Partnerships give you access to new customers and new capabilities without having to take on all the financial and operating risks of the new venture. I personally believe that they are a major opportunity for most businesses. Hi-tech businesses have pursued joint ventures and partnerships for decades, but they are now increasingly popular in more traditional sectors. Across my clients, retailers, manufacturers and service businesses are now seeing the benefit of partnership arrangements.
Critically, however, alliances and partnerships take time, commitment and skill to deliver positive and profitable results. I have taken part in partnerships and alliances between two companies where, despite a positive start, the relationship quickly falls apart and the performance of the joint project deteriorates.There are five criteria that you should use to ensure that your alliances, partnerships and joint ventures are effective and you shouldn’t go ahead unless all five are in place.
- All parties have a strong belief in the value of partnerships. There will always be problems and issues in any alliance. If you or your potential partners are less than sincere in your absolute belief in the value of partnerships those problems will turn from slightly choppy waters to enormous tidal waves of destruction. You should ask yourself whether your potential partner really believes in partnerships. Are partnerships, for example, one of their core values and have they demonstrated that value in previous relationships and projects?
- There is a good fit of senior personalities. For the alliance to succeed you need to be able to create and maintain strong relationships at various levels between the organizations, but, critically, there must be a good fit and chemistry between the two leaders. Other players in each team inevitably take their lead from the boss, and if the leaders are working well together and getting on it makes it significantly easier for everyone else to work towards the shared aims.
- Aligned objectives. All the partners of the coalition must be materially better off from being part of the alliance than not. This means that all parties must be clear on their specific, tangible objectives and, at the same time, recognize and support the objectives of their partners. A partnership cannot function with a win-lose mentality; it must be a win-win-win.
- Plan upfront for success and failure. All partnerships set off together with the firm intention of succeeding. The reality is that some do and, unfortunately, some don’t. It is critical that you establish what constitutes success and failure up front, and that you are clear on the consequences of both events.
- Create formal ways of working. The initial teams may be driven by shared enthusiasm and great working relationships, but it’s likely that the composition of the teams, including the leadership, will change over time. You must be able to deal with these changes without needing to start the relationship from scratch, and should create the governance structures for effective ongoing communication and decision-making.
Partnerships will only succeed if they are managed as effectively as your core business activities. How many of these five criteria do you apply in your business?
To find out more contact Stuart by clicking here or call +44-(0)1636-526111.