A good number of my executive coaching clients across large and small businesses are involved in establishing and managing strategic partnerships. For many, the process is one where the hopes run high during the courtship process, but often fail to live up to expectations once the contracting and announcement steps are over and the output of the partnership moves to market.
In many years of doing this across multiple technology firms, I’ve learned some good habits (thanks to some great mentors and patient partners) that led to successful strategic partnerships I’m happy to share those lessons learned along the way. Please apply or adapt the ideas to create your unique formula for strategic partnership success.
Some Context—Why a Strategic Partnership?
Strategic partnerships are commonly used by organizations to fill technology or supply-chain gaps, reach into new markets, and create complementary or value-added offerings. Partnering can be a cost and time-effective approach to filling a gap or seizing an opportunity.
A wide variety of needs bring firms to the table to explore partnering together for mutual gain. In my technology career, we regularly created inbound (technology and data) and outbound (marketing and distribution) partnerships to augment our development and sales and marketing efforts.
Guiding our smaller firm into new markets and geographies took place in large part as a function of carefully selected partners where mutual effort and investment led to mutual gains. And, the inbound partnerships where we gained access to critical and complementary technologies and data allowed us to address the challenges of our clients that exceeded our organic development capabilities.
Getting Strategic About Partnering:
Nearly every firm involved in strategic partnering, particularly on the outbound or go-to-market side, wrestles with how to limit the number of these relationships. Many firms I’ve observed focus on quantity over quality, seeking to add as many badges or logos to their partner page as possible. Often, these firms build a team responsible for creating partner relationships, and when the team does its job, the number of contracted partnerships grows. Much as almost everything else in life and business, maybe twenty-percent of those partnerships produce anything of substance.
A better approach is to treat partnering as a strategic decision where you choose a limited number of opportunities that best fit your strategy and appropriately invest in making the relationships successful. Of course, doing this means you are confident in your strategy and willing to work with resources you don’t control to help them meet their strategic objectives as well.
Winning Partnerships Involve Deep Integration Across Firms
The best partnerships in my experience involve deep integration of business processes, including development, sales and marketing, and customer service, all aligned around a clear audience and strategy. Inherent in this process is the need for you to invest time and money, for people, product, promotion, and programs.
One lesson learned through long experience is, there is no free lunch when it comes to building successful strategic partnerships.
Getting Beyond Early-Awkward to Opportunity Development
The early dance between prospective partners is typically an awkward feeling-out process in search of compatibility. Often, a partner development professional facilitates the dance, bringing executives together to share ideas on strategy and look for so-called synergies. In most cases, the experts downstream from the executives engage in technology sharing and detailed needs exploration. If things look “interesting,” both sides agree to come together and begin defining the partner agreement.
There are some elements of this early-awkward phase that cannot be eliminated. It’s essential to learn more about each other, and the best way to do that is to sit at the table and share. However, my preference is to quickly move beyond the cursory culture-sharing and synergy identification and exchange of strategic platitudes and get down to defining the approaches for building success and navigating failure.
After qualifying the opportunity as a prospect to help the respective firms solve a problem or create value, I introduce what I term an Opportunity Points approach and suggest we focus first on defining a small “s” strategy.
Defining Success—8 Key Strategy Questions for Prospective Partners
I prefer to focus the gray-matter of the prospective partners on some core questions, including:
1. What’s the situation for each of our firms?
This allows a high-level of exchange on respective strategies without getting too far into the weeds. It gives each party context for how the other sees its opportunities and challenges, and this context is useful in answering subsequent questions.
2. What are the market forces and customer problems that are encouraging us to partner?
Specifically, what are the emerging trends or trigger events that suggest our relationship might prove valuable to our customers and our respective firms?
3. How will competitors respond to our partnership?
It’s easy to get lured into a false sense of advantage. Does our combination create something unique and potentially inimitable?
