starting up a supply network Archives

Strategic Partnership Series

What Is a Strategic Partnership?

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.

bigstock-A-Venn-diagram-with-circles-ma-24898727

BigStock: Where the circles overlap we enjoy shared resources.

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.

Buy the Insider’s Guide to Online Conversation.

Strategic Partnership Series

The Story

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.

Buy the Insider’s Guide to Online Conversation.