The 5 Powerful Myths of Partnering
In this continuing series focused around alliance building and partnering, I’d like to explore 5 topics, or should I say Partnering Myths, that I will discuss in this issue. These myths, as I term them, are nothing more than a set of expectations that are usually never realized.
Here are my 5 myths of partnering:
Myth No. 1 – Loyalty and success are dictated by the Agreement and Contract. My experience indicates that a written contract has very little to do with success. It’s not the numbers, terms or conditions that make alliances work, rather it’s much more dependent on people and mutual trust.
Myth No. 2 – My second myth, Exclusivity, frequently is associated with further increasing the mutual value of the partner agreement. Some believe that exclusivity enforces trust and loyalty and further creates a foundation for success. Perhaps that is true in some cases, but while exclusivity may benefit the smaller partner in the near term in a weak-strong partner relationship, it usually creates over-dependence on the larger partner in the long term and can result in non-competitive selling situations, reduced revenue and lower market capitalization for the smaller partner.
Myth No. 3 – Short Term Financial Results are indicative of a successful partnership. While short term results are always good, they can also cloud or mask problems with how the combined products and services are supported and what the longer term satisfaction requirements are for the customer.
Myth No. 4 – Money and Resources can solve partnership problems. Rarely does a set of joint marketing initiatives or investments solve an inherently poor business proposition. Rather, joint marketing spending needs to have clear objectives assigned in terms of what it will do to create demand and brand for the partnership.
Myth No. 5 – Industry Analysts buy into it. Over the years, I’ve heard a lot of analysts who come out and endorse a certain alliance or particular partnership. While analysts usually have excellent insight into the market landscape, they can often be blind-sided when it comes to understanding how productive alliances net out in actual working relationships between two sales organizations and R&D groups.
No doubt that there are others that I haven’t highlighted.
What’s your favorite myth when it comes to partnering?
This is a good summary and I imagine that most of us experienced the lack of relevance of these myths. However, some questions remain :
1) Financial model : How to measure the long term impact of partnering ?
2) Management accounting : Does company have to assess the contribution of partnering and come out with figures. and if Yes how to do it?
3) Agency cost : How to be sure that your Alliance Manager is doing a good job?
These questions show how the success of Alliance Management depends on company vision & strategy rather than on ecosystems forces. This is more an internal challenge and and company willingness that can make these myths look very effective somtimes
I have another one for you :
Executive Relationship drives partnership success. I strongly believe that, while these executive relationship are important for sucess, they are not enough. Only very strong relationships built at field level between “doers” will ensure partnership success. Hence great investments to shape in order at every level of the 2 companies people are aligned and work together, sales, technical, legal.
There are some tools for financial performance measurement including using the Balanced Scorecard which companies use. Measurement is easier for channel driven reseller programs. But much in the way of financially measuring strategic alliances is more difficult. Thanks, Ralph
And yes I agree about executive relationships being over rated. See my blog – point #2 on Management
http://rgsmanagement.com/SeveriniBlog/2009/08/4-key-ways-to-build-the-right-balance-with-your-alliance-partners-and-channels/
On the Balanced Scorecard, I discussed in a prior blog. You can also refer to the Association of Strategic Alliance Professionals (ASAP) that uses this as a framework od partner management. Here’s links to both.
http://rgsmanagement.com/SeveriniBlog/2009/08/4-key-ways-to-build-the-right-balance-with-your-alliance-partners-and-channels/
http://www.strategic-alliances.org/