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What to Know Before You Meet to Negotiate A Strategic Partnership

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Strategic Partnership Series

What Is a Strategic Partnership?

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When two business parties agree to build something they can build better together than they can build alone, you have a strategic partnership. The advantage of strategic partnerships is that partners can do more with fewer resources. Knowing ahead of time that you’re building the same basic product together means that some parts of it will serve both parties and won’t have be built twice.

Let’s say you are in Fashion and I’m in Fitness. We both have a core audience of recently graduated college students. We might decide to take the place where our Venn Diagram overlaps — Fitness Fashion — to offer a clothing line through your distribution and mine.

That shared “We” on the diagram points to the areas where we can lower costs and increase resources by working in partnership. With two teams working one clothing line or one fashion-fitness event, we’ll enjoy:

  • the ability to split costs and spread the work
  • a wider resource of experience and fresh ideas from another industry
  • a better chance to focus on what we’re good at — if you’re good at staging events and I’m great at marketing, we can specialize and give our best to the team.

A strategic partnership can be formed between any two parties who can align their goals to work together for mutual benefit. How to Identify the Highest Potential Strategic Partnerships tells what I’ve learned about how to identify the right partners. For the strongest partnerships, look for partners who share your values and philosophy of business but have different strengths and skill sets.

Don’t overlook partnerships with the folks in other departments, with your vendors, with potential customers and sponsors. Anyone whose goals align with yours can be a strategic partner. Small partnerships offer the same advantages a big ones and are sometimes easier to manage.

Once you’ve decided a strategic partnership is a good idea.
Do a little preparation before you try to negotiate one.

What Is Negotiation?

Let’s be clear on the question, What is negotiation?. The goal I set for initial strategic partnership meetings is a viable answer:

Negotiation is two parties to agree to a workable and positive outcome.

When you first meet with a potential strategic partner, you should know how you can help each other, but they may not even know you. Even if you do know the folks you’re meeting with, the idea of a partnership may be alien to their usual way of doing business. That means a discussion — a meeting. Few folks have longer than about an hour or so. That’s not much time for negotiating first impressions, new ideas, deals and relationships.

On my trip to London, I had to introduce myself and our business. I needed to make business deals and wanted to establish long-term business relationships. Most importantly, I hoped to start an international network — a collaborative effort — publishers working together to build our businesses in a way that no one publisher could have achieved alone.

What to Know Before You Negotiate Any Strategic Partnership

The best first impression and the best first meeting reflect and demonstrate how you the strategic partnership will work. If you want an open, honest, equal partnership based on mutual growth, structure a meeting that offers the best possibility of that outcome.

Strategic partnerships are relationships not transactions. A first meeting is more than just selling or “going fishing.” Relationships are established by building solid foundations.

Have a Goal, Have a Vision, and Articulate the Fit

  • Set a Realistic First Steps Goal. Great relationships take place in stages. A test case of a process establishes whether the communication has been effective. The first steps goal should be small, set in time, and easily measured.

    Time was tight. Urgency was high. The first goal was to identify, license, and bring back existing products that we could version and get to market quickly.

    In the example of fashion and fitness, it might be that I might ask you to put some of your fitness fashion in my fitness centers for distribution.

  • Have a Vision for the Relationship. Great partnerships collaborate to grow both businesses over a longer term. It’s important to know what the next stage will be.

    When I went to London, the ideal partnership would be with companies from whom we would first buy, and then collaboratively partner on products in the areas where we served similar customers (in non-competitive venues).

    In the fashion-fitness example, the future might be that we collaborate on an exclusive fashion line that is only offered in my fitness centers.

  • Articulate Why the Partnership Is a Good Fit. No partner wants to get the impression that you’re working with them by accident. It’s important to articulate why it’s them not just anyone. It’s important that potential partners in business (as in romance) know that we’re making an informed and conscious decision.

    On my London trip, I could point to products that fit the values of my audiences and how easily I could promote them with over 900,000 color catalogues to my market.

    In the fashion-fitness example, I might point to how our customer groups were the same people, how our companies shared the same values, and how well our skill sets complimented each others’ skill sets.

Preparation was a foundation to solid success of those 8 or 9 days of meetings and the resulting strategic partnerships. Having a goal, having a vision for the relationship and being able to articulate why this partner and not just anyone made it easier to keep the tables even when I walked in the door to discuss strategic partnerships with that would grow both of our businesses.

It started a chain of irresistible events.

Be irresistible.
–ME “Liz” Strauss

Watch for more on negotiating strategic partnerships.

