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Partnering is essential for growth in 2022; here are some tips

Partnering may be a hot management concept, one that works for many firms. However, it clearly is not for everyone.

January 29, 2022 / 12:39 PM IST
Representative image

Representative image

Partnering is yet another buzzword doing the rounds in the corporate world these days, whether it is called strategic alliance, buyout, outsourcing or any other word. Mind you, it is not just big corporates who talk of partnering. However, partnering does not work for everyone just as in the case of marriages. Here are some tips for successful partnering based on learning from global businesses.

muneer column smart growthPartnering may be a hot management concept, one that works for many firms. However, it clearly is not for everyone. Three common elements consistently appear in successful partnerships and usually are absent in unsuccessful ones: impact, vision and intimacy. "Impact" means impact on the bottom lines of both partners – the effect on revenue and income. "Vision" is a shared goal or set of goals, and "intimacy" refers to sharing of information and goals, like a good marriage.

In partnering, information becomes tightly integrated with impact and vision. The depth of shared information makes a strong vision possible and provides the data needed to affect larger business problems. Most partnerships begin with waste reduction because it provides quick, measurable results. When the partners know each other better, they can go on to other objectives. This process is not born of any theoretical or pragmatic necessity. Rather, it is a demonstration of modern partnering's origins: In the automobile industry, where it was used to drive costs down so American manufacturers could compete against the Japanese. From those beginnings, this concept has now found worldwide acceptance.

However, the real reason for partnerships is its financial impact. Ideally, the profit pie gets bigger for everyone, and that is what makes the partnership feasible, worthwhile and, ultimately, successful. This impact sustains and justifies partnering relationships. Which leads to a key point of partnering and of business-to-business marketing in general: Match your competence to your customer's incompetence. First, approach the customer about their processes to which you can add value. Second, do not expect the customer to be able to say what they want or need – they will not be aware of what is possible.

The best business relationships are symbiotic, in which both members need each other to thrive. Ask:

  • Who addresses problems for which I have superior solutions?

  • Who needs a product licensing relationship with me and why?

  • Whose channels do I want to ship product through and why?

Of course, this list applies to both partners in the relationship. Bottom line conditions determine whether a supplier-customer relationship can successfully be transformed into a partnership.

These conditions lead to three following questions:

  • Do both organisations share a "win-win" approach to the deal?

  • Do both organisations have similar values?

  • Are there values unique to one partner that would cause problems with the other?

Many vendor-customer partnerships arranged today are reminiscent of a classic strategy that has been attributed to a major global retail chain: Invest in a supplier, buy most of its output, then put the squeeze on the supplier for volume and price. This US retailer chain managed its costs very successfully through such partnering. Of course, both the chain and its partners grew over time.

However, such partnerships are not marketing partnerships. As the term now is understood, it is not a partnership at all. The Microsoft-IBM relationship started out as this kind of classic partnership, and it degenerated rather quickly into squabbles over power. Most firms, it seems, want to be the "senior" partner in the relationship, the one with the most influence over the partnership's course.

When partners think in these terms, the partnership already is in trouble, if not doomed. Partnerships are not about power, leverage, or advantage – at least not in relation to the other partners. Some feel that the kind of intimacy advertising agencies achieve with their clients is what many firms should strive for in partnerships: They frequently use marriage as the metaphor for a good partnership (hence the use of the word "intimacy" in that regard).

But marriages as well as relationships between agencies and clients often become fiercely acrimonious. Many end in bitter divorces. And when business partnerships degenerate to this level, as some do, they are just as deadly as divorce.  Partnering, like marriage, is not for everyone. If an organisation and its management are uncomfortable with intimacy or with sharing information – even internally – and if the left hand truly does not know what the right is doing, then partnering probably will not work.

Here is a quick check to determine if a firm is right for partnership: If the firm's management is adversarial with its employees, that company will probably not be a good partner.

M Muneer is the managing director of CustomerLab Solutions, a consulting firm.
first published: Jan 29, 2022 12:39 pm