Strategic Partnership Series
I sat at the conference room table with two other people. I was the consultant. They were the President and Key Partner of the Investment Firm that Owned the Company. It started as a simple conversation.
We talked about the company’s situation — their revenues were declining by 10% a year. Their product mix wasn’t robust enough to support growth. Attempts at new product had been poorly conceived. Now they were sitting with one potentially successful product that, if left alone, would leave the business in a slow growth, high risk situation.
We talked about product life cycles in their industry. Successful products could expect to grow for 3-5 years. Then the natural decline — the downside of the bell curve — would follow and sales might continue out to year 10.
“What would be your product strategy?” the big boss asked me.
“I’d get on a plane. Go to the U.K. Buy quality product and adapt it to fit the U.S. market.”
“Why the U.K.?” was the next question.
“Because everyone has already been to Australia, and if you don’t get some product to market and earning as fast as you can, it won’t matter what strategy I conceive.”
“You’re going to London,” was the man’s answer.
By the end of the year, I not only went to the U.K., I was hired and I took my first of what became a yearly trip to build and nurture strategic partnerships around the world.
How to Identify the Highest Potential Strategic Partners
The idea of entering a strategic partnership is both intriguing and challenging. Strategic partnerships grow TWO businesses at a faster rate. The ability to share ideas, piggyback resources, decrease costs, and shorten timelines by distributing, versioning, and repackaging can bring a huge increase in ROI even to the smallest business.
But partnerships are tricky to begin with. Choosing the right partner is critical to success. Use these questions to identify the highest potential strategic partners for your business.
- Who has product we can version for our customers? Would they consider making two versions as they build their next product? Potential strategic partners have to make product appropriate for our market that we might want to distribute. Define that as something for customers who are like ours, only slightly different.
If we make packaging for boutiques, we might explore companies who makes packaging for department stores, grocery stores, computer stores, jewelry stores, restaurants — the list is huge. We’d be looking for what we might distribute to our boutiques. Those tiny “to go” boxes used by Chinese restaurants might make interesting packaging for boutique candy stores. Would they be willing to print an exclusive series of those boxes in fashion colors, we could sell them to our clients at exclusive prices?
- Who shares our standards and values? Naturally a partnership needs to agree on what is quality workmanship, what is good service, and how to respond when problems arise. Shared values and standards are foundational to trust. Partners who share our values and standards see the quality in our work, understand our pricing, and trust our choices and decisions.
- Who is good at what we’re not and needs what we’re good at? Can they extend our brand or strengthen our marketing? Can we shore up their product offers and idea development? A great partner doesn’t look like us. They look like what we’re not.
- Who has a similar process for approving ideas? My experience over time has taught me to be wary of potential partners with numerous approval stages. A business with the more approval stages will control final decisions. The approval process will break down ideas and steal time.
- Who sees the value of the partnership immediately? High potential partnerships are agreements between businesses each contributing value to the other business. If a potential partner needs to be converted to the idea, that equality of agreement is missing. It’s wise if we don’t work at making it work. Converts rarely stay converted. We’re likely to end up in something that looks more like a client/vendor relationship.
Great strategic partnerships demonstrate the idea that leaders look to build things that they can’t build alone. We share easier, faster, more meaningful way to reach customers that are just outside our “sweet spot.” We can offer product ideas that we could pursue without partner help.
Have you given strategic partnerships enough thought?
–ME “Liz” Strauss