How to Identify the Highest Potential Strategic Partners

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Strategic Partnership Series

The Story

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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?

Be irresistible.
–ME “Liz” Strauss

Watch for more on negotiating strategic partnerships.

Negotiations: 3 Steps to a “YES” and a Great Relationship

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A Guest Post by
Zelko Kecman

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We’ve all heard this when buying a car – “let me check with the manager and see what I can do for you”. The interesting thing for me is this also happens a lot in business and almost the same type of conversations. Someone almost always has to go away and ask for approval either on price or a clause in a contract.

Here are some simple principles that have worked for me over the years that will get you to a mutual Yes and more importantly won’t harm your relationship for future business. Lastly this is a very high level view as what I’ve outlined is generic for both business or personal. There are some additional considerations when dealing with very large organizations and large values.

I see negotiations in 3 phases, Preparation, Discussions and Done Deal. The more time you spend on step 1, the less time you’ll spend in 2 and you will be more likely to get to a good deal.

1) Preparation (aka Do your homework)

– #1 item is listing specifically what is most important to you. What is absolutely not negotiable and what is and how far. WRITE it down and be specific with the details.
– Leverage your network of friends and colleagues (that’s what Facebook and LinkedIn are for)
– Google, Bing, your own internal databases: look for other similar cases, going prices, reviews, what are you worth, how the company is doing, etc
– What role does the person you are going to be talk with have? Think of this, someone in procurement is measured by how much they get from the other side financially in most cases. Also is it month/qtr/year end?

2) Discussions

First of all, before you even get into the hard discussions and start throwing contracts or wants around, try to understand who you are dealing with. If you meet someone who is good at what they do, it almost always starts with seemingly harmless questions and discussion. The reason for this is to get a better sense on who that person is or what is important to them. Also, have faith the other person is being honest, but do not trust. I know this sounds harsh, but being naive will not serve you well.

Here’s a simple checklist during the discussions:
– Keep a cool head all the time, be friendly and keep emotion out of it.
– Be open to heated debate. Just don’t make it personal, keep it factual.
– For each item being discussed, clarify your intent. I can’t stress this one enough. Especially in legal terms, legal is not as black and white as people believe.
– Take notes on actions and decisions and owners of each
– Don’t commit to something unless you are 100% sure. Take it away to verify. Again, with the car, “so if I were to drop $xxx off you would buy the car?” – you’re response should be “let’s take a look at the whole deal and decide then”
– At the end review all the actions and decisions

At this point, you’re either getting closure on the deal or steps 1 and 2 will need to be done a few more times as people take away action items or revisions. Remember this is negotiations and you should be able to give on items (look at your list you wrote down in #1 and push on others you want. Also, it is very important to know that if you truly have 1 item left that there is no mutually agreeable way forward you should be able to step away from the situation and wish the other person well. If you can not you better be ready to give on that item then.

3) Done Deal

Great job, both you and the other person have come to an agreement. Neither side should walk away from the situation feeling like they got taken advantage of, if it does happen, it’s almost guaranteed you’ll never to business again. Close the conversation like it started with a friendly conversation and a follow up once you’ve completed the transaction. You never know when you will be back at the table and having a supporter of you will be important.

Lastly, getting to a point where you are comfortable with negotiations is not something you get from a course or book alone. It really is something that you need to do regularly. It can be with simple negotiations with your kids, spouse, stores, banks, anyone, you just have to be conscious that you are practicing your skills or in participating with others who are seasoned at it.

There are hundreds of resources out there for learning negotiations, however one of the best that I have seen as a starting point is “Getting To Yes” .

I love debate, discussion and comments so please feel free to let me know what you think.

—–
This blog post began as a Twitter conversation with Zelko Kecman – @zelkoCA – You can find out more about him through his linked in profile.

–ME “Liz” Strauss
Work with Liz on your business!!

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Job [and Client] Hunting ala Liz

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Gosh You Look Great

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You have your act totally together. You know how to answer every question. You can explain how to capitalize on your strengths and how you make your weaknesses irrelevant. You can explain your biggest challenge and how you handled it with finesse and outstanding interpersonal skills. Your resume is a personal branding brochure and an inviting picture of who you are. You can see yourself as a leader and explain what your best traits are in simple, clear sound bytes. Your personal branding BIG IDEA shines through your eyes, your words, and everything you do. You are cool.

That doesn’t change the fact that job [and client] hunting is stressful. Even if you didn’t put your pants on backwards. [Read more…]