by Mark Brigman
Business Service Management (BSM) is a booming segment of business right now. IBM and other “big data” companies are working diligently to offer sophisticated systems that provide vital performance data both within companies as well as to partnering organizations. It has been said that you cannot manage what you cannot measure. For this reason, it is critical that each party discusses and agrees on a set of KPIs that will be measured and communicated to key stakeholders.
It is also important that the partners agree to revisit the list of KPIs from time to time to ensure that new metrics are not needed. Over time, you will likely determine that new KPIs could add insights so you work with your partner to begin to capture the output. On the flipside, it is likely that certain metrics that are being captured are not adding value, and they should be dropped from the list of KPIs being tracked by the partnership. Simple is always better; do not collect what you do not use.
It is critical to have consistent and open lines of communications between partners. Depending on the size and level of interdependence of the strategic partnership, communications could range from daily to monthly. Furthermore, communications will range based upon scope of responsibilities. For example, many strategic partnerships have a working team that handles the day-to-day management of specific initiatives. In these cases, daily communications is common to keep the tasks moving forward.
Scheduled meetings, either in person or by phone, give everyone an opportunity to discuss any challenges that may exist and provide time to offer updates as needed. But just as important, it allots time for the working team to reconnect and continue the rapport building process.
In today’s fast-paced, ultra-stretched, busy schedules, we do not allow enough time for meaningful personal interactions. We must remind ourselves that the foundation of partnership success is trust, and trust is only gained and maintained only through interpersonal interactions. You need to ensure that you and your team invest the proper amount of time necessary to maintain strong relationships. Remember, businesses do not deal with businesses, people deal with people.
Esprit de Corps (Commitment):
Esprit de corps is French and it means “for the spirit of the group; or, to feel enthusiasm, devotion, and a sense of responsibility for the welfare of a group.” Having a strong sense of commitment to the cause is an absolute imperative for strategic partnership success. So what does the word commitment mean? According to Heidi Reeder, Associate Professor at Boise State University and the author of Commit To Win, commitment is the experience of being psychologically attached to something and intending to continue.
Reeder claims that there are four factors that can predict one’s ability to commit to an endeavor:
Treasures (benefits)
Troubles (costs)
Contributions (investments made)
Choices (competing options)
Commitment can only come if people fully understand what they are committing to. The planning portion of a strategic partnership is critical to achieve commitment because this is the phase of the process that fully discloses to each party what is being asked, what the commitment entails. If you enter into a partnership where quitting is a convenient option, then save your time and money and do not form the partnership. Every partnership undergoes challenges, unknowns, and turbulent waters that will test your will to succeed.
If you think that growing a business is challenging when dealing with your co-workers within your own organization, strategic partnerships are a whole new game. Realize that strategic partnerships include employees from other companies whom you do not directly oversee. Your partner’s organization has its own unique cultural norms and standards and forms of communications. Your ability to influence and direct your partner’s actions will likely be significantly lower than your ability to influence employees in your own organization.
When considering engaging in a new strategic partnership, it is important to understand the full commitment of time, money, and other resources that are required in order to make the endeavor successful. Managing and leading strategic partnerships require a significant amount of resources from all companies involved, a full, unwavering commitment to encounter, endure, and overcome the significant challenges that inevitably lie ahead.
So what are some strategies that can help you test a potential partner’s level of commitment to the cause?
Have they actively engaged in planning conversations, and do they have a clear and consistent view of the partnership’s goals that align with yours?
Are they willing to sign a multi-year deal? Depending on the partnerships complexities, many strategic partnerships take more than one year to produce results.
Are they willing to forgo a termination for convenience clause in your agreement? That is, are they willing to commit to supporting the partnership at least until the initial term ends, or do they want to have a lever to take the easy way out?
Bernie Brenner, Co-Founder of TRUEcar and the author of The Sumo Advantage, states that his organization will not enter into a partnership with a company unless they are willing to sign a multi-year agreement and forego a termination for convenience clause. He argues that these two points alone could be a clear signal of a company’s lack of commitment to a partnership. Bernie goes on to suggest that challenges arise in every strategic partnership—it is a part of the territory. When we attempt to create something innovative, new, and unproven, we have to be committed to the cause and not be likely to take the easy way out, otherwise, failure will be the inevitable outcome.
Speaking to Bernie reminded me of a story, The Halfway House. On the side of a mountain in the Swiss Alps, exactly halfway to the summit, sets a cozy, quaint café and gift shop affectionately named The Halfway House. Every day that the weather allows, tourists meet at the base of the mountain and start the 8-hour trek toward the summit. The air is crisp and the scenery indescribably majestic; climbers see snowcapped mountains for miles and the only building in sight is The Halfway House.
