It was one of those days when you have to fire someone. If you’ve ever done this you know that the gravity and empathy around removing someone’s income is heart wrenching. And it should be. This is the big stuff you have to deal with at a company.
On this particular day we knew someone needed to go, but one of us was having cold feet and pretending it could work it out, despite those efforts failing in the past. Despite the damage being done to the client relationship. Despite the damage being done to the team. We were talking about it as we carpooled to work. We talked about the suggested action plan. We went back and forth on action plan versus firing. It got heated. We got heated. There was some yelling and we walked to our separate corners to chill out.
Once cooler heads prevailed we came back together and handled the issue. We also realized that it was time for a new operating agreement.
1:1 Informal Operating Agreements
For years now we’ve worked with the same people at many different gigs. There is something magical about long-term creative partnerships — like the Creative Director + Copywriter duo of old. When we work on a project we are a multiplier as a team, you don’t get 2 people, you get 2.5 or maybe 3 people because we know how to talk to each other, we know how to avoid pushing buttons, we know how to shortcut long process and relationship development efforts. We know our strengths, our weaknesses, and know how to build products really well.
One thing that has helped is the introduction of an Informal Operating Agreement. This is a document that is signed between two people to help them explicitly state the rules of engagement with each other. You want to support each other, not step on toes, and be the best force multiplier team you can possibly be.
The goal of an informal operating agreement is for creative partners to work harmoniously.
It all starts with Trust
A truly close work relationship revolves around trust. Someone that you can be totally vulnerable with. Someone who will never use your information, fears, or secret wants against you. Someone who can call you on your crap or remind you that you are good.
The operating agreement follows an already tight and trusting relationship — it’s a management and maintenance tool, not a script or a recipe for creating a bond.
Operating Agreements are Iterative
We have had many operating agreements over the years, some are informal to protect our friendship, some are formal and legally binding when one of us worked for the other one.
We change our operating agreement whenever the rules around us change. Our last gig, a Bay-Area startup focusing on applying machine learning to massive visual data sets, brought us many opportunities to hone our operating agreement game. The company was always in flux and the only constant was change. Big change. Chaotic change.
We’ve been through the darkest depressions, the highest exultations, and everything in between. We’ve snapped at each other, seen each other cry, celebrated accomplishments, apologized countless times, and survived multiple Hard Things.
We once had an operating agreement that only lasted for a week. It was an agreement that when one of us had something to say to the company the other had to approve it first. One of us was in deep shit and needed a chaperone to make sure they didn’t keep sinking. The agreement was accompanied by this image:
Different kinds of operating agreements
Before we dive into our current operating agreement, let’s quickly mention types of agreements and the high points of them:
- 1:1 Informal Operating Agreement — A non-legally binding agreement; a set of rules to help two people best navigate situations.
- Partnership Agreement — A legally binding agreement that sets out how you want to run a business with someone. This generally codifies IP, equity, and other aspects of a formal (read: accountants and lawyers are involved) relationship.
- Pro bono / Friend Agreement — we do these when we consult for friends, this outlines what they are getting, the fair market value, and includes a first-right-of-refusal clause.
- Company-wide Agreement — this is usually an employee handbook, a set of rules and guidelines for how we all operate together as a company.
Our current operating agreement
Since we’ve both left our last gig and we’re figuring out what’s next, it was time for an updated operating agreement. This is our current one:
- Timebox & Boundaries — We’re both very lucky to be faux-retired right now as we sort through options for our next job(s). To ensure we are moving forward on our goals we structure our days around the following:
- Agenda with goals of the meeting, strawmen (so we have a place to start discussion), and action items with dates.
- We mark out one day per week to catch up, go to breakfast, and have big discussions.
- On another day of the week we review our ideation funnel / do pitches.
- The other days are for focused work.
- Current Focus: Ideation Funnel — we’ve created a funnel for how to generate, process, prove, and test ideas for businesses, articles, and other creative endeavors. We are committed to using the funnel to see if it’s something that can work long term and help others.
- Full Pitch Style — we tell each other when we’re doing “full pitch style” information sharing. This is a technique we developed to let the speaker go through their entire pitch, beginning to end, with NO interruptions. (There is one exception: the listener may interrupt to ask questions if they are confused to the point of not being able to follow the pitch.) The listener takes notes then can go back through for questions and discussions.
- Courtesy vs Collaboration — We let each other know if information is a courtesy (I’m sharing this so you know what is going on) or a collaboration (I need your help figuring this out).
- Modeling Healthy Discussions — We model the type of discussion we want to see throughout the company. We’re always respectful of the person, listen to ideas with the mindset ‘how do I make this work?’, ask leading questions to help air ideas we know someone has but has forgotten in the moment.
- No Public Arguments — We discuss but don’t argue publicly. We can disagree and go the rounds privately if needs be. We’ve seen first hand how senior leads arguing in public can destroy companies. We’re not here for that.
- Walk Away — we watch for when situations get out of hand and call it. We cool off, collect our thoughts, and then let the other one know when we are ready to talk through things to find solutions and ways forward.
If you build an operating agreement with a creative partner, chances are you’ll already have a good idea of what you need to address. Additional things you could include:
- Overlapping Skill Sets — if you have close or overlapping skills it’s sometimes a good idea to call out who takes the lead on various things and where you truly overlap. We’ve done this with Venn diagrams before.
- Final Decisions — related to skill sets, someone must be assigned the responsibility of making final decisions during disagreements. And everyone else on the team understands and respects that responsibility.
- Goals — either personal goals you want help being accountable for, or goals you have together for how you will navigate situations.
- Communication Medium — you may want to declare one communication method the actionable one so you aren’t chasing through text messages, Slacks, emails — but you always agree that text messages are the place to find each other and stay on top of.
- Offline times — times when you absolutely don’t work, like Sundays or after 8pm.
Often when you build a legal contract, it’s when all parties are getting along. The reason to put together the contract is for how relationships currently are and could be in the future. You don’t want to try to figure out how to handle tricky situations when things are already bad. The informal operating agreement is there for the same reason.
Operating Agreements can be particularly valuable with remote teams where you can’t just drop by someone’s desk and find out how they are doing. If you implement an informal Operating Agreement, we’d love to hear how it goes for you — the good, the bad, the ugly. While this works for us, and we have a theory that it will work for you, please write and tell us where it is working and where the flaws are.