Ombudsperson ADR: “Money Changes Everything”

13 February 2011

I’ve chosen this title as the “theme” for one of the most critical types of situations that I’ve “engaged” for decades in business.  It also creates the most conflict, polarization and chaos in all types of business “personalities”; and it basically has to do with any type of funding to make the entity viable.  Normally I’d practice “ombudsmanship” if this were in my “other practice”, but this time I got a referral from a past client I coached on his dispute as an Independent Contractor.  In this scenario, money acts as a catalyst for change and is regarding the ongoing internal dispute between “owners” of a new start-up e-commerce company.  We handled this using ODR methods with the 6 C’s Of Sociocratic Peace Building process.  The outcome was very successful and it’s been over three months now without any recidivism. As I’ve mentioned previously, a vast majority of our work is “coaching” the dispute process asymmetrically, which continues, but this case was “traditional” and satisfying to handle.

The background on this is that one of the group was referred to me by a previous client and the new client is a 19-year-old “web developer” that has been “informally” participating with a group of about 6-10 guys, depending on the time of year, regarding starting a new web based e-commerce company.  He quickly, verbally, laid out his case as one of the “younger guys” of the informal group, where ages ranged up to the mid twenties.  Key to the informal group structure is that it shrank and grew in its informal membership, where no business plan had been developed, but they would have “lan parties” for gaming and informal pizza and beer meetings over the development of the new start up company.  When I asked how long this “idea” phase of the new business had been going on, my client indicated he’d been “in it from the start” and it has been sporadically ongoing for all of 2010.  What was making things so urgent now was that one of the guys was talking to a “rich guy” about funding their new e-commerce business and got a commitment of $300,000 cash in an email, with contingencies; and so they are all now “rushing” to meet requirements.  Indeed, from this moment forward, money changed everything as every type of dynamic between “business partners”, mostly bad, began to unfold.

To start I simply got my client to email everyone, have a meeting and present me as a person to help them “sort out” their conflict now that “cash” has corrupted everyone. Surprisingly, they all agreed, including more people than has been actively involved.  First step, formally define who’s in and who’s out.  Surprised me again when they had a roster within 48 hours.  Thus we discovered, to my clients elation as he was included out of all the “informal” members to date, a roster of 6 people total.  This process is also indirectly contributing to the planning they overlooked.

Next step, get a one page narrative on the WWWWHW’s (who, what, when, where, how, why) including their role, contributions to date and description of what the conflict is from each individuals perspective.  Again, surprised, all email contact information and cell phone numbers were provided to me and I sent these out… all came back completed within days.

I then did quick 20-30 minute phone interviews with each “member” of the new entity for purposes of building consensus and determining how adaptive each guy would be to formalizing the business structure. I also did some preemptive discussion where I detected an intractable ‘position’ by relaying my years of experience and wisdom in such situations and the “worst case scenarios” I’d witnessed through the years, thus cautioning them all, individually, that if they can’t “play nice in the sandbox”, everyone will be impacted and the financing opportunity they have in front of them would be over.

Everyone agreed that things got “really serious” when the “letter” from the investor offering $300,000 was circulated and this triggered greed and selfishness rather than the continued “fun and teamwork” they had all been demonstrating for a year.  In a conference call I related my previous experiences where the worst I’d seen in my career was a group of  “grown men” who broke from “formal” agreements, business plan and slit throats practically for their own gain over everyone else in their yet to be funded company.  I then asked them, “do you wish to all do the same?”  Verbal consensus quickly came, thus providing the common point of focus to cooperate and continue to have them develop a document that they all sign and agree with so as to have structure and boundaries of membership in the face of potential protest from individuals who are now excluded. Again, I’m surprised, as everyone agreed with roles and titles with responsibilities in the new company based on the “concept” model of the business as discussed.

I then simply laid out, from the interviews, written and verbal, where the “points of conflict” potentially were, got consensus again for a solution as to what would be best based on my business development experience and venture finance, in various areas.  One key point I made was that, “the money is not yours” that you are getting, it’s the funds for the new company as an entity and they are stewards of the money and accountable to each other and their benefactor. It happens in every case I’ve ever had for over two decades that the common misconception is that the beneficiaries think the funds are theirs now.  This fact further stabilized perceptions and brought some order from chaos over “money” issues.

