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Download80% of leaders search for strategic partnerships – but why do only 65% find successful ones? Use our Strategic Partnership deck to form mutually beneficial relationships that elevate growth. Learn best practices to innovate across a partnership lifecycle. Assess partnership potential and weigh benefits versus risk. Most importantly, avoid failures and build partnerships that last for sustained impact.
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DownloadTrack a partnership's activity progress and develop outcome-based measures for success. (Slide 4)
Potential risk association identifies and calculates partnership value against potential exposure to risk. (Slide 8)
An evaluation matrix weighs various partnership options against each other to select more organizational buy-in, better brand synergy, or acquire more customers. (Slide 12)
According to McKinsey, most strategic partnerships fail due to the partners' lack of focus on the areas where the most value is at risk. To succeed, partnerships need to match objectives, have effective governance, be mutually beneficial, and stay independent.
Whether an organization needs to research and find the right partner, build on an initial partnership into an ongoing relationship, or keep an existing partnership active and mutually rewarding, this deck provides a roadmap to your partnership success.
The right strategic partnerships are used by top brands to increase growth into new markets, cover weaknesses, or reinvent themselves. Kohl's partnered with Amazon in 2020 to provide hassle-free Amazon returns at the department store. In return, Kohl's added 2 million new customers over the course of the year with sales topping analyst's estimates. Others like Apple Pay and Mastercard, or Starbucks and Barnes & Noble, were integrated so seamlessly that it becomes a day-to-day norm for customers. On the other hand, failed partnerships can be a trainwreck. Like the Staples and Office Depot or AOL and Time Warner partnerships. (Slide 1)
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There are many motivations to introduce the development of a strategic partnership. An organization may want to secure new introductions and customer referrals, source and leverage new business opportunities, or build a win-win relationship that is mutually rewarding for the long term.
You can edit and use this slide to show the importance of each individual component in the context of your team's overall strategic goal.
Additionally, this slide can be used as a progress tracker to determine how far along a partnership is. For instance, has your organization identified the right points of access to partner groups, and if so, how far along into the research stage are you? Do you understand where and how a partnership can benefit your business? Edit accordingly to present to key stakeholders. (Slide 2)
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To form a successful partnership, individual program components need to be met. The alignment of these components with the activities needed to make it successful is key.
For example, let's say you're leading a new partnership initiative. You work for a successful video-first social network and want to formalize a partnership with a business-focused video platform to integrate its back-end advertisement tools. The goal is to attract small business owners and make it easier for them to run sponsored ads on your platform
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First, you develop your strategic partnership plan and estimate the resources required. Then, define the associated activities to be accomplished, like define the role of each partner, determine key engagement strategies, and establish how you will evaluate success.
Next, invest in the program and align your staff. This includes the allocation of funds and the development of training tools so that both organizations have enough resources to encourage collaboration.
A collaborative culture is important, so make sure support and program visibility are provided to all the stakeholders – be it managers, investors, employees, or customers. Establish a common language among teams and promote ongoing communication so everyone's in the loop.
Next, market the program with key value propositions that align with your partner. In our example, both companies want to increase ad revenues and make it easier for users to profit off their content, whether they are advertisers or creators. You can cross-develop marketing materials that work in tandem with each other.
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Last, measure your progress and develop evaluation measures. For instance, you might pick the KPIs of user engagement on the platform and advertiser traffic increases to determine if the integration is mutually rewarding to advertisers and creators. If ad traffic increases and ad revenues go up, that would be a good sign for both partners. But if engagement goes down and overall traffic decreases, that could be bad for your platform's user experience even if the rise in advertisers benefits your partner. (Slide 3)
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The evaluation process should begin in the partner selection stage. Before an organization even commits to a partner, leadership should question what the objectives of a partnership are, what each partner would contribute, and how the value of partnership can be maximized.
Take business needs into account: will the partnership create stronger customer loyalty, increase growth and market share, increase profits, or provide greater access to distribution channels?
From a strategy perspective, consider if potential partners have a strong reputation? Are their cost and quality comparable to your own? Could they supply a larger customer base? Are their products and channels well aligned?
Last but not least: maintenance. For organizations already in a partnership, is the value of the partnership fully realized? Have any changes impacted mutual success? For instance, have economic conditions, market demand, or the regulatory environment changed to impede your success? (Slide 5)
There are five main stages to a partnership lifecycle: initiation, formation, growth, maturity, and reinvention (or in less promising cases: decline).
