How to Successfully Select Strategic Partners
In the new knowledge economy, the intangibles of connectivity, expertise and relationships can be just as valuable as tangible assets. In such an economy, forward looking CEOs should consider strategic partnerships, which create those intangible asssets, as a great tool for creating sustainable, competitive advantages.
However, it has to be the right strategic partnership, and there’s both a method and an art to finding the right partner. I’ll outline four areas that I think are helpful in finding the right partner for your enterprise:
• A defined business goal
• Complementary core competencies
• Shared underlying corporate values
• Opportunities for expanding relationships
Defined Business Goal
I’d suggest you start by making sure you and the proposed partner have a well-defined understanding of a shared objective. Both partners need to consider how this common purpose is mutually beneficial. Why is a strategic partnership necessary for achieving this goal?
Complementary Core Competencies
Next, inventory or review your organizational strengths. What do customers consider to be your greatest value-add? What commands employee loyalty? On the other hand, what would you outsource if you could? Where are there inefficiencies?
Working from your core competencies, seek partners that will complement what you’re best at. Look for access to technologies or expertise or relationships in areas that you lack.
Shared Underlying Corporate Values
If your core competencies are complementary, compare partners’ fundamental values. The skill sets may be different, but you’ll work together most smoothly if you share fundamental values. Some companies prize innovation while others highlight results. Of course, innovation and results are not necessarily in conflict, but one firm may be more open to experimentation while the other company puts more emphasis on guaranteed outcomes.
Hardly anyone will say they don’t value innovation or performance, so you’ll need to probe to really understand what an organization values. Read their mission statement and see if they live what they say. Ask what people are promoted for and look at how the organization has competed in the market. If sources are available, speak with customers or even other competitors to get a sense of the corporate values.
Opportunities for Expanding Relationships
Finally, select partners for who they know – “who” as in customers, other businesses and even entire markets. You’ll both benefit if each of the partners knows marketplaces or has customers or vendor relations the other lacks. Sharing networks can help you and your strategic partner quickly access additional expertise to be more competitive.
In structuring a strategic partnership, I believe in taking “baby steps,” especially with more complex partnerships. For example, set aside a six-months “try out” period. Start with an informal statement of goals and financial terms.
I suggest identifying and discussing exit strategies from the outset because circumstances can change and partnerships, like well-laid plans, sometimes go awry. Have procedures in place that address the dissolution of the partnership without acrimony or ill will or worse – financial losses and/or reputation damage. Knowing there’s an agreed-on exit strategy makes it safer for both parties to engage.
Set specific milestones and goals for this initial “try-out period” and evaluate how it’s going at least monthly. At Spector Group, we check in twice a month with our partners. The more interaction you have with your partner, the easier it is to make adjustments and pivot quickly.
At the end of the try-out period, you can determine if a more formalized partnership makes sense. Create a formal document of the nature of the partnership and, in the case of a joint venture, liabilities and responsibilities should be clearly spelled out, including the goals, financial terms and, again, the exit strategy. Have a lawyer review.
I believe in strategic partnerships because I’ve seen them work to both parties’ advantage. Spector Group has just launched an exciting strategic partnership, SG Latin America, with Newcomb+Associates. The relationship will allow both companies to create a deeper footprint in a burgeoning commercial real estate market.
My experiences tell me that good strategic partnerships quickly multiply a firm’s resources and provide access to new markets, technologies and people. With the right strategic partnership, you can add value to your company that might otherwise take years to acquire.