Partner Article

The case for business partnering

All large, and many medium sized organisations in the public, private and third sectors are involved in alliances and other forms of partnering. Business leaders are increasingly choosing alliances and partnering, instead of acquisitions and mergers, to meet the needs of their customers and to grow their businesses. These agreements can be global, or regional or local.

There is a lack of statistics on the amount of activity transacted through partnering and outsourcing. With many public sector organisations and large companies it is likely to be around 60 - 80% and therefore critical to their ongoing business success.

There are many reasons organisations decide on partnering, such as wanting to widen their client base or product range, or to access expertise or technology, and to reduce costs.

Improving the effectiveness of business partnering should result in a significant improvement in the organisation’s bottom line as well as more productive working relationships.

So what are the critical success factors in developing and managing an alliance?

(1) Ensuring that there is a viable, long term, market opportunity i.e. there’s something of value for both partners and for the ultimate customer

(2) Shifting mindsets away from e.g. supplier/customer to those that are effective for partnering

(3) Building trust and credibility and open channels of communication

(4) Having the skills to create and implement an influence plan

(5) Building with the business partner a shared vision/business objective, that is understood by the staff of both companies

(6) Defining a balanced set of metrics and allocating responsibility for monitoring each metric between the parties

(7) Having a sustainable win-win-win and understanding what this looks like for your organisation, the business partner and the ultimate customer

(8) Having an up to date legal agreement including protecting each party’s intellectual property rights

(9) Appointing a strong sponsor in each organisation with clear roles

(10) Recognising and managing cultural differences

(11) Managing changing expectations and having the skills to revitalise long established partnerships

(12) Being willing and able to exchange knowledge, new insights and innovation with the alliance partner

(13) Evaluating the alliance regularly and facing up to difficulties

(14) Checking that both parties continue to be financially viable

An example of a successful alliance

HP (USA) wanted to add high quality printers to its product range. Canon (Japan) wanted to move into high quality printers, building on its excellent reputation for photocopiers. Both companies could see a large, profitable and sustainable market for printers.The two companies appointed a strong sponsor for this alliance and these two men built an excellent relationship and spent time understanding the cultures of their two companies. They both had clear roles and they also clarified what assets were in the alliance and what were outside the alliance and therefore confidential to that partner.The sponsors developed clear objectives and outcomes and also agreed how they would resolve difficulties.Both sponsors were strong enough to overcome internal resistance to the alliance e.g. over distribution channels.

An example of an unsuccessful alliance

A UK organisation naively entered into a joint venture with a German company in order to increase market share in Europe and in the Far East. It soon became apparent that the two companies were working to different agendas. The UK company thought that they were now part of a long term alliance, which would provide greater job security for their staff. The German company seemed to be working towards a shorter time frame and the UK company feared that they might be acquired by their much larger ‘partner’.

The UK company could make decisions quickly. The governance of the German company was fundamentally different and it seemed to take months to get a response to proposals. What trust there might have been between the companies collapsed.More capital was needed to exploit the market in the Far East. The UK company was unable to raise its 40% share. The German company acquired the business of the UK company.

This was posted in Bdaily's Members' News section by Richard Fox .