4. What’s the whole offering?
What’s the combination of technologies, services, and processes essential for going to market? If your partnership focuses on bringing a unique technology combination to customers, how are you going to sell, support, and make it work for customers without exposing them to the complexities inherent in dealing with multiple firms.
5. What makes us believe we can we win with this approach?
This question allows the teams to surface and challenge the assumptions underlying the partnering rationale. Ideally, involve a variety of sources in this stage, including prospective customers and objective outsiders.
6. What do we have to create or invest in to bring the solution to market?
From new customer service processes to expert solutions engineers, what do we have to build to make this work.
7. How are we going to measure progress and success?
Often, it makes sense to use progress measures early in the arrangement and then revenue measures as the relationship matures. And finally, if things don’t work out:
8. How are we going to get divorced amicably?
For this last question, it almost seems counter-intuitive to talk about failure at this stage of the discussions. I believe it’s imperative to tackle this head-on as a part of the process of building trust. It also reflects reality. At some point, the partnership may no longer make sense. Knowing how you are going to untangle things now saves you a lot of headaches and legal bills later.
These questions are powerful conversation starters that focus in the right areas. Too many partner development efforts move quickly from fluffy executive sessions to contract discussions where the market and customers get lost in a sea of legalese around issues of intellectual property, non-compete, and indemnification. While the lawyers have a valued place in the contracting phase, it’s a mistake to go there without baking the strategy first.
6 Great Practices for Creating Successful Strategic Partnerships
Navigating the questions in the prior section is critical. However, as we all know, once the plan is locked in and the contracting takes place, it’s time to engage and let the learning begin.
Few if any strategic partnerships work as designed on paper once you get to market. Here are some excellent added practices to help you succeed with your strategic partnering initiatives.
1. Create an executive sponsor role for each firm.
The sponsors are accountable to each other and their respective teams for ensuring success. When things don’t go as planned, the sponsors are there to ensure lessons learned are reflected in the appropriate adaptations to the partnering strategy. The absence of this role is a critical failure point for many potentially valuable strategic partnerships.
2. Meet regularly to review progress and identify new, shared opportunities.
I love a quarterly partnership review with the executive sponsor and key players involved to stare at each other and evaluate progress and identify next steps.
3. Make sure you can deliver on the promise, or you risk disenfranchising your sales forces.
In go-to-market strategies, the sales arm often decides what gets represented to customers. Salespeople typically represent what they are comfortable their firm(s) can deliver and support. You cannot over-invest in helping your salespeople succeed by helping your customers succeed. Alternatively, once a sales team gets a whiff of a half-baked product or process that creates headaches for customers, you’ve lost their advocacy.
4. Engage and Involve Marketing from the Start
I’ve observed mostly well-designed partnerships fall flat because marketing was treated as a group to hand things off to versus an integral part of success. The resultant marketing programs were… fluffy and failed to exploit and communicate the potential of the combination fo the firms. I want the marketers to have context for the opportunities opened up by the partnership and to be engaged in developing the tools, programs, and data essential for success while the relationship is moving from idea to fruition.
5. Celebrate Successes Together
A strategic partnership that is winning in the market is worth celebrating. Get the respective firms involved in supporting each other to reward and celebrate success and continue to build goodwill across cultures.
6. Know When It’s Enough
There’s an unknown shelf-life to most strategic partnerships. Your hard work developing the divorce process before the contract stage and then codifying it is now about to pay off. The divorce does not have to be contentious, nor even disappointing, particularly if the relationship worked for awhile. Market and industry conditions change and what made sense yesterday may no longer hunt in the new world. Get together one last time to celebrate the history and then help each other with the separation process.
The Bottom-Line for Now:
I love the potential from strategic partnering, but I lose sleep worrying about making the wrong choices or under-investing in creating success. Developing winning strategic partnerships requires ample investment and a relentless focus on refining strategy and execution plans. This is hard enough inside our own firms, much less across multiple firms. Under-invest in this excellent, hard work at your peril.