GROWING The Business-The Partners – who are
Nobody ever got fired for buying IBM. It is the safe bet for the department manager to buy a product from IBM because there is no risk to that purchase, because nobody will criticize you for having bought from IBM. Customers often have a problem to buy from a small company. Therefore you should try to get associated with some large names through partnerships. You will have to do everything to be credible in the eyes of the buyer. One excellent means to increase your credibility is to form alliances with important well-known industry players. Another real value of strategic alliances is that you get an insight into what is happening in different parts of the industry which might have an effect on you. When you are allying with the industry leaders who are forming a new industry, you yourself will become a part of the industry to partner with. In addition, through partnerships you will even be able to lock out your competition, creating high barriers to entry. A successful partnership can therefore create a tremendous leverage, enabling you to grow much faster than you probably could if you were just on your own.
The decision of choosing partners will be driven by who you want to sell to and how you want to sell to them. That is dictating who the ideal partners would be. Once you decided on the category, work with the biggest guy in the category, the number one. You have to partner with the big guys, to overcome the fact that you are an unknown, small company, and thus overcome ultimately the resistance of big customers to buy from you. In addition, once you are associated with the leader in the industry, whoever comes after you will only be able to ally with number two.
You can tremendously leverage your business by working together with partners that control market access or distribution channels and can influence decisions right at the spot. Also sometimes, you should directly partner with customers themselves. We will probably end up with offices at several of our major customers.
Building relationships with multiple players will create the biggest leverage, but like anywhere else, you will have to focus and to be careful not to take on too many partnerships. If you try to develop ten partnerships at once, you will find it very hard as a small company to keep them all active and make them all productive. Ask yourself which are the ones that are going to matter the most and focus your attention on those. Once you made them work, you can go from there.
The way bigger companies work is that if the one person you know cannot get the attention and resources of the others, you are not going to get very far. To really make a partnership work, you therefore have to create a network of relationships in the company you partner with. You need to build up both advocates and champions in a company, especially the bigger the company is. You have to find the people who personally and emotionally feel attached to the partnership with you and who can drive it within that bigger company. Identify the right persons and give them what they need. You pitch it to them by telling them why the partnership makes sense for them. Obviously you already know why it makes sense for you, now just think of how it makes sense for them and specifically target them. Make sure to really define the partnership as a “win-win“, so that it becomes very obvious to them what they are getting out of it and what the lasting benefit is for them. Try to attract as many people as possible, and give them incentives to help you succeed. The best strategic alliances are when both parties bring something valuable to the table. Otherwise it is going to wither as time passes. Partnerships therefore need to bring a distinct set of competitive advantages together. The other party provides strength where you are weak. You give them strength where they have none. There have to be positive overlaps to realize and value has to be created mutually.
There are two types of alliances: There are window dressing alliances and there are real alliances. It is a lot easier to achieve the former than the latter, because alliances are very hard to manage. You will have to spend a substantial amount of time cultivating partnerships or you will not get the desired results: It’s like one city saying we have a sister city in another part of the world. Great, who gives a damn.
Strategic alliances and partnerships are always a double-edged sword. The problem is that all parties are trying to play to their own agenda. It requires a lot of instinctive feeling and careful navigation, to decide what you say “Yes” to and what you say “No” to. Especially as the smaller partner you have to be very careful not to get totally sucked into your larger partner’s fairway. Therefore always do a due diligence on potential partners. In fact, you are looking for a non-conflicting, long-time strategic alignment. Make sure that both sides meet the expectations.