In today’s globally connected world, change is constant and innovation in almost every industry is emerging at hyper speed. Combine that with quickly changing customer needs and preferences, and the expectation of near-instant results, and it may seem impossible for businesses to grow alone. Many smart companies are realizing that the key to growth isn’t found in being all things to all people but in developing purposeful strategic partnerships that can help diversify and fulfill customers’ needs better.
According to the World Economic Forum, strategic partnerships play a significant role in driving innovation and growth in today’s economy. And while we know that forming partnerships can add flexibility and diversity to a company’s growth strategies, at our company, we’ve forged them to achieve leadership extension (a broadening of the capacity of our leadership team), advance our capabilities and create new go-to-market strategies.
While strategic partnerships often involve less risk than developing a new capability in-house or acquiring one through a merger or acquisition, they ultimately can offer businesses new pathways for understanding and acting upon customer needs.
Finding The Right Fit
At the core, we believe that all partnerships should be rooted in creating new value for your existing customers or customers you’re trying to attract. The orientation should be outside-in. Ask yourself, “What unserved customer need are we fulfilling together?” versus something motivated by an internal directive, such as “Jointly, can we increase market share in a specific region?”
Below are five other considerations when identifying and developing win-win relationships that capitalize on the unique competencies of each partner:
1. Market Disruption
When a strategic partnership creates a disruption in the market that surprises and delights customers, a smart partnership has been formed. A