How to Build an Effective Strategic Partnership

A few months ago Morrisons announced its strategic partnership with Amazon to deliver groceries ordered through the online retail giant. The deal may have helped to propel Morrisons back onto the FTSE 100. The advantages of a strategic partnership are evident. Both parties in an alliance can capitalise on the strengths of their partner to offset their disadvantages. For Morrisons, its access to Amazon’s delivery network and loyal consumer base, and Amazon now has access to Morrisons’ products which are mainly produced by the brand itself, offering a flatter supply chain and potentially more room to outcompete other grocery stores on price.

What needs to happen now is for a strategic partnership to be built between the two companies so they can function effectively. There are many successful strategic alliances to draw inspiration from, some of which include:

  • Apple & IBM
  • Google & Luxottica
  • Apple Pay & MasterCard
  • Hewlett-Packard and Disney

But what makes a great strategic partnership? How would you build a strategic alliance; especially when your brand and another might have different values, goals and organisational culture? Here are a few tips:

1. See Beyond the Initial Offerings

Fear, anxiety and feeling exposed are three of the main reasons why organisations don’t pursue strategic partnerships. Sharing limited resources and results might worry you and your leadership team. However, business experts state you should look at the potential of what the deal could deliver.

This thought pattern is known as the scarcity-abundance theory. By considering the abundance aspects of your partnership, you can see the benefits and therefore be more positive towards it.

2. Understand the ‘Whys’

Most partnerships are created because one company feels they don’t have enough value on their own; this never bodes well for a mutually beneficial relationship. Instead, you need to be clear on the value you provide the strategic partnership.

Conduct an honest assessment that clearly demonstrates what contributions are expected from you and your partner. At the same time, ensure you know why your partner is looking to develop the partnership. If you can’t deliver what they want, the partnership is never going to work.

3. Have Compatible Cultures

Another critical piece of the association puzzle is to have the right cultural output. Do you both believe in the same ethics and values? If one of you believes in quality at any price and the other thinks that prices should be low – the strategic partnership is more likely to fail.

4. Don’t Rush

There is no need for you to rush any decision or process in a strategic partnership. Instead, ensure that everything you are putting into place is right for both you and your partner. Arrange follow-up meetings to address future objectives and steps to complete the alliance, to be sure that both parties are equally committed and still excited about the partnership.

Failing to do this can lead to one party not undertaking their commitments, and this can place stress and strain on both companies in the future. As a result, customer service can falter.

5. Set Clear Objectives, Deadlines and Responsibilities

Right from the start you need to be upfront about what you expect to do and what you would like your partner to contribute. All of these expectations need to be set out in a series of objectives with clear deadlines, naming who is responsible for what.

You can use these to benchmark your partnership’s success and make adjustments when activities are not progressing as expected.

6. Clear Communications

Clear communication is an essential element of a strategic partnership. You need to keep in contact with your partner to check up on progress, discuss changes in the market or new opportunities or threats.

Communication can be completed at the very senior level, or you can assign liaison officers to assist you. The liaison officers will relay information between the top leadership and build a strong rapport with the contacts of the partner organisations.

7. Have the top Ingredients for Your Partnership

One of the main reasons business partnership deals fail is because there isn’t enough trust, honesty or respect for the other partner. So make sure that you have those in abundance for your partner. If you don’t, then perhaps you need to look for another.

Conclusion

Strategic partnerships can offer your business significant benefits. IBM currently generates 30% of its revenue from various strategic alliances. You need to ensure that you have the right ingredients in your partnership to make it work, and that you communicate clearly with each other to progress smoothly and deal with any opportunities or threats that may arise.

Speak to the Balcroft team today if you are looking to implement a strategic partnership.

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