Tag Archives: Partnership

How Do You Choose The Right Strategic Partner? Five Guidelines

Situation: A rapidly growing company is expanding in both its primary market and into new verticals. A number of companies are interested in strategic partnerships. How do you select the right partner in the right space? How do you choose the right strategic partner?

Advice from the CEOs:

  • At the end of the day it’s about a connection with the partnership which extends across both organizations. Look for cultural synergy with the other company. Do your and their managers and employees “click” or are they oil and water? This is a gut assessment.
  • Is the quality of people in both companies complimentary? Is there similar drive for quality and attention to detail? Will technical integration be smooth? Are systems complimentary? At a minimum on both sides need to possess the right skills so that these factors won’t hinder the project. Are sales and marketing approaches compatible? Will teams be able to work together?
  • You need to have strategic commitment across both organizations. Partnerships don’t work if there is only alignment at the top. Executives can’t shove a new opportunity down the throats of those who report to them. There must be excitement about the opportunity across both sides of the partnership. There must be complimentary competencies, capabilities and commitment. Is there a clear understanding of the goals and objectives required to succeed? Reward structures and incentives must be aligned down through the two parties. Conflicts will lead to struggles.
  • There must be a strategic alignment between the two organizations so that both see the partnership as complementing their broader strategic plans. There must be a fundamental strategic win-win. The venture must be seen by each party as core to their business, plans and results. If this isn’t present, the collaboration can collapse when a better opportunity that comes along.
  • Look for some gauge that the partnership is as important to the other party as it is to you. What other partners do they have? Is the size of the opportunity enough so that you are assured of their ongoing attention?

Thanks to Jim Soss of Red Aril for his contribution to this article.  

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Can Marketing Partnerships Work Well? Five Considerations

Situation: A company has the opportunity to form a marketing partnership with another company. The primary potential benefit to the company is gaining access to new customers. On the other hand, partnerships may bring complications. What is your experience with marketing partnerships? Can marketing partnerships work well?

Advice from the CEOs:

  • Marketing partnerships can certainly work, provided that both parties see benefit to the relationship, and –  more importantly – both parties are committed to make it work.
  • Clearly define boundaries with the partner. If either company can perform a particular service, whose customers are who’s? Is there alignment throughout the partner’s organization regarding the partnership? Are their conflicting priorities within different branches of that organization? Test the waters ahead of time and assess how these will potentially impact the partnership.
  • There are potential pitfalls to take into consideration. What is the in-house/outsource attitude of the partner? If there are strong voices for in-house production or service provision, these will not be supportive of the partnership.
  • Monitor the quality of the partnership over time. Successful partnerships are based as much on friendly cordial relations as on business priorities. Are your business cultures and ethics compatible? Who is the champion for the partnership on the other side? What will happen if the champion leaves? Is there a backup champion?
  • Build an exit strategy into the partnership that will allow you to leave gracefully and mitigate financial or good will consequences if the partnership sours.

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How Do You Bring Different Teams Together? Seven Points

Situation: There are many opportunities to team with other companies, whether through partnerships, joint ventures or M&A. This is accompanied by the challenge of bringing together different teams to succeed in new roles and tasks. How do you bring different teams together?

Advice of the CEOs:

  • People are an investment. Just like the stock market is not up every day, neither will be the performance of your people. Bringing people into new relationships, roles and responsibilities takes patience, work and nurturing to build skills and to get the best out of people.
  • To optimize this, build an organizational chart of the new or revised organization that you will build. Fill in the spaces with the individual who currently holds responsibility for each role. This means that some people will have several different roles. This is OK. As you add additional people, they will fill many of these roles.
  • Build a set of company or project values to guide individuals through the decisions that will drive future growth. Involve the full team in this exercise so that ownership of the resulting chart is broad.
  • Develop and consistently express the roles and boundaries of the company or project.
  • Focus on systems and processes, not just on tasks. The core of any organization is people and relationships. These are best expressed through systems and processes, not tasks. Tasks express discrete roles. As sophisticated as these may be, they won’t encompass the richness or complexity of the systems, processes or the people involved.
  • When dealing with people always ask “What is my role?” and “What is their role?” In each situation, work to understand the other’s perspective and what opportunity or concern they are bringing to the table. Trying to transform an individual into someone that they are not doesn’t work.
  • Particularly in a company or venture that focuses on high levels of customer service, act urgently, but avoid emergencies. You want your response to customer needs to be swift, but you don’t want to destroy operational rhythm.

