Visiting Fellow to Northampton Business School
In my view the oldest forms of partnership structure, built on trust and the open exchange of information, are the most suitable for our modern business environment.
Over the last few decades companies have increasingly played lip service to the concept of genuine partnership and generally use one of three models:
Transactional partnerships involve a clear position of power for one party based on a contractual relationship between the two parties involving goods or services. A closed approach to information sharing and the implicit (and sometimes explicit) desire to create a deal that is unfavourable to one party. An example of this type of partnership would be between Samsung and Apple, with Samsung providing components to Apple for its products. Neither side sees the other as equal, and their have been complex legal battles between the two parties.
Strategic partnerships often involve cross-ownership to support the creation of a new business enterprise or delivery of a service. Both sides are committed as a result of the ownership and (in the best) both sides bring particular skills and capabilities. The relationship between Virgin and T-Mobile in the UK to create Virgin Mobile was a classic application of a strategic partnership.
Open partnerships are often for particular projects or to launch new products; companies seek out relationship that involves companies working together in a looser arrangement. Often there is no cross-ownership but there may be shared rewards in a positive outcome. An example of this would be Samsung and Phones4u working together in the UK to launch an innovative retail concept, the Samsung PIN store. Both sides shared a common vision and worked together for its achievement, but they did not engage directly in a long term or strategic partnership.
Unfortunately all these structures struggle in the new reality of a business world enabled by social technology. In my view this new reality is characterised by three principle components all of which directly impact on the partnership structures companies need to apply:
Business model disruption is the new reality with customers directly accessing suppliers; the digitisation of all information and the emergence of new generic platforms such as Facebook, allow new routes to trading relationships. These can directly impact on the need for strategic partnerships.
Access to everyone – traditional connections are breaking down and it is easy for companies to make connections with multiple potential partners and transfer and share information immediately and at no cost.
Everyone knows everything – The bass of traditional partnerships is the sharing of information and the focus of that sharing on achieving a particular outcome. Sharing information is now easy and commonplace. Not only can any one reach anyone but they can share information easily – for example: CAD/CAM data between designers and machines (across continents) or integrating launch teams across continents.
All of these elements place significant strain on the current partnership models being used across business.
In my view businesses need to embrace a form of partnership that has not only been in existence for centuries, but also provides the essential tools to allow a business to survive and prosper in today’s environment.
The mutual partnership is founded on an open, honest and trusting relationship. The desire is to build a much more effective approach to the market than either business could achieve alone. Both parties accept and acknowledge their strengths and limitations and both parties work together to achieve success. The conversations between the parties do not start with contract discussions but with shared aspirations and mutual respect.
How do you establish a mutual partnership?
There are six principal steps:
- Understand your own strengths and weaknesses
- Identify a small number of key partners that could help you and that you could help (Think about customers – these are crucial partners)
- Meet with these partners and work on developing a shared vision
- Start small and quickly – identify something that can be done collaboratively and that will breed a positive commitment - and do it quickly
- Constantly and mutually monitor the relationship. Don’t look for formal measures but constantly check – is this working for us? Is this working for them?
- If it feels wrong – kill the project