IN THE GROWTH SPOTLIGHT
Partnering Offers New Opportunities for
A familiar concept with a new ring in the '90s, partnerships today can turn million dollar companies into billion dollar giants.
In a well-received presentation given at the ACG Corporate Development conference in Washington, D.C., Dorothy Langer, a strategy consultant from Boston, described just how valuable carefully crafted alliances can be.
"With major restructurings taking place in industries worldwide, no company
can be successful without partnering. Yet, most companies do not carefully
consider a pro-active corporate partnering strategy, but instead pursue
partnerships in an 'ad hoc' fashion, without a clear sense of purpose and
required resources. As a result, two-thirds of partnerships fail," says
WHAT IS A CORPORATE PARTNERSHIP?
Langer offers her tried-and-true definition: "A corporate partnership is a relationship - not just a contract - which helps each partner leverage resources to achieve business goals." Within that context, the term relationship means that one can't assume it will work just because it's a great idea or deal. Each partner implies that both parties take risks, and both parties benefit - true mutuality. Goals means there is a clear understanding of each company's desired objectives, and those objectives are compatible.
Lest you think that symbiotic industries are the only ones to partners, think
again. Langer says there are no typical partnerships, no predictable
combinations of companies. Further, there is a wide range of functions to
leverage, including sales, marketing, manufacturing, and research and
MAKING PARTNERING WORK
Focusing on corporate partnering, an "activity that can transform one's business on a scale equal to or better than capitalization, organizational change, innovation and other options for strategic growth," Langer offers a finely tuned methodology, beginning with seven factors critical for partnership success:
The corporate partnering process involves three major steps: planning, engaging and delivering.
Planning operates on two levels minimally: One requires developing a corporate partnering plan; another requires figuring out who the target partners are and constructing a plan for each partner. Simplified, the process involves the following steps:
At the planning stage it is important to bring into the process the people who will make the deal happen, Langer says. Corporate development people are not deliverers of the deal.
"The people in marketing, sales and development who will work on the deal need to be involved from the beginning. Otherwise the delivery stage could crash and burn," Langer says. She cites as an example Kaleida, IBM and Apple's joint venture, which failed a year ago. Langer quoted from a story in the Wall Street Journal (Nov. 1995) titled, How Do Joint Ventures Go Wrong? Kaleida President Michael Braun said, "The marketers at Apple and IBM treated (Kaleida) like an outsider and felt little motivation to sell its products."
But, contends Langer, the marketers may never have been consulted.
"Technology companies like IBM are known for putting deals together without
consulting marketing, even though these companies fully intend to sell the
products that result from the deals."
Engaging involves seeking out partner targets and getting a deal done. It involves cultivating prospective partners, updating due diligence, and agreeing on a practical working relationship. Negotiating win-win opportunities is the final step in engaging and should be the least important - provided all bases of planning and initial steps of engaging have been covered.
AFTER THE HONEYMOON . .
Involving the deliverers in planning and engaging is the first step to successful delivery. Delivering on commitments is next. This includes identifying and acquiring the resources necessary, communicating changes and failures to the partners, and meeting deadlines.
Managing the relationship and monitoring its progress and benefits are vital next steps.
"Managing is key and requires carefully chosen relationship managers who can handle delicate cultural issues. In a partnership there is no boss but rather individuals who use techniques of influence and persuasion to achieve their goals," says Langer.
Monitoring progress involves tracking delivery, monitoring goals, examining the continuing benefits and watching for identified risks.
A final caveat in the delivery stage is avoiding dependence upon your partner. Dependency can create vulnerability and resentment, says Langer. "The irony is that the more successful a partnership is the more dependent on each other the partners become.
"Companies must be vigilant. If a partner owns too much of your sales and then walks away or goes 'belly up,' you're in trouble."
Langer and Company (email@example.com and (617)-367-0657-ph)
is a strategy consulting firm that helps companies develop and execute critical
growth strategies, particularly with strategic alliances. Founded by Dorothy
Langer in 1990, Langer and Company has assisted more than 60 companies to develop
their growth strategies.
Langer Cites Time Warner Example
Clear Objectives Make Successful
In 1989 Time Inc. and Warner Bros. merged to become the world's largest entertainment and information company. As part of the corporate strategy, Time Warner set three partnering objectives.
These goals had the following elements that led to eventual success: they were clear, purposeful and compelling; they were measurable within a timeframe - i.e., the company identified:
Importantly, these goals were consistent with the corporate objectives of Time Warner as a whole.
As a result, Time Warner entered into highly successful partnerships with Itochu,
Toshiba and U.S. West. These partnerships catapulted Time Warner into the forefront
of the entertainment and information industry.
Copyright ©1996 by ACG International