||June 30, 1996|
MAKE STRATEGIC PARTNERSHIPS WORK
"Partnering is often the most important growth strategy a
technology company could have," says business development consultant Dorothy
Langer. "Yet most companies are clueless about how to spot a good partnering
opportunity, or how to work successfully with another company. When the phone
rings, they just go into reactive mode."
Langer, an industry veteran who has worked for IBM,
Gartner Group, Businessland, and a blue-chip list of software and hardware
clients, has developed a seven-point checklist of critical success factors for
strategic partnerships. "It's interesting that none of these factors involve
negotiation," she notes. "I've helped put together dozens of partnering
relationships, and the few issues that had to be negotiated always turned out to
be less important than people thought they'd be."
Langer recently shared her partnering guidelines with
- Build a marketing plan: "Partners are like any other customer," Langer says. "Before you
make the first sales call you need to resolve a lot of pretty complicated
issues, preferably as part of a formal plan. What are the competitive values
you bring to the table? Are you willing to take risks--like losing your
independence--in return for partnering benefits? How will you quantify whether
the deal is working? And are there things you absolutely won't do, like
license source code or create a private-label version?" Once a company
achieves consensus about these issues, Langer adds, "it's usually much easier
to make a list of potential partners."
- Be sure you solve an "eye-popping"
problem: The best way to build solid deals is
by offering the potential partner a solution to a highly-visible business
problem, Langer says. "The real value of the deal to a partner might be your
technical team, your knowledge of an esoteric market they want to penetrate,
or access to your customer base." She warns that partners are rarely
interested in just becoming a reseller of someone else's products. "The
product is not the value, so leave it out of the discussion."
- Run a deep background check: Before closing a partnership deal, Langer says, it's essential
to check out the partner's financial model, organization chart, and sales
channels. "You especially need to know how much authority your contacts have.
And you should have a feel for the corporate culture, because big companies
tend to work better with people who are like themselves."
- Visualize the deal:
In dealing with big companies, says Langer, it's helpful to offer a tangible
proposal that demonstrates what the end result might look like--a product
prototype, a marketing campaign, or a business plan. "If you just say, 'we're
going to work together,' people will sit around and talk forever."
- Involve the deliverers: "If you're talking with a company about a co-development deal
and they won't let you talk with their sales people, that's a red flag," says
Langer. "You can't stuff something into a company without getting the support
of all the people who have to make the process work." The riskiest
partnerships are often set up by "ivory tower business development groups,"
she adds. "Their job is just to do deals, and they don't get involved in
- Create a specific relationship
agreement: Formal contracts are typically fuzzy
about how two partners are supposed to work together, Langer points out,
because lawyers aren't comfortable about describing the give-and-take of a
relationship that will evolve over time. "But even if you only write a
non-binding side-agreement, it's always good to put everyone's expectations
into written form." She adds that it's especially important to appoint
specific "relationship managers" who will be accountable for the ongoing
success of the deal. "And just in case the relationship falls apart, you
should write a kind of prenuptial agreement that specifies who gets
co-developed technology, customer lists, and other assets."
- Expand on success: The highest payoffs from partnerships usually occur when small
companies expand on existing relationships, rather than look for additional
partners, says Langer. "It's hard to find good partners. If a deal is working,
actively build on it. The more champions you have in the organization, the
better off you are."
president, Langer and Company, 14 Joy Street, Boston, Mass 02114;
617/367-0657. E-mail: email@example.com.
Copyright © 1996 by