How to Build Strategic Partnerships
Click to download & print our Infographic for easy display in your office.
From experience, I can tell you that many strategic partnerships that are announced with a bang, end up flat and disappointing. This is because either the marriage was wrong from the beginning or failed due to bad execution.
Strategic partnerships have become an implicit part of business growth. It’s no longer business as usual. Today, if you, for example, are aproduct-driven company, then you need a shipping partner. Specialization in addition to interdependencies of production and commerce keep increasing and thus the need to collaborate with companies who are best of breed in their space. So, selecting a company to partner with strategically is critical to create competitive differentiation.
Any strategic partnership should start with two basic prerequisites: can both sides gain meaningful market benefits and profit from working together? Target strategic partners among companies who:
Have something that the other can leverage
Can drive incremental profit and/or revenue together
Can build a partnership that is scalable
Now let’s assume that you have chosen wisely, you then need to work on the following 10 measures. As with any relationship, it is a work in progress continuously striving for perfection:
1.Business Alignment – should we work together and why?
Both companies should have organizational aspirations that are complimentary. Strategic directions and key priorities should be aligned and common in nature. I highly encourage in depth discussions around this. Regularly reviewing that alignment, as both companies change directions, will be equally important. Don’t start at the details, but rather at the big picture.
2. Agreement – can we work together?
Once you've determined, together, where you'd like to go and what the key partnership objectives are, it will be clear what the win-win scenario is. Documenting the intent and the manner by which business is conducted in a contract will be the key to ensure expectations are met. Both sides will also need to comply with detailed requirements, such as compliance, IP, notifications, reporting, service levels, pricing, etc. Get the critical details documented to ensure both sides can now operate together.
3. Business planning – what are the goals and how do we get there?
When you build anything, you need a plan with SMART goals (Specific, Measurable, Achievable, Relevant and Time-Based). Strategic goals need to be detailed out into objectives and tactics, looking at the technical, commercial, organizational and operational activities. It ultimately serves as the initial project plan with dates, owners and the necessary flexibility points to take into account that there are two independent groups.
4. Executive engagement – which senior people support the relationship?
Remember that we are talking about a strategic partnership and by the nature of this alone, the partnership should have material impact on the growth or value of the business. If management is not on board from the beginning or not available for escalation, such a partnership can come to a screeching halt. Make sure that the right heavy hitters are sponsors and are ready to stand up for the common goal.
5. Interoperability – how do we each do business; terms, logistics, etc?
Now that you have figured out why the partnership makes sense, who will sponsor it, put in place the contractual details to allow for collaboration, it is now time to ensure that your products or services actually work well together. Whether it is about compatibility of software, customer support handoff, integration of processes and/or payment collection, make sure that the technical and operational teams collaborate closely to ensure a seamless customer experience.
6. Marketing & messaging – what is the value prop and how does it get shared?
You are not out of the woods just yet. The first 5 “check boxes” are about “getting ready” while the next 5 are about “execution.” Prospects, clients, employees and any other critical stakeholders need to understand how to communicate the joint value proposition. Simplifying this can be a challenge as it would be a combination of two solutions, products or services. Driving awareness and then interest in the partnership offering needs to be a collaborative and proactive effort if you want to drive incremental revenue. Ensuring the correct marketing tools and activities are in place are a requirement.
7. Field readiness – are people on both sides ready to move forward?
Now, lets implement! Are those people who need to sell, implement or service customers ready to do so? What is the plan for the “feet on the street?" You need to educate and train those who need to bring the solution to market. Identifying the crucial resources on both sides and engaging them and their managers appropriately can be mission critical.
8. Compensation – Are people motivated, financially, to drive success?
Just because you have all your corporate “ducks in a row” does not mean people will actually act in support of the partnership. The thing is, professionals, especially sales people, are hard-wired and incentivized to push the products of the company that employs them. Selling “other people's stuff” does not feel comfortable or natural. So, make sure that it either happens automatically (e.g. an OEM-partnership) or that enticing sales incentives are in place.
9. Sales Engagement – are we transacting, how often, how well, etc?
If you have gotten this far, you are firing on all cylinders. Getting sales management involved with planning both sales targets and activities will drive productivity and scalable growth. It is hard to manage what you don’t measure. So, effective partnership sales engagement would include proactive joint pipeline building, management and reporting. Sharing progress, challenges, wins and losses between partners drives the right behavior.
10. Governance – do we review how we are doing, when and with whom?
It is NOT an ugly word. All I am saying is that we need to “govern” the partnership. This starts with clearly identifying who is responsible to review, discuss and report periodically on the progress against set objectives. There should be semi-annual, quarterly, monthly and/or weekly conversations between key owners at different levels to analyze results, discuss challengers and redefine goals. At these review meetings, decisions will be made to ensure maximum success for the relationship.
None of these items happen in perfect order, nor are any of them complete all at the same time. Partnerships are continuously evolving so just make sure you are always aware of those areas that need attention and by when. Strive to honor the objectives and recognize that the most successful strategic partnerships are those driving scalable incremental business opportunities while leveraging assets on both sides.
Good luck and happy partnering.