Tip 2: Be Clear on Your Reason for Partnering
It can’t be emphasized enough how important it is to find your reason for partnering before you actually enter into the partnership. Without a clear and fully defined reason for partnering, you won’t really know if the alliance you are forming will be beneficial for your business in the long run. It’s like taking a road trip across the country without an intended destination or a road map.
Unfortunately, many companies small and large dive into partnerships for the wrong reasons or without deciding on a good reason for the partnership first. They don’t ask the essential question: “Is partnering the right solution for our growth?” This choice should be answered early on in the process.
The decision to grow organically, acquire the technology or to partner with another company should be fed by your company’s strategy. Moreover, your department’s strategy should be in line with that overall strategy. In the early stages of a potential partnership, you should already determine what tool the answer is for the goal you have in mind. Each of your choices – to build, to buy or to partner – will have their own advantages and disadvantages in growing your organization.
This equally applies to larger companies as well as to solo entrepreneurs. You may not call it a strategy if you’re a solo entrepreneur. Perhaps you may call it your mission or your purpose in business. Whatever you call it, the growth steps you make should be in line with your reason for being in the business in the first place.
In the book Start with Why (2009), Simon Sinek describes how companies and people who know their “why” are, in general, more successful than those who don’t. Sinek illustrates a golden circle with the “why” in the middle. This “why” circle is then surrounded by another circle labeled “how,” and the “how” circle is lastly enclosed by another circle labeled “what.”
Every organization should know its reason for being. They should know and be driven by their “why.” The sad thing is many companies are working from the outside of the circle in – they know what to do and how they do it, but only a few know why they do it at all. On the other hand, highly successful companies with a great following and a loyal customer base work from the inside out. They know why they do what they do, and this “why” drives their “how” and leads into the “what.”
A similar thinking applies to creating partnerships and strategic alliances on multiple levels. If your company knows why you are doing what you are doing, you know the how and the what. Initially creating partnerships and alliances will be part of the “how,” but also within the “how” you will need to know the “why” of choosing a partnership over another way of growing the company. Do know exactly why you choose to be in an alliance before establishing one!
In other words, be clear on your reason for partnering in the first place. Many companies just jump into a partnership because they see an opportunity or simply because the people running the companies involved like each other and feel the need to do something together. Or they have been approached by another organization with a proposal to partner.
These reasons are actually the worst for starting a partnership. The partnership proposal may look very attractive to those involved, and this often results in a partnership created too quickly. In such situations, it’s essential to go back to the first stage and question your strategic rationale. Be very clear on your reason for partnering and ensure a good start at the right side of the 80% rule.
Just like with marriage or long-term relationships, you may find your potential partner attractive at first. But once the attraction has faded and you have gotten the chance to look at your partner more closely, you may find that being with them does not help you grow at all.
Be clear with how the partnership will benefit you before you even start negotiating the partnership.
I will publish my ebook “25 tips for successful Partnerships and Alliances” in parts here on my website. Every other week a tip from the book will be shared, in the weeks in between I will publish my regular column. If you prefer to read the tips in the ebook faster rather than wait a full year then click here to purchase your own copy of the book.