The Power of Partnerships
/Two heads are better than one. Collaboration and partnerships are evident in real life, though often not very evident. The best examples are the participants on Survivor or The Apprentice, with people harnessing the power of working together instead of competing with one another. Often short-lived yes, but these partnerships exist for a specific reason, dissolved the moment the desired objective is accomplished.
Businesses across the world are now adopting this strategy to utilize innovation from their peers to enhance their offerings to customers. Changing consumer and market expectations have companies evaluating their business models with an external lens, fueling an environment of collaborative innovation in the enterprise and start-up space.
While mergers and acquisitions have traditionally supported companies in their pursuit of growth, alliances and partnerships is the solution for an economy with limited resources. These alliances allow teams to design focused terms, pinpointing specific areas of value creation, translating into enhanced long-term business success.
Meaningful partnerships provide businesses the opportunity of attaining the 80/20 Principle – 80% results come from 20% effort. This can be done by identifying and leveraging key (and unique) complementary resources that can help craft a sustainable competitive advantage.
But, what are the few salient features of partnerships that businesses need to be aware of before embarking on a joint journey?
An ideal partnership is one where the result is greater than the sum of its parts. The outcome of any alliance needs to be one that cannot be recreated by its participants individually while significantly driving incremental revenue for everyone. In other words, 1+1=3.
Beyond forging a synergy for value creation, the partnership eco-system is founded on aligned beliefs and values. This can include business objectives and ethics as well as management style and priorities. Presenting a unified offering to customers involves a deep understanding of not only the market but also potential partners as well. Simply put, teams involved in any collaborative agreement needs to function as 1+1=1.
There are also challenges associated with partnerships which teams needs to be aware of prior to the launch of any collaborative effort. These can include a drain on resources, various implementation issues, widespread accountability (or lack of) and even management having to accept the loss of sole decision-making powers. Businesses can also outgrow partnerships over time, resulting in new conflicts of interest emerging. In these situations, it is important for teams to evaluate the progress of any venture, assess any potential for future value and determine how sustainable or beneficial it is for their business objectives. Killing a venture early enough can save everyone involved unnecessary damage on many levels.
Despite the challenges, partnerships and alliances can help businesses move forward quickly and decisively in the new digital economy without losing their core value proposition – all through a little co-epition.
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