Lewis - Regarding the China-lead paint incident... This morning on MSNBC I read that there may have been undue pressure to hire the paint company because of a friendship that existed between the CEOs of both companies.

I'm sure it seemed like the right thing to do at the time, but the relationship clearly got in the way of making sound *and thoroughly vetted* business decisions.

Very good, Lewis. It's not as black and white as we'd like to think as life rarely is. That's why my lead was drawing attention to the outing of Commerce Bank Vernon Hill and the reasons why.

I don't have the answers, clearly it is worth asking the question and pondering the dynamics.

I would be curious to hear from readers about this as well.

Thanks Cam and Valeria. Maybe the dude who bought the lead paint should better choose his friends. This is a gray area and a difficult question. Again, I think relationships and friendships can be separated. Should they be in the world of business?

To add some gray matter to your thinking on the subject, today's Harvard Business School Working knowledge reports that Felix Oberholzer-Gee, the Andreas Andresen Associate Professor of Business Administration at Harvard Business School, tested the "dark side" of trust with a new, innovative drain. The test was conducted in Philadelphia with plumbers. Here is a snippet from what Felix Oberholzer-Gee reports:

"Trust is a double-edged sword. In the short run, working with trusted suppliers reduces transaction costs and furthers the buyer's competitive standing. This is the effect that has been emphasized in previous work.

"But trust can also make you blind because it can make it harder to see opportunities that arise outside established relationships. The managerial challenge is to build trusting relationships without losing sight of outside opportunities.

"This applies to contexts other than procurement. For example, in human resource management, managers face the challenge of balancing the advantages of working with trusted employees and the opportunities that come with bringing in fresh talent."

"Again, I think relationships and friendships can be separated. Should they be in the world of business?"

If one person is compelled to make a sound, ethical business decision, in his capacity as a representative of his company (not to mention as a citizen of his country in good standing) that a friend disagrees with, if the two cannot be separated, then maybe that person isn't much of a friend after all.

I can see how that would be a bitter pill to swallow sometimes, but one must put what is right before all other considerations.

As much as we hear this old saying, it is VERY hard to follow - Never do business with family, friends, and members of your church.

In most cases, the lowered guard and trust makes us blind to the unintentional, or even intentional, mistakes of others. Often both sides expect extra from the deal and when they don't get it the cost to the future of the relationship is great.

They say the CEO of the Toy company committed suicide in his factory because it was his friend who owned the paint supply business that caused all of this. Should that friend now do the same?

Good discussion. This raises a gray area in business. How much should we befriend our clients and customers and still be risk averse?

I believe that trust is extremely important but not at the exclusion of sound business decisions. We can't afford to take any customer relationships for granted, nor do I think we should assume they "owe" us because we've been out to lunch a few times and get along famously. This attitude can help keep consultants and vendors on their toes, too.

Hey, Lewis. Just received this in a Harvard Business School e-newsletter. It's a study on business responses to trusted suppliers.

Take a look.

http://hbswk.hbs.edu/item/5742.html

I think it's doable since I just had my ex redo my company logo. But I do think it's a fine line to tread. Both parties must have a clear understanding that business is business and don't mix personal feelings into business. But generally I wouldn't recommend it, have done business with relatives. (I am a stager and I had staged homes for an realtor aunt's listings.) Once the deal goes south, there are a lot more at stakes such as your personal relationship with this person and more importantly, the relationships of your common friends and family who may be caught between the 2 of you.

Cheers,

Cindy

Great comments all. At the end of the day, aren't we saying that we have to know ourselves. If we are blinded by our relationships to a point where we cannot make the right decision for our business, our employees and our customers, we must be aware of that blind spot. And then do what about it?

Often both sides expect extra from the deal and when they don't get it the cost to the future of the relationship is great.

Great post. I really enjoy your writing. By the way, I run a Relationships Article Directory and if you have some articles for distribution, you are very welcome to post them.
Regards,
Alex
http://www.hotdatinglist.com/articles/

Doing business with friends works just like doing business with strangers EXCEPT one must be much more careful with communications.
It is critical for both sides to spell out ALL their expectations and, if disappointed, talk about the issue and the feelings without attacking the individual. Often it takes saying, "I'm sorry I wasn't effective communicating what we want but here is the issue...." Too many start by saying, "How could you do it wrong, I was clear on what I said." The implied ending to the latter is, "you stupid idiot."
The final note is also to know when to say, "This is a tough job...I don't want it to get in the way of our friendship, I think I should work with some other company."
BTW - great issue in today's world!
Regards,
Ken