of relationships change over time. Sometimes one can give more than another, sometimes one can't give at all, and sometimes one gives in excess. However, taking a long-tail view rather than a snapshot, less than 2 in any given moment may ultimately be ok. Obviously if neither can give, either by choice or circumstance, the framework's equation will render an unfavorable outcome. The question then becomes whether the outputs can change and, if so, how.

All this is to say that the answer is basically 3. The most valuable combinations, and thus relationships worth pursuing and securing more often than not, are where 1 + 1 = 3. Both individuals use their skill set, compliment the other's skill set, and ultimately result in a combined relationship where the whole is larger than the sum of its parts.





Michelle Thompson

Employee Relations Partner

9 个月

Awesome!

Sarah Goodman

M&A Strategist | Community Builder, Investor, M&A Expert

9 个月

This is my number one rule for acquisitions - 1+1=3. When talking to an individual or business owner about making an acquisition - this is my first line of questioning. Trying to buy revenue or cash flow, while in the short-term it seems like a shortcut to a 2, it's often a shortcut back to 1 (or worse). The cost, risk, and is just not worth it if from the outset you can't define the path to a 3 or more.

Jennifer (Jen) Diaz

#IstandwithIsrael ???? President, Board Certified Customs and International Trade Law Expert, Mom ?? ?? #import #export #aduana #fda #customsexpert

9 个月

The partnership should create something larger than the mere partnership itself, well said!

Rania V. Sedhom

Named a Luxury Woman to Watch

9 个月

An insightful read highlighting the importance of synergy and collaboration in achieving greater outcomes.

Julie Herzog

Owner/Principal at Fortis Law and Full Velocity, Expert Negotiator & Deal Maker in M&A, Fundraising and Business Transactions

9 个月

The focus on the longer term is really important. In any moment, 1 + 1 may only seem to equal 1. In any partnership, a short-term focus could lead to wayward results if the partners don't also take a step back and look at the long term.

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