Partnering or collaborating with other organisations is more prevalent in doing business today. What is driving this trend? What stops more companies using this as a strategy to grow more rapidly? What can help partnering to be more successful?
Here are some reasons why organisations are partnering:
1. An alternative to growing a large organisation
Small businesses can hit an inflection point where the need to scale up quickly becomes paramount. Growing capability can be done in two ways, by taking on new staff or outsourcing to others who have the expertise you need to grow. If the capability you need to grow is core to your business success it might be worth growing by recruiting and training resources, but it’s worth exploring if there are organizations whose main focus is the expertise you are seeking and partnering with them. Having a critical mass leads to a high volume efficient process, so using an outsourced capability can result in success for both partners as these scale efficiencies are realised. For example, do you need to invest in expensive manufacturing facilities if you can outsource to an experienced manufacturer? As Mark Zuckerberg spells out clearly, Facebook is not in the business of music. “The basis of our partnership strategy and our partnership approach: We build the social technology. They provide the music.”
2. Increased complexity of doing business
Opportunities for growth come in many ways through moving into new markets, exploiting new technologies or developing new products. The challenge is taking advantage of these opportunities using the best resources there are. Sometimes that means specialized capabilities which would not be cost-effective to have in-house, so it’s worth making that choice. There are many success stories of partnering in non-traditional outsourced functions such as Research and Development to effectively develop new products or in Sales and Marketing where partnering with local experts can help you identify how best to work in a new market, whether it be working with regulatory authorities or understanding various marketing channels is another valuable strategy.
3. Accessing top talent
If you are a small business then hiring the best people on a full-time basis does not always make sense. For example, small businesses cannot hire the strategic HR advice that may make all the difference as work force starts to grow. Outsourcing your HR function can be a great strategy until you become large enough to justify having an in-house resource. The flexibility of this kind of resource where you don’t have to commit to a full-time employee allows growth at your own pace and the ability to work with you through the inevitable peaks and troughs that smaller businesses face. The many virtual assistance companies that exist now are testament to that where you can access top executive admins that work with you on a variable basis.
4. Achieving more
Different expertise and perspectives can be used to deliver more than one partner can achieve by themselves. By creating and delivering a broader value proposition customers of partnering organisations can access a range of services (one stop shopping) from partners. For example, working with management consultants who can both help you create strategy and execute it, means much time can be saved and frustration avoided, by not having to contract and onboard separately. Another example is described by Cisco’s CEO John Chambers “When I look at the success of the Cisco Networking Academy program, which has reached more than 4.75 million people since 1997, I know it could have never achieved this scale without our partners. Together we provide the tools, equipment and training for our students and teachers.”
What stops more organisations taking on partners? Not trusting each other is the simple answer. How do you build and continue to develop trust? It often comes down to personal relationships but at the organisational level there are two major tasks
1. Build a solid foundation
Work through various challenges before they arise. Basics such as how IP (intellectual property) will be owned, what processes and governance will be used and agreeing talent sharing policies before partnerships are started is critical and documenting these agreements through contracts and service level agreements are key. Successful partnerships are also taking these agreements one step further and developing principles of operation much like they would put in place within an organisation when cross functional teams come together.
2. Continuously improve your partnership
Once partnerships are up and running a regular review not just of deliverables but also of how each partner is living their partnership principles can help to continuously improve the partnership and build the trust that will be a cornerstone for success for many years. For a simple way to create more effective partnerships click here.
In a complex and ever-changing world the boundaries between organisations are blurring. To succeed a strong partnership strategy where you can succeed because of your effective partnerships will only become more important. As Safra A Catz (CEO of Oracle) says: “Let your customers be your partners; let your vendors be your employees. What’s necessary in this transformation more than anything else is courage and a willingness to change.”
By Kathryn Simpson
Kathryn is a respected and successful strategic change management consultant with diverse career experience in Europe and North America. She has over 25 years of consulting & line experience with leading organisations (Unilever, Mars, KPMG and GSK).Since 2007 she has been focusing on partnering with leaders at all levels in healthcare and other sectors, to drive growth and create sustainable success, by bringing a comprehensive toolkit and providing disciplined and supportive approaches that create focus, accountability and collaboration across organisations and their partners.