Judging by the title, you may be asking yourself, “How old is the person who wrote this blog post?” That’s not important right now. We’re here to talk about strategic partnerships based on the thoroughly heart-warming lessons we’ve all (don’t you lie to me) taken away from watching Pixar’s own Toy Story.
Before immersing ourselves in cute movie references, what do people even seek in a partnership? Think back to school. When the teacher announced to the class that the next project will be done in groups, who did you gravitate towards, or regret having gravitated towards? Did you seek out the friends you could go through a Pixar movie marathon with while your work fell to the wayside, or the ones that could help you bang out 15 pages of great content at the library at 8:00AM on a Sunday? Were the groups made up of 3 students of the same majors, or were their backgrounds more diverse? What was the quality of the end-result like in those situations? You have certainly had positive and negative experiences between both spectrums, but striking the balance between the extremes is what makes strategic partnerships imperative. Though this becomes a great lesson to learn in our youth, it isn’t something you’d want to experience when determining an appropriate growth strategy for your 25-year-old company, for example.
You could imagine how much more important the decision in choosing a partner becomes in a corporate setting where you’re not playing for fun anymore. The most obvious motivator to do well might be to expand your customer reach to ultimately lead to more revenue, but that’s only the tip of the iceberg (NBI, 2010). A new successful partnership will open the door to new products, potentially reach a market you’ve been trying to break into, keep what is rightfully yours away from the competitors and, depending on who it is you’re partnering with, increase customer loyalty. The right business partnership could even help improve your company’s weaknesses: you can identify what your firm does exceptionally well, continue to be exceptional at it, and outsource the stuff you’re only meh at best at to someone who can knock it out of the park. It is also a great networking opportunity: you’re exposing your company to references and new leads, and creating liaisons within your industry or sister industries as well.
So how did a relationship (albeit an unlikely one) between a toy cowboy and a spaceman teach us a thing or two about creating strategic partnerships? Although I’m sure you already remembered this, Toy Story is about two toys – Woody, the cowboy, and Buzz, the astronaut – that get separated from their owner, Andy. Both wanting to be reacquainted with him, they are thrown into a series of events combining Woody’s street smarts and Buzz’s high-tech analytical skills, allowing them to devise a plan which forces them to overcome their differences and get home before Andy moves away forever.
Chills? I know.
Flying? Or falling with style?
Bound for success or for failure? At the beginning of a new partnership, the line separating both of those directions is scarily thin. The way you pursue a partnership will determine a number of factors. It will determine how successfully you will generate new ideas (maybe new products), gain access to new clients, be exposed to key players in the industry, gain further understanding of the industry you currently work in, or the one you plan to enter. So, why be picky?
- Trust: Partnerships require a lot of work. In order to work most effectively together, you’re going to have to share some information about your company to one another (Welford, 2013). Think about it: would you trust the person you’re partnering with with your wallet? Maybe this is an extreme example, but you’re going to be entrusting part of your life to a new person. You will have to continue to trust them even through the rough patches, when we daresay may be the most testing!
- Agile management: Set milestones for the projects you work on jointly to review and revise as needed. This person needs to be able to evaluate the stages you reach as you go along, and evaluate it fairly at that. You are joining efforts not just to propel an idea as quickly as you can into any given market, but to carefully build something better for an eventual launch.
- Shared vision and values: Are your goals in line with your partners? This was the easiest part for Woody and Buzz to establish: getting back to Andy. But what if your end goal is to save the local woods, while your partner’s is to raise a massive housing project? Your vision and values will clash if you are not upfront in establishing what they are at the beginning, or even how they may eventually change.
- Honest and open communication: We’ve all been in situations where we felt like, “There seems to be no sign of intelligent life anywhere.” We know. It happens. Needless to say, misunderstandings like this should probably be avoided at all cost. Make sure you’re explaining your ideas sufficiently and ask your partner to reiterate your idea back to you the way she understood it. When it comes to product strategy, you don’t want to risk screwing up its sales potential by not having clarified something properly.
Aside from this, partners might want to ensure that they’ve done the following (Brown & Hogg, 2012):
- Established measures jointly: Defining one’s agreed-upon success metrics.
- Identifies strategic measures: Which changes are you committing to in the long-run?
- Established evolving measures: Establish expected financial measures such as increases in revenue, profitability, unit sales, or reductions in costs in the key operational areas.
- Create relationship measures: Strengthen the bond between partners to extend the relationship well beyond one isolated project. You have a stake in their business now, so referring them to resources you might think could be helpful to them will add to the rapport.
- Agreed on customer measures: Agree on key metrics items such as customer satisfaction and sentiment, customer attitudes towards referring, and usability. Remember that a client can very well judge your products or services by your alliance. The Olympic Games might lose some credibility if one of their event sponsors turns out to be Imperial Tobacco, right?
To infinity and beyond!
Okay, so… maybe not all partnerships are meant to last forever. But despite this, regardless of the duration of the arrangement, your company and your partner should each walk away with substantial value. Maybe you’ve gained bonus branding points for pairing with the latest environmental organization, or maybe you’ve lined up five new prospects in the sales pipeline by encouraging software demos, but your company should only gain from the experience. Even if the partnership is not ongoing, consider keeping them as a resource to refer back to in times of need or for referencing other organizations to.
Brown, A. & Hogg, P. (2012, July). Successful Strategic Alliances: How to create a mutually agreeable measure of success. Special to Financial Post. Retrieved February 3rd, 2014, from http://business.financialpost.com/2012/06/22/successful-strategic-alliances-how-to-create-a-mutually-agreeable-measure-success/
National Federation of Independence Business (NFIB). (2010, August). The Importance of Strategic Business Partnerships. Protecting the Future of Small Business. Retrieved February 4th, 2014, from http://www.nfib.com/article/the-importance-of-strategic-business-partnerships-52254/ .
Welford, B. (2013, July). The 12 Step Check list For A Successful Business Partnership. Under 30 CEO. Retrieved February 3rd, 2014, from http://under30ceo.com/the-12-step-checklist-for-a-successful-business-partnership/.