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Partnerships are difficult. The business world is littered with examples of big announcements describing the massive benefits to be derived from new “strategic partnerships”, only to be followed weeks or months later by rumours of misalignment and an increasing rift putting an early end to the relationship.
Yet those partnerships that succeed create real value for both parties.
Partnerships in business come in all shapes and sizes. Firms can partner with vendors; they may partner to sell products or services to address complementary clients or markets; they can cooperate on research & development or philanthropic projects; and internal service divisions ‘partner’ with operating divisions or subsidiaries. Partnerships may be project specific as often happens in construction, or long term operational through the supply chain or subcontract relationships. They may involve equity stakes, joint ventures or a combination of skills and resources.
In each case, while partners may be focused on their own agenda, the partnership needs to benefit both parties.
There are nine main reasons that partnerships fail:
The first step in building an effective partnership is being clear about your objectives, even before you look for potential partners.
Take the time to figure out what you need help with. For example, this might be around business development, filling out your value proposition to customers/clients, funding for growth, manufacturing or project delivery, or for professional or operational support.
The answer should inform what to look for in a partner, but intangibles such as culture and values are equally as important to partnership success. A meeting of like minds with a pathway to strong mutual benefit is critical if you are to overcome the inevitable hurdles faced in making a partnership successful.
When choosing a partner, it is important to consider culture, brand positioning, reputation, their ambitions, IP, available resources, capabilities, financial stability and risk appetite. Each of these could make or break a new relationship.
The partnership should represent a clear and significant value proposition for both partners, and in most cases for their customers as well, which is strong enough to motivate joint problem solving and commitment when needed.
This clarity will inform the partnership structure and evolution. Defining a successful structure for the partnership requires clear answers to practical questions such as ‘What does success look like for each partner?’, ‘Who leads when?’, ‘Who commits what?’, ‘By when?’, ‘What KPI’s are important?’, ‘Contracts?’, ‘IP?’, ‘Governance?’, ‘What regular engagement and communications will be used to keep the partnership on track?’, and ‘How are issues to be escalated so that senior leaders can work together to address them early?’.
Partnerships can be in perpetuity but are often better defined against a shorter timeframe. A vision of success can be more easily defined and worked towards over a two-to-five-year timeframe.
Even successful partnerships can go off track. Reasons may include quality or reputation issues, a change in the environment, a change in personnel, scale, objectives, or attitude. When this occurs, what interventions will take place? How will disagreements be resolved? Or what is the most effective and fair way of ending the relationship while minimising any damage caused?
While this clarity is needed, the best way to really start building the relationship is to move from thinking to doing quickly, with an open ‘test and learn’ mentality. Momentum is most likely to be achieved when fortified by the rapid delivery of mutual benefits through early wins. Once the value starts the focus should be rapid iteration and refinement to further optimise value for all parties.
When a regular rhythm is established with mutual benefits flowing, real trust can be established and a successful relationship will begin to normalise. Partners can then work together to refine or expand the relationship to further increase the value achieved.
With thoughtful design and a collaborative agenda, successful partnerships can be forged, potentially delivering value for many years ahead.