Thanks to Jennifer Choate for her contribution to this discussion.

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How Do You Access Key IP? 3 Steps to the Dance

Situation:  A company is moving from a specialty solution to a complete solution. They have identified a partner with intellectual property (IP) that will help them fulfill this vision. How should the CEO approach this company to access their IP? How do you access key IP?

Advice from the CEOs:

  • There are two aspects of any deal: technical feasibility that will produce both value and the emotional needs of the principals of each company. The technical aspects are the most straightforward and easiest to value. Frequently, a favorable deal hinges not on technical feasibility, but on the desires of the principals and their ability to trust one-another.
  • If you are convinced of the value, you must convince the other party that their best option is to work with you. This accomplished, you can negotiate the specifics. Sell your vision: the technologies together are much more valuable than they are alone: 1 + 1 = 5! If control of the technology is an issue, negotiate an arrangement where they are comfortable with your control. Do you and the other party have a trusted advisor in common or is there an individual who is respected by the principals of both companies? A person like this can help communicate your good intentions.
  • If your best efforts do not produce an appealing arrangement, your fallback position may be a partnership. If the partnership is backed by modest investment with options for future purchase, this can be another way for you to eventually gain control of the technology.

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How Do You Maximize Customer Satisfaction? Six Suggestions

Situation: The CEO of a company wants to assure that his company is doing everything that it can to maximize customer satisfaction. What have others done to evaluate and measure whether their customers are satisfied with the service and/or products provided? How do you maximize customer satisfaction?
Advice from the CEOs:
• Ask customers what they like and don’t like about your services.
• Ask what other things they are struggling with and whether or not you can offer services to improve this situation.
• By asking these questions, other opportunities may arise. Act like a business partner not hired help.
• Set targets for the company and sales team. What do you want to measure? How will you know if the client will reuse your services? What are you looking for?
• In the case of a new installation or activating a new service, as CEO be there when the implementation is complete and ready for “live” time. You may see complementary products or services to suggest to build a partnership with the client.
• Look closely at what added value you are offering so clients want to keep you on retainer. Identify what retainer business looks like and look for options to offer retainer services. This will help to differentiate the offering.

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How Do You Optimize Your Product Offering? Four Points of Focus

Situation: A CEO wants to take better advantage of his company’s product offering. There are many opportunities available, but the company needs more focus on optimizing these opportunities. How do you optimize your product offering?

Advice from the CEOs:

  • Brand – Where has the company been? Where is it going? The world is constantly changing – what’s the company’s new brand? The brand identifies the company and both your customers’ and business partners’ identification of the company and its products and/or services. In a changing world with increased competition and “noise,” having a strong handle on the brand and brand message is critical to remaining at the top of customers’ and partners’ awareness.
  • Education/Customer Advocacy – An underutilized source of marketing strength includes both customer education and customer advocacy. Customer education allows the company to better position its product and/or service to the customer and helps the customer better meet unrecognized needs. Customer advocacy positions the company along with its customers in an area of mutual interest and strengthens both bonds and loyalty.
  • Diversification & Channels – In a changing and rapidly diversifying world, being open to new opportunities and channels through which to reach the company’s stakeholders is a source of sustainable advantage.
  • Partnerships to Take Advantage of Diversification & Channel Opportunities – Partnerships are an underutilized resource to creatively diversify and open new channels to stakeholders. They require less investment than doing everything on your own and can form the basis for key alliances and strengths going forward.

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Where Should You Focus the Business? Four Recommendations

Situation: A company has experienced limited growth and profitability for the past five years. It is also short of resources. They have invested a lot of time and effort in a new technology which has yet to bear fruit. The CEO seeks advice on the company’s future direction. Where should you focus the business?