Some climbers join guides for their expedition, while others simply go it alone. The climb to the summit does not take a heroic effort, but there is no doubt that the climber’s legs will be tired by the end of the journey. It seems every climber in the parking lot chats about the amazing pictures that he/she will take at the summit. You can hear of bets being made about who will assent to the top first. As the journeys start for hundreds of climbers, it seems everyone offers at least one comment of their personal vision of reaching the summit and their personal reason for doing so.
Groups of people form at the trailhead and organize their thoughts and teams before they begin. You can hear the hired guides and the do-it-yourselfers making sure everyone has water, snacks, extra socks and clothing, a camera, and other gear needed for the day. One will also witness some “kamikaze” climbers who do not have full appreciation for preparation, but nevertheless are excited for the challenge as they take off.
By lunchtime, many of the climbers grow a bit tired and cranky. The high anticipation of the start has long worn off. At this point, the climbers are four hours into their journey and are nearly halfway to the summit. Their stomachs start to growl with hunger and their legs begin to feel heavy as they continue toward the top of the mountain. You can hear periodic words of encouragement that are shared by the more motivated climbers, the ones who seem to have a clear purpose for reaching the summit.
On one such trek, a mother promised her sons that she would take a panoramic picture with her phone as soon as she reached the top so she could share it when she returned home. Another climber, a battle-tested Marine, promised a mother that he would spread her son’s ashes at the top of the mountain. The warrior was killed in combat and one of the items on his “bucket list” was to snowboard in the Swiss Alps. Everyone seemed to have a different reason for reaching the top, but as each hour passes, it becomes apparent that the levels of commitment very among the individual climbers.
At last the climbers arrive at the m
id-point, The Halfway House. The quaint café is a welcome sight for hikers as it is perfectly positioned on the side of the mountain with large, welcoming doors. The teams are able to come inside, grab a hot meal, and cozy up next to one of the two fireplaces. The café visitors can look out of the tall, picture windows at the majestic views of white-capped mountains all around. The images seem like endless Christmas cards just waiting to be printed.
Groups of climbers randomly gather inside of the building and share their stories of the adventure thus far. Some laugh, smile, and joke about their fears and accomplishment of having reached the halfway-point, while others express their newfound indifference to reach the summit or their regret to have agreed to the challenge in the first place. At the start of the journey, there were no discussions about the potential failure of reaching the top, but the sounds of defeat and weakened commitment are now a part of the white noise surrounding the climbers.
With their stomachs full and bodies warm, the climbers are more comfortable and relaxed. But it is easy to sense the division between the committed and non-committed. After an hour, the guides and do-it-yourself team leaders rally their groups to head back into the cold and continue their assent in order to make it back down by dark.
Some climbers are eager to accomplish their goal of reaching the top, while others cannot wait to get off of the mountain. After a few minutes of discussing, considering, and some yelling amongst particular teams; the division among teams is clear. Only half of the climbers reenter the cold and head up the mountain while the rest remain in the café, sipping on warm drinks, soaking up the heat from the fire as they watch the climbers through the large windows.
As each minute passes, the climbers become smaller and smaller as they continue up the mountainside. Just five minutes after the climbers left The Halfway House to continue their journey, a small group of people had a change of heart and decided to continue the challenge. After a few minutes of reconsideration, their fears of regret for not finishing what they started outweigh the threat of mediocrity.
Several hours later, the first wave of climbers make it back to The Halfway House and are reunited with their families and friends. The climbers who completed the assent are full of excitement and a strong sense of accomplishment. Their enthusiasm cannot be contained. The spectators who stayed at the cafe, though, have a visible look of regret and despair.
The climbers who had successfully reached the summit share visions of the awesome cloud formations that filled the sky on the opposite side of the mountain range, but the spectators cannot relate because it is a scene that they did not witness with their own eyes. As the mass of people traverse down the mountain toward their cars, the divided feelings of great accomplishment and deep despair also travel with the climbers.
The regrettable utterances of “should’ve, could’ve, and would’ve” fill the air during the descent. For now, the opportunity has passed. The “should’ve, could’ve, and would’ve” thinkers are not going to get a second chance. They can only continue forward and reflect on their decision and learn from it. When the next opportunity presents itself to stay committed to a challenge, the decision to continue will be made as opposed to a resigned choice of mediocrity. Ironically, mediocre means “halfway up the mountain” in Latin.
