Scenario planning: failure, windfall, a partner dropping out
Which scenarios partners should rehearse in advance: failure, windfall, a partner dropping out through illness, death or the wish to leave, crisis and turbulence. Scenario planning gives an agreed course of action for the moment when negotiating under stress is too late. Examples come from sessions and stories such as a Ferrari bought by five people.
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Where does each partner's limit of acceptable risk lie?
It differs for everyone, from mortgaging a house to dealing with criminals to save the business, and it is most dangerous to discuss it first in a crisis. The author insists a partnership session settle in advance what partners will never do.
Topics: Scenario planning: failure, windfall, a partner dropping out · Conflicts between partners
What should five people who buy one Ferrari together agree on?
The author lists nine points: usage schedule and date clashes, servicing, costs, liability for damage, a reserve fund, a partner's exit, a right of first buyout, and death or incapacity. The exit scenario is the one most often forgotten, and conflicts start there.
Original: LinkedIn
Topics: A partner's exit from the business · Scenario planning: failure, windfall, a partner dropping out · The author's own partnerships · Tools and services
What helps a partnership get through turbulence?
Pre-agreed rules for unwelcome but foreseeable situations: who does what, how decisions are made, whether a reserve fund exists. When the answers are recorded, there is no need to negotiate from scratch; the partners simply follow the plan.
Topics: Managing partner relationships · Scenario planning: failure, windfall, a partner dropping out
Which crisis scenarios should a partnership agreement spell out in advance?
The agreement needs a separate chapter on crises: what happens to the share of a partner who stops delivering, how a partner who wants out leaves, who inherits the share in force majeure. Without answers fixed in advance, they get improvised under pressure and emotion.
Topics: A partner's exit from the business · Partnership agreement · Scenario planning: failure, windfall, a partner dropping out
Why should partners rehearse failure and runaway success in advance?
Scenario planning, a framework dating from 1962, gives partners a pre-agreed course of action for the worst and the best case. In a crisis there is nothing left to negotiate under stress: the scenario has been played out, resources estimated, behaviour agreed.
Original: LinkedIn article · LinkedIn
Topics: Scenario planning: failure, windfall, a partner dropping out
Why are conflicts between partners inevitable, and how can they be prevented?
People enter partnerships without knowing the rules, and friendly trust is no substitute for agreements. Disappointment equals reality minus expectations, so expectations must be discussed at the start, and each partner should ask how they would part if things go wrong.
Original: LinkedIn
Topics: Disappointment in a partnership · Partner expectations · Partnership session · Partnership: the blind spot of business · Scenario planning: failure, windfall, a partner dropping out
What should partners do when their relationship hits a crisis?
Breaking up is an extreme exit and usually far from optimal. A crisis means the old rules no longer work: boundaries and expectations have to be redefined and recorded, and with skilled negotiation the new agreement works better than the old one.
Original: LinkedIn
Topics: Conflicts between partners · Conscious partnership · Scenario planning: failure, windfall, a partner dropping out
Why are bronze medallists happier than silver medallists?
In Richard Wiseman's study The Luck Factor, bronze medallists think they could have won nothing, while silver medallists think they could have taken gold. Psychologists call this ability to imagine what might have happened counterfactual thinking.
Original: LinkedIn
Topics: Ideas from adjacent fields · Scenario planning: failure, windfall, a partner dropping out
What did a food producer and an investor agree on at a partnership session?
Starting equity of 35/65, moving to 50/50 after three consecutive months of operating profit, follow-on investment terms, and joint decisions on goals, share sales, investment and new markets. Heirs receive the value of the share, not a say in management.
Original: LinkedIn
Topics: Equity split between partners · Partnership session · Scenario planning: failure, windfall, a partner dropping out
Why plan scenarios if you cannot foresee everything?
"Unknown unknowns" cannot be foreseen, but there are "known unknowns", like toilet paper running out: they need no guessing, only an earlier agreement and a stock in reserve. This is how the author won over a sceptical partner.
Original: LinkedIn
Topics: Scenario planning: failure, windfall, a partner dropping out
Which three kinds of events should partners discuss in advance?
Per Noam Wasserman: the known, the known unknowns and the unknown unknowns. The first go into the agreement, the second get scenario planning, and the third need an independent outside party and shared principles and values.
Original: LinkedIn
Topics: Scenario planning: failure, windfall, a partner dropping out
Why is scenario planning a safer bet than relying on luck?
Crediting others’ success to luck means giving up agency and any learning from mistakes. A scenario played out in advance removes negotiation in a crisis: Chicago imposed quarantine earlier while New York missed its moment. Luck wins once; a system wins repeatedly.
Original: Site blog · LinkedIn
Topics: Ideas from adjacent fields · Scenario planning: failure, windfall, a partner dropping out
Which two scenarios should partners be ready for in advance?
Failure and “carnival”, meaning runaway success. For failure, agree in advance in what proportion partners add money and at what indicators to close the project; for success, how each partner can be sure he will not be squeezed out.
Original: LinkedIn
Topics: Scenario planning: failure, windfall, a partner dropping out
What should partners do if one of them drops out after a personal tragedy?
Agree on a scenario in advance. Partners come up with different solutions: a psychologist paid by the company, a long leave with agreements preserved, a mandatory month away from the business, or an open discussion of adequacy and satisfaction with the work.
Original: LinkedIn
Topics: A partner's exit from the business · Conflicts between partners · Scenario planning: failure, windfall, a partner dropping out
What happens to a business if one of the partners suddenly dies?
Without a partnership agreement the remaining co-owners cannot prove what was settled: after the director died, over half of receivables and payables were in cash, and the documents and money access were with him. Write down scenarios for the "unforeseen" in advance.
Original: Site blog
Topics: Scenario planning: failure, windfall, a partner dropping out
Can partners prepare in advance for the sudden death of a co-owner?
Yes: scenarios for "unforeseen" events should be discussed and put on paper, with an independent expert if experience is lacking. In the case described, four co-owners without an agreement had no proof of settlements, and the company's life changed in a single day.
Original: LinkedIn
Topics: Partnership agreement · Scenario planning: failure, windfall, a partner dropping out · Trust between partners
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