In the initiation stage, create a plan and identify target partners. Develop a joint strategy, finalize business propositions, and propose alliance organization and leadership. In the example of our video ad tools integration, determine who will lead the project and how the organizational hierarchy will be structured. Since the plan is to integrate the tools to be used on your company's platform, you could likely be the project lead and will orchestrate collaboration between the dev teams at each company.
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During the formation stage, kick off the partnership and incorporate stakeholder interaction. This is where you'll coordinate team meetings and feedback sessions with stakeholders, management, and test groups.
In the growth stage, your job is to put the people, processes, and systems behind the partnership in place. A project manager will manage capital, meet project demand with a focus on value growth, and create new approaches as needed to extend growth. In the case of your video partnership, this is where you focus on marketing and the promotion of your new tools to generate awareness and attract advertisers. Each partner will do their respective marketing and outreach to maximize growth and value potential.
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As the partnership matures, both parties may need to make improvements. At this point, growth will likely plateau, and the synergy between partners will have hopefully cultivated a unique culture. This can also be a phase of consolidation, where values generated are reinvested to enhance the alliance.
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Lastly, in the reinvention stage, the partnership may need to be reinvented to the next level or spun off into a separate organization. This will most likely be due to a decline in value generation. The relative interest of strategic partners can also contribute to a decline as complacency or a failure to adapt to changed circumstances can set in. Both partners will need to be proactive to reassess or reinvent, and additional training of team members may be required. Otherwise, the alliance should be closed to avoid unnecessary blame game. (Slide 9)
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The right business alignment is important for any partnership to succeed. Analyze if the target market, competitive landscape, strengths and weaknesses, and performance of both organizations are the right fit. If so, evaluate development options under specific criteria like resources, capabilities, or ROI with a set time frame and a manageable level of risk. (Slide 9)
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A checklist for effective partnerships simplifies the search for a strategic partner. Management can assess partnership priorities like synergy, common interest, mutual dependency, complementary support and shared core competency, among others.
For instance, the alliance checks off as a voluntary partnership with potential valued-added that is greater than the sum of individual contributors. There is also a common interest between both parties, so resources can be allocated to projects that both find most important.
However, there is not mutual dependency or complementary support present. In the case of your video platform partnership, this could be because both parties fall into a similar niche and don't have complementary services. And because the video ad tools will be hosted on one platform over another, there is not an equal share of risk and responsibilities.
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That said, the shared core competency and respect and trust could outweigh the lack of effective communication, so as long as those negatives are remedied with strong leadership, organizational structure, and a solid strategy guide, it could still prove to be a fruitful partnership in the long run. (Slide 11)
When a company needs to weigh and assess multiple partner options against one another, a partnership evaluation matrix is a useful tool to visualize the relative strengths and weaknesses of each candidate. (Slide 12)
To evaluate success and failure, partners can list and measure the factors that will be present in success and factors that will be missed in failure. It's important that both parties agree on these factors before forming a partnership or they risk falling out over miscommunication and mismatched expectations.
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Some factors include alignment on partnership objectives, effective internal communications, constructive governance, clearly defined KPIs, a plan to restructure and evolve the partnership over time, and defined roles and responsibilities.
You can edit this slide and share it with potential partners to align expectations. Both sides can tabulate the data to rate specific components that are the most critical to them. (Slide 13)
Here are some partnership models to consider.
Out-task partnerships are one-off contracts. An organization will typically partner with multiple vendors with a basic price based on the scope of the contract. This is the simplest form of partnership.
Relationship partnerships are typically task-based, where companies have a generic product and service and want to expand activity around it. This could be a relationship between a supplier and distributor.
Preferred partnerships are contractual relationships with defined scopes around recurring activity. This might occur when a company partners with a marketing or ad agency on a recurring or annual basis. It's a preferred partnership because there is a mutual trust that's been established, so this partner becomes the go-to choice of the organization.
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Alliance-based relationships are more exclusive agreements with a higher degree of trust and collaboration. Typically, this would be an alliance an organization might have with an external IT or HR company that is focused on value-additions that mutually benefit both parties.
Equity partnerships are when two organizations have common equity ownership in each other. Typically long-term in nature, these partnerships are formed when two entities share common goals, risks, and rewards.
Strategic alliances are higher level commitments of investment with a longer-term strategic value add. The senior management of both parties share high levels of engagement and investment. (Slide 14)
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