The second common “theme” was that everyone was, in their own way, maneuvering and holding each other “hostage” over “ownership of contributions of Intellectual Property” to make the enterprise run.  Everything from one guy hurrying to register the domain name and then charge everyone thousands of dollars to buy it from him, to another guy wanting royalty payments from his programming of the financial interface on the website as money came in from transactions.  There’s more, but again, once it was pointed out that they were “holding each other hostage”, polarizing the group in to “me versus them”; and not cooperating they began to see more clearly.  At this point I simply asked each person, live in the call, “do you want out now or want in for the long-term?” so as to get intentions out in the open for all to confirm.  In addition to this, the solution everyone is to follow through on their commitments, contributes as they said they would all along and then in reality, for a start-up, revenue sharing of net gains improves as the company performs and does well.  If anyone holds back, it affects everyone.

In the end they completed their “terms of consensus” memorandum as a prelude to their business concept and planning.  I reviewed it for completeness from gathered information, they all signed, I have one on file, and they are now moving ahead with a new company and the understanding that before it’s over, more conflicts will inevitably come up and they now know how to resolve them.  Once again, my previous experience and background go hand in hand as I’m in my second year formally as an OO and referrals now come… a pleasant surprise finally.

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Ombudsman ADR & Online Dispute Resolution Technology

28 April 2010

If you’ve been following the OO Blog since inception you know “we” are just over a year old into our formal practice, which is a “spin off” of our other two-decades old consultancy.  So after just a little over a  year we are right in line with how we envisioned the delivery of services as an extension and “leveraging” of our long established “internal” capacity and in alignment with the current and future demands of the consumer.  We have long been able to easily roll out improvements for any function, process or procedure for most businesses by moving in tiny incremental steps in the development.  More and more though, the Internet and web based applications are providing great “value”, enhancements and cost savings with simple customization of forms, templates and content to achieve very good functional outcomes and at a reasonable cost.

All of our clients to date have engaged us via the Internet to do ODR or Online Dispute Resolution, which is now a pretty standard and accepted industry acronym.  ADR too, or Alternative Dispute Resolution has gained wide acceptance and more inclusive terminology is being adopted and adapted currently to better fit the Ombuds profession.  I’ve stressed the difference and tried to define Ombudsman ADR verus legal ADR too and specific meanings with regarding the term “mediation”.  As we pick up the pace our own proprietary solution to do intake and sequentially process steps for dispute resolution have worked just fine for the majority of our cases.  We are though, fortunately, just after one year, considering ODR Technology or Applications as a next step now in our own progress.

As with any business process or practice the real value of Web2.0, Group Ware and other team based collaborative applications is that it provides a standardized set of processes and procedures for communication, but proprietary processes need vertical applications or extensive customization.  By adopting ODR web based application technology you have a built in checklist from intake to settlement that insures everyone is participating fully, technical detail and steps are not forgotten and best practice compliance is built in with every step of the process.

Of all of the current ODR applications I’ve considered, I like Juripax currently because of it’s emphasis on proper preparation at the time of intake and focus on ethical and transparent  procedures that are built into the application.  There is also the de-emphasis of legal terminology in this package because as participants engage each other in the ADR process I’ve noticed that many times, even breathing a wrong word about “legal alternatives” can be explosive and I have had to coach clients to take care less they wish to escalate in the wrong direction.  The Juripax ODR solution is perfect for streamlined “non-legal” processes that are standardized by default for quick assessment and for a variety of types of complaints in B2B, B2C, institutional and community scenarios.  The platform guides you through the process and easily keeps you on track with where you last left off and with who.  Terminology and content are in alignment with currently practiced Ombudaman ADR “lingo” so as to be able to “facilitate” informal discussion and log it all the way through formal legal mediation if the case needs a “hand off” way down the road.

I won’t labor the benefits and features in detail other than to say this package is perfect for a newer practice that is in their second or third year of the business cycle and more formal business practices are now needed to have quality assurance, best practice and now technology to handle higher intake volume.  Regarding key strategy and still evolving “general practice” versus specialization for handling types of disputes, the package handles it all and does not lock you in, but rather adapts as your need to.  Very important as the external environment shifts year to year and you have to align with opportunity as it presents.

So with all of the changes in terminology in the profession that still being hashed out, much of the time with a big or little “e” in front of it… my take now is ADR and ODR will be locked in and accepted by our industry from now and into the future.  ADR and ODR are the means and method for the most efficient, practical and modern formal process to handle local to national and even global disputes in all industries utilizing the Internet to deliver their products or services and where disputes about something serious invariably pop up.