Advice from the CEOs:

  • Continue to support BOTH business – the core product line and the new technology – but rearrange priorities to boost revenue and profitability growth. Simultaneously, focus new R&D investment in the company’s core product. This has three principal benefits:
    • The company’s primary expertise is in its core product line. This product is its principal source of revenue and has the greatest potential for profitability and growth.
    • R&D and start-up production of new iterations of the principal product is less resource intensive than the new technology.
    • Further, sales of the core product are far less cyclical than the market for the new technology, and therefore more promising to a small, niche company.
  • Looking at this recommendation sequentially, the group recommends that the company:
    • Continue to sell the current product line a well as existing complimentary products to maintain revenue and profits.
    • If additional work or resources are needed to mature the new technology, have someone else take the lead role in R&D and private label the technology for the company.
    • Focus all new R&D investment on improvements to the core product.
    • Refocus market research on current and potential customers for the principal product line to determine their greatest needs to guide product line innovation.
  • The company needs access to advanced equipment to support development of the core product line. Consider creative ways to gain access to this equipment at little expense.
    • Look for advanced equipment that is available at distress or liquidation-sale prices by companies who made poor investment decisions.
  • Find a partner that wants to focus on the new technology, but who also wants and needs the company’s expertise in its core product line.
    • The company focuses on the core line; let the partner develop the technology.

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How Do You Establish the Company’s Brand? Four Approaches

Situation: A company has developed a leading local position in an important new technology. The CEO is concerned that the company’s suppliers may try to move into their market and replace them. What’s the best strategy to counter this threat? How do you establish the company’s brand?

Advice from the CEOs:

  • Exhibiting high growth is the company’s best shot – whether to preserve exclusivity in the company’s geographic area or to build the company’s brand. Aggressively build the company’s service presence to build a sustainable advantage.
  • The primary question is – What is the objective? The objective is to build the company’s own presence and brand.
    • What would happen if another, better technology was launched? Wouldn’t the company want to offer this?
    • Think Web 2.0+. Build the company’s website as the place to go to discuss the technology, share thoughts, designs and software, and easily source prototypes – provided by the company. Let users define the site and the market for the company.
    • The bottom line: exclusivity may not be in the company’s best interest if it inhibits access to the best technology. Strive to build the company’s brand instead and be opportunistic on the exclusivity issue.
  • What markets have gone through similar development? What can you learn from them?
    • Document other rapidly changing markets. Hire a current undergraduate or MBA student to research how these markets have developed.
    • Select a target vendor with multiple locations and do a deal with them to locate your technology and service in their locations.
    • Look at a franchise for which the company’s technology is a compliment and see whether franchise owners are open to adding the company’s technology in their locations.
  • Does the company have a partnership strategy? How can they accelerate strategic development?
    • Where is the place to focus?
    • Who is the perfect partner for this focus?
    • Identify the most promising markets and use partnerships to accelerate penetration of those markets. Write partnership agreements so that once an area is developed the company has the option to take it over. This is a classic market development strategy.
    • Give away some of the company’s margin to partners in lieu of salaries or commissions to support market development.
    • Look for partners in key locations in the company’s territory. Do a demo at a Starbucks where engineers like to hang out.
    • Hire a sales or business development person to work on partnership development.

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How Do You Decide Between Strategic Options? Five Thoughts

Situation: A CEO is faced with three strategic options that the company could pursue. He seeks guidance on how the company should evaluate the three options. What signs should they be watching for in their marketplace? Are there steps that they should take while completing their evaluation? How do you decide between strategic options?

Advice from the CEOs:

  • Go with what sells! Listen to the market, and your key customers. Make sure that you have ears out there that will give you early signals.
  • Until there is a clear indication from the market place as to which is the stronger strategy, keep your options open. A hybrid strategy – maintaining your current strategy while evaluating the strongest strategic option – will allow you to do this and continue to drive revenue from your existing base while the market determines dominance among the new platforms.
  • Look at the cash flow from your current strategy and each of the new options that you are considering.
    • What difference is there in upfront payments versus ongoing residuals?
    • Look closely at your cash flow needs compared to the timing of receipts from each option.
    • Are there ways that you can strengthen your cash flow depending upon which strategy you select? How will you bridge the gap between current and future cash flows from each strategic option?
  • Consider hiring a full-time manager in business development.
    • This will help you to learn more about your customers and what they will buy.
    • Select someone who has relationships with the key people in your target markets, and who knows what the insiders are doing at important existing or target customers.
    • Select someone who can give you access to new opportunities and help steer your strategic development.
  • Consider a long-term strategic partnership with a leader in your market.

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