What can we learn about strategic partnerships from The Halfway House story? I can promise that the strategic partnerships that you embark on will be filled with opportunities for you to choose mediocrity and safety, but those choices will not result in significant accomplishment. Only the choice to maintain commitment and esprit de corps will leave you with the satisfaction of success and fulfillment and give you the results that you planned to achieve in the first place.
As a quick side note, I want to share some staggering statistics regarding employee commitment as you look to improve strategic partnerships within your organization. As we seek to engage and develop relationships with partners to grow our companies, we must first consider our own teams. It is imperative that our strategic partners be engaged and committed to our collective success, but more importantly, as business leaders, we must first ensure that our own team is poised for the challenge.
According to a 2014 Gallop Poll, only 13% of employees are psychologically committed to their professional work. This means that 87% of the employees are either “not engaged” or “actively disengaged” in their work. Considering these staggering statistics, it is no wonder why the failure rate of strategic partnerships is so high. However, having partnerships that are led by employees who have a strong sense of purpose and commitment to the joint vision of the partners will significantly improve the partnership’s likelihood of success.
Results:
To quote Stephen Covey, I, too, recommend to “begin with the end in mind.” When it is all said and done, we choose to enter into strategic partnerships so that we are better positioned to achieve results that will help our organization prosper. Without meaningful results, no business, no partnership, and no relationship will sustain.
Achieving strong results does not happen by accident. It is never automatic, and it is rarely effortless—especially in business. Achieving significant results take time, discipline, planning, nurturing, management, leadership, and a couple bouts of good luck along the way. There is no doubt that our actions and abilities not only influence our results, they determine our results.
According to a recent CMO Council study of C-Level Officers, 85% of respondents view business partnerships as either “essential” or “important” for their company’s future. However, only 33% of these respondents indicated that they have a formal strategy for partnerships. Many times we get into the daily grind of operating our businesses only to find that our business is operating us. Strategic partnerships can be an incredibly effective way to significantly grow a business, but is has to be intentional; there has to be a disciplined strategy in place.
The CMO Council’s report offers the following recommendations to business leaders:
Companies must have a leader who develops the structure, processes, and measurement systems for how the company will approach, form, develop, manage, and assess partnerships.
A failure to think through the objectives, align on win-win outcomes, agree on resourcing and responsibilities across the parties, and decide on key milestones and checkpoints can lead to a relationship that languishes over time.
The CMO Council’s research and recommendations are spot-on. There seem to be countless studies that have been published in recent years that validate the growing need for effective strategic partnerships and also a growing concern that strategic partnerships are not effectively being structured or managed, causing high-failure rates.
At the 2013 ARPAE Summit in Washington D.C., it was discussed that, according to their research, 90% of CEOs are very interested in forming strategic partnerships in order to advance their businesses; however, only 65% stated they had experience in managing such relationships. And just because 65% have experience in managing strategic partnerships, this does not mean they know how to achieve great results from their partnership, in fact, most do not.
Just as we create business plans and business cases to help manage our organizations, we too must have the same structured discipline to incorporate these management principles into our strategic partnerships. As a matter of fact, I would argue that having a definitive plan with a strategic partner is more important than a plan for our own firm. After all, we have direct influence and control over the fate of our employees, but we have much less control over our partners. Therefore, we need to be diligent in the way we select, structure, manage, and optimize our strategic partnerships.
After reviewing the literature regarding strategic partnerships and their high-failure rates, it is more than apparent that companies face major challenges when working with strategic partners. All experts on the subject recommend following a model or framework to add structure, process, and intentions to help govern the partnerships. A
lthough there is consensus that more structure is needed, there does not seem to be agreement on the optimal framework for accomplishing this task of coordination.
For many, many decades, companies have engaged in contractual relationships with suppliers, distributors, agencies, and other providers with the hopes of creating a competitive edge. Unfortunately, the majority of businesses end up with a set of vendors that provide expensive, sub-par products and services that add little to no value to your company.
For this very reason, I created the Strategic Partner Leadership Model™ to methodically take company leaders and their partnership leaders through a process to ensure they achieve their intended results. The Strategic Partner Leadership Model™ will be covered in great detail in chapters 5 through 10. But as a prelude, the elements of the model are: VISION, TEAMS, GOALS, METRICS, PROCESSES, and RESULTS.
CHAPTER 3
PARTNERNOMICS.com/C3
COMPANY GROWTH EVALUATION
NOTES:
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