I am in the midst of putting together one of the most challenging partnerships I have ever encountered. I cannot give you the details of the parties involved but can share lessons learned in collaborating important strategic partnerships to drive business growth.
First of all, what is a strategic partnership, specifically? By definition:
“..a type of contractual alliance between two commercial enterprises that is not a formal legal partnership.”
Basically this means that two companies can come together and combine their assets to help each company drive revenue in some way. The partnership usually becomes official with a formal contract to work together on a unified strategy that will benefit both parties.
Initial steps to formulate a partnership are for both parties to meet and discuss the pros and cons of developing a particular strategy. Each partner should also look for synergies on the potential partnership. Essentially partners come together because each offers a resource that the other is not able or willing to supply.
Next, I recommend outlining with both legal departments the elements that offer no flexibility by each party. If this is done upfront with clear communication, then a lot of hassle and time is saved – as ultimately most of the focus should be on what elements are flexible for the duration of the negotiating process. One can argue that the next step before this should really be to develop the relationships; however, there are certain aspects that just won’t work no matter how much the relationships are cultivated.
From the get-go, strategic partnerships can be inherently challenging because of the focus on sustainable competitive advantage and what that means for both parties. There can be a lot of tension between who owns what elements and about how the teams on each end are cooperating.
Sharing information is always a touchy subject and almost impossible to create a partnership without. It must be a fine balance between what kind of information is shared for the good of the deal. There must be strong leadership on both sides with extensive experience in the negotiating process; and expectations must be set far in advance of getting into confidential details. Trained managers will most likely try their best to avoid distrust, yet push for innovation and uniqueness tied to the outcome of the partnership. Each partner leader should try to avoid the daily inertia that sets in when day-to-day details do follow suit smoothly – and keep in mind that the ultimate goal should work for both parties’ advantage.
Trust is key. Without it, it would be difficult to reconcile differences and resolve disputes. Conflict can be expected when forming partnerships, as each team will always have its own company’s interests in mind. Trust at the onset will all partners to respond to one another through mutual respect and ensure the best performance from each team member.
Finally, the negotiating process is just as important as all other elements I have mentioned as it drives the opportunity for such, through innovation and growth. Strategic alliances allow for both business partners to gain competitive advantages by using one another’s resources to reach goals. This will include target markets, creative ability, technologies, IT performance, capital resources as well as an experienced team. These things are crucial to complete the operational process that will implement the best negotiation points, when handled correctly.
In the end, I view the whole process as a means to learning versus a means to an end. Of course the goal of any company joining forces is to drive revenue growth for the company – yet many times, much more is learned throughout the hard-earned progression toward final development.
If both strategic parties can remain open-minded and show a deep ambition for facing challenges with creative solutions, then I believe you have a ‘home run’ no matter what.