Hard cases make bad laws.

Hard cases make bad laws: it’s an old legal adage that’s equally relevant in business world today.

Let me explain.

In business world, so-called “hard cases” arise all the time. At their cores, they’re little more than decisions needing to be made that go beyond the scope of “business as usual”. They’re hires, clients, product decisions, etc. that we wouldn’t normally make, but somehow, through some circumstance, we find ourselves making them.

They’re little traps, really. They seem fine as “no big deal” one-offs — developing off roadmap for a single client or hiring a trusted colleague’s recommendation despite knowing it’s not a good fit, for example — but when adopted as common practice, they have catastrophic effects.

And the real problem as I see it is that, as startup founders, seasoned managers, and CEOs, we’re certain to experience these. I, for one, have had my fair share of moments where I shied away from making the hard decision or tried to appease someone, thinking that it wouldn’t matter in the long run. But what ultimately happens in those moments is a kind of snowballing. Small aberrations transform into destructive business-level “laws” that can be difficult to undo.

Discussing this with few peers and mentors, and thinking through some of my own failures, I’ve realized that these “hard case laws” are everywhere: in 90% of failing businesses, in failed startup after failed startup, there’s a single commonality: they were all embroiled in bad practices, bad cultures, and bad products that originated from totally reasonable decisions made in extreme situations.

Here are a few of the most common (and toxic) hard cases that can set terrible precedents for your business in the long-term:

  • You let “brilliant jerks” spoil your company culture.We’ve all worked with (or hired) those super-qualified “lone wolves” who perform above and beyond while showing absolutely no respect for their colleagues or your company. And to say that they create a hard case is an understatement. After all, deciding to let go your most technical resource or a sales exec responsible for over 50% of company’s revenue can make you feel crazy, but ultimately, you have a larger responsibility to your company. Allow the brilliant jerk to thrive, and you set a precedent for the team that it’s fine to be a jerk. And before you know it, that’s what you’ve got: a company full of jerks, brilliant or not, who destroy the culture and lead your business into a death spiral.
  • You fail to address a single point of failure.More common in start ups than in mature companies, single points of failure — i.e. one person who isn’t pulling their weight for whatever reason — create real problems for businesses. While it’s easy to excuse it by thinking “they’re overburdened” or “this was the best we could do given the budget,” refusing to address it tends to poison the well. If everyone else is putting in 60+ hours a week of truly game-changing work, and they see you tolerating incompetence or complacency, you’re on your way to a bad place. Slowly but surely, your “A” team will notice the behavior of their non-performing colleagues and begin questioning their own sacrifices, hard work, and “do-whatever-it-takes” attitudes. And as soon as you’ve got that large-scale questioning, you’re likely to see an overall relaxing of your working culture (which, of course, leads to diminishing chances of success as your competitors edge their ways ahead of you.)
  • You let powerful (or vocal) clients make your decisions for you.It’s always hard to say “no” to a client, especially when they’re important, successful, or incredibly vocal in their demands. And while it’s always important to go above and beyond for each customer you serve, doing things like building off-roadmap functionalities or creating unique, unscalable pay structures has a way of setting an incredibly bad precedent in your organization. In addition to the obvious fact that no external source should control your roadmap, caving to demands like this sends a message to your product management team that their prioritizations aren’t valuable, are disposable, and that their own visions are never as important as a single client’s demands.
  • You favor your product vision over your customer experience too often.No one would argue that, making the right product decision — even if it’s initially ill-received — can lead to world dominance in a way that compromise just won’t. Take Facebook for example: users hated the newsfeed when it was first introduced, but in sticking to their decision, they’ve ended up with the largest share of eyeballs on the entire internet. That’s awesome, and it takes a bold leader to stick with a decision in the midst of an outcry. However, if they’d kept it up — making decisions about their product without taking feedback / suggestions from their customers — they’d have ended up in a very different place than they are today. Remember Facebook Credits, Facebook Deals, Facebook Inbox, or Facebook Slingshot? No? That’s because they listened to their customers. If you have a truly visionary idea for your product, you should absolutely go for it. But always let that be the exception rather than the rule. Getting too wrapped up in the “greatness” of your own ideas (and letting your gut make the “law”of your products) has a bad way of coming back to bite you where it hurts.
  • You let your exhaustion determine the investments you take.We all know that starting a business is incredibly expensive and that finding investors at any stage is a challenge. And sometimes, you’re desperate. You’re convincing your parents and rich friends at seed stage, running the Sand Hill gauntlet during your series rounds, and, at some point, you’re so ready to be done with it and get back to business, you’re tempted to let your due diligence / base rule establishment slide. Unfortunately, acting with this kind of haste can land you in some pretty binding terms that set unpleasant laws for your business / revenue.

Though it’s inevitable that you’ll find yourself in some (if not all) of these situations as you’re growing your business, how you react will completely determine what happens in your business. It’s easy to made a bad decision (and trust me, you’ll make tons of them) or for things to get out of hand, but failing to address them and letting those extreme situations ride is the first step toward making a bad law, one that your business might not recover from.