7 Secrets to a Successful Business Partnership
With the latest news about Kraft and Heinz merging to become the world’s fifth largest food and beverage company, it got me thinking about the secrets of successful strategic business relationships. When two or more companies partner (or merge like Kraft-Heinz), there is always the risk of failure. Success will depend on how well the partnering companies can align their once separate strategies to create a new business or partnership more successful (and profitable) than before. As we sit on the sidelines watching the Kraft-Heinz merger unfold, we can only hope these two giants understand the secrets required for a successful partnership.
Over the years, I’ve supported many companies with their strategic partnering to leverage one another’s complementary strengths (think alliances, joint ventures, partnerships, consortiums and other company structures), and the majority have either met or exceeded performance expectations. So even though partnerships often mean increased complexity, multiple languages, differing operating cultures and delivering on a mega scale, coupled with the frequency of failures and disappointing results, what are the secrets to success?
1. Have a Strategic Plan – In a recent study by the CMO Council, 85% of respondents viewed partnerships and alliances as important or extremely important to their businesses, yet only one third of respondents had a formal partnering strategy. The Strategic Plan has to answer why you want to partner and what exactly you need. Do you want access to new markets? Geographic expansion? Pooling of resources? Funding? Being clear on the objectives and then having a clear strategy of what the partner(s) need to bring, is essential. This leads to the first Contracting Strategy Decision – Partner Selection.
2. Invest time in partner selection – Do your due diligence. Is there really a match? Are you really values aligned? Don’t just spend time in meetings or over lunches – spend time in the ‘pressure cooker’ solving real challenges (will blog about this is the future).
3. Genuine senior management commitment – How genuinely committed are the senior managers? What are their fears? How capable are they to support the Partnership? What resources are invested into making it work? What measures of visible commitment do you have? If the original managers move on, will the commitment stand the test of time?
Right. You’re clear on your strategy, you’ve picked the right partner, and your management team is committed. What’s next?
4. Define and map the ‘core value offering’ – Once the partnership has been formed, make sure that the leadership team and then the rest of the organisation is crystal clear on the value that the partnership offers, with particular consideration to the unique value that the partnership offers in the eyes of the client or customer, and how the partners combine to offer a value greater than the value they would offer in isolation. Having defined the core value offering of the partnership, methodically identify the primary outcomes that it must deliver to bring that value, and the drivers of those outcomes within the business. In this way, all activities and elements of the organisation can be aligned to the core value offering and steps can be taken to ensure the capability to deliver that offering is developed and not eroded. The ‘core value offering’ and ‘role clarity’ impacts everything – the new team’s identity and every subsequent Contracting Strategy decision. Invest as much time as necessary to be crystal clear on the offering – grab this opportunity to align. For example is the partnership core offering the ability to self perform? Is it to design and project manage? Is it client relationships? Is it land acquisition and community relationships? Is it product offering? Seamless manufacturing and distribution?
5. Establish the ‘where’, ‘what’, ‘how’ and the ‘ways of working’ – to energise and unify multiple partners, set the vision, the scorecard and the strategic initiatives to provide common focus. Make sure the ways of working together is clear including decision-making, collaboration, problem solving, conflict management, how performance of individuals will be managed, technology and systems etc.
Now that you have developed a clear vision you should also have an understanding of what the combined team brings, the scorecard, the strategic initiatives and the ways of working together. Next are the most crucial steps for taking the partnership off the paper and making it come alive.
6. Develop trust – Let me be clear – without trust the partnership will most likely fail. If you are lucky, it just won’t reach its potential. One of my all-time favourite books, The 5 Dysfunctions of a Team by Patrick Lencioni, shows why trust is so important in teams. Add to the mix multiple companies, cultures, languages and interests and the importance of trust is amplified. Trust is genuinely seeing differences as strengths, encouraging creative challenge, fostering diversity and collaboration. Trust within partnerships should develop through the earlier fundamentals, and trust is best reinforced when the ‘pressure cooker’ is on full throttle and problem solving constructively together.
7. Lead – this is the largest variable, and without it, remarkable things cannot happen. Invest in leadership – not only the senior leaders but the leaders at the pointy end. The pointy end leaders are the biggest opportunity to shift performance. The leadership team must authentically lead, develop trust, engage, connect, listen and model collaboration in the ‘pressure cooker’.
So these are my 7 secrets to a successful business partnership. By following these fundamentals you will be in good stead for creating a business that is aligned, committed and high performing.
If you would like more information on how these fundamentals of partnership success can be applied in your business, please contact me at KFairbairn@stsgroup.com.au.
Post written by Kristy Fairbairn, Project Manager at STS Consulting Australia