Does your association or business have strategic partner relationships? The answer to my question always draws an effusive and unequivocal “yes.” What follows is a long list the may include other associations, universities, chapters and affiliates, suppliers, members, vendors and many others. I can see why executives pride themselves in their partner lists and are on the lookout for the right strategic relationships. It’s a good development. In our networked world your competitive advantage is realized through infinite types of linkages--alliances, joint ventures, economic networks, communities of practice, co-development with customers, etc. Yet, the mere acts of linking two organizations’ names together in print; creating chapters, branches or affiliates; or treating members and others fairly and inclusively do not constitute strategic partnerships.
Are you trying to compete on your own, in spite of the partnerships listed in your annual report--being all things to all people? Are you adequately leveraging others’ resources to complement your own and get you to the destination you envision? I find that Michael Maccoby’s short article, “Learning to Partner and Partnering to Learn” from 1997, is still the most insightful and effective guide for recognizing various levels and categories of partner relationships. It can be eye-opening in assessing the full range of your relationships and identifying the value that can be leveraged from them in helping you get to places you can’t get to on your own.
Not all partnership relationships are the same. Maccoby plots them along a continuum from commodity-based relationships to strategic partnerships. Yet the various levels are not mutually exclusive; neither is any one level universally good or bad for everybody. It is a question of uncovering the latent value of relationships and matching them to your needs.
- At the lowest level of the partnership continuum are commodity relationships, such as those with vendors or suppliers. They are defined by strict contractual agreements and are conducted on the basis of specifications, with little or no room for exercising independent judgment or improvising and departing from specifications.
The next level is that of the preferred provider. You may be one of the go-to resources for a company’s training needs, for example, but the relationship is still driven by exact specifications and legal requirements.
Value added involves a degree of customization beyond strict contractual specifications and generic products, such as adding a service to a product or a customized module in a standard training package, but the relationship is still bound by specified contractual obligations. Maccoby would put outsourcing in this category.
Alliances involve a degree of strategy and independent thinking beyond just fulfilling contractual requirements as in the design and marketing of a joint product or initiative. They involve the setting of mutual goals yet the relationship is still limited to the product or project the partners are collaborating on.
Cooperation is more open-ended. Instead of beginning with contractual specifications or the goal of developing a joint product or project, cooperative partnerships begin with a strategic challenge the two partners come together to address through sharing information, coordinating activities and crafting solutions. Maccoby brings Intel and Microsoft; United Airlines and SAS as examples. Last month, Microsoft Corp. and salesforce.com (NYSE: CRM) announced a strategic partnership whose goal is to deliver more value to customers by coming up with solutions that increase their productivity: connecting salesforce.com’s customer relationship management (CRM) apps and platform to Microsoft Office and Windows.
Strategic partnership is the highest level of partnership. Strategic partners have a deep understanding of each other’s vision, values and culture and recognize how the other’s success will boost their own. Their focus is on strategic goals of mutual benefit beyond any one project or even timeline. As a result, the relationship is flexible and highly adaptable to new situations, challenges and opportunities. There is a high degree of trust and transparency between partners. These are the most difficult relationships to forge and require long term development but they are also the most rewarding with the highest return on value.
The path up the partnership continuum is one of increasing trust, co-development and the exercise of judgment and innovation outside narrow, contractual specifications and categories. The rewards are proportionate to the level a partnership occupies within the continuum. The more confined a relationship is by rules and requirements the more limited its value (e.g. product development and sales, outsourcing). The more open the relationship and the more focused on solutions to strategic projects that don’t have to fit existing categories, the higher the opportunities for breakthrough innovations; business lines and models--components that can yield entirely new market positioning and competitive advantage.
What kind of relationships do you currently have and need? Are there strategic challenges in your market positioning or capabilities that the right strategic partnerships might help you address? Perhaps, most importantly, you can use the continuum to assess internal relationships as well. Are your relationships with staff, board, members, customers and other stakeholders driven by rules, policies, governance structures and just “the way things are done” in associations, industry or company, or are people empowered to make decisions, carry projects from concept to market results, introduce and execute innovations? Is your product development confined to new products but within existing categories or driven by solutions to customer needs through whatever form or package provides the highest value?