Introduction:
Forming partnerships with different companies for mutual benefit has been the core of operations of every organization. A partnership can take multiple shapes, from commercial enterprises joining forces to invest in a venture to sharing technical information and ideas amongst companies.
Many businesses lack the requisite capabilities and resources to respond quickly. Partnerships can save costs while also increasing flexibility and reducing risk. According to a PwC report from 2014, over 80% of US executives are seeking strategic partnerships now or plan to do this in the immediate future. Nonetheless, just about 65 percent of those pursuing new strategic relationships have been fortunate over the last 3 years.
A strategic partner is a company with whom you agree to share resources in the pursuit of mutual success and growth. In a strategic partnership, the partners maintain their independence while sharing the advantages, liabilities, and management of this joint venture. They are generally formed when a company needs to add new capabilities to an established organization.
Strategic partners often face obstacles such as separating proprietary information, processing numerous information flows, establishing adaptable governance, and managing global remote workers that must be addressed quickly to guarantee the partnership's long-term viability and profitability.
How do decision-makers characterize a strategic partnership?
A successful partnership should be based on a good growth strategy and make sense in terms of capabilities. All partners' goals, values, and cultures should be in sync. You must also have the necessary infrastructure in place. Businesses have collaborated with partners from different nations, industries, and supply chains for a variety of objectives, including expansion and cost-cutting. A survey found that approximately 60 percent of the total attendees had a wonderful experience with strategic partnerships, whereas 31% had a negative (9 percent had no experience).
Three significant factors for strategic alliance failures are identified via survey assessment:
1. Disputes over operations and finances, a lack of funding, a lack of high-level sponsorship and dedication, and so on.
2. Cooperative business models, consumer ownership issues, copyright sharing, and so forth.
3. Internal silo mentality, contradictory goals, and objectives, confusing roles, and duties, trouble conveying the combined business model.
The truth is that successful collaborations don't just happen. Strong partners establish a solid basis for and nurture commercial ties. They emphasize accountability within and between partner firms, and use metrics to gauge success. They're also open to changing things up if necessary.
Hence, decision-makers should trust and follow five basic methods to make the most out of your partnership:
Strategize
Businesses that choose to explore strategic alliances must implement alterations at all levels of the business, including organizational structure and processes. Businesses should explicitly specify the domains where alliances should be formed based on their overall strategy and goals.
Explore, filter, and engage
When searching for potential partnerships, one of the most typical mistakes firms make is that they focus on only a few alternatives rather than the entire ecosystem of strategic partnerships. As a result, decentralized search, screening, and selection criteria persist. Businesses should seek potential collaboration opportunities using a range of techniques, including current contact connections, specialist industry organizations, unions, and seminars. Companies should leverage strategic partnerships to gain new talents within current businesses during the screening process, and be aware of customer analytics.
Structure
Strategic partnerships can be in a variety of forms, ranging from non-equity partnerships (usually in the form of modern-day agreements) to equity-based partnerships (partial equity investments and joint ventures). All facets of discussions, as well as the effective objective of strategic collaboration, must be understood.
Launch and stabilize
To guarantee that a strategic partnership is efficient and effective, the organization must develop a supportive environment. This entails making alliances a top priority for the company. Even though conflict is unavoidable, particularly in the early phases, the most critical first goal is to define and agree on the issues which must be addressed. The agreement should provide a coordinating aspect, as well as requirements for raising issues, such as who should be raising the issue, to what degree, and so on.
Strategic collaboration using a portfolio approach
Companies frequently create a separate unit tasked with enabling and sustaining strategic collaborations. These units typically manage a portfolio of strategic relationships or initiatives inside the collaboration to improve cooperation, expand the partnership's reach, and develop expertise. A portfolio concept of strategic partnerships improves efficacy because the larger the partnership's breadth, the more likely it is to succeed.
Hence, business deals knowledge, legitimizing expertise, institutionalizing organizational memory, and transferring best practices throughout its portfolio are all ensured by this separate unit.
Conclusion
In order to build sustainable strategic partnerships, the synergy between the partners, and integration into the institution's operational processes, is required. The cornerstone for effective strategic partnerships is effective interaction, which ensures transparency and accountability.
To build value, however, it is critical to focus on sharing commitments and capabilities. When it comes to partnering, capital might be used to replace trust. When trust is low, partners are more likely to believe that “it pays to comply”. But in reality, high trust promotes partnerships to the level of personal ties. Hence they start sharing the same values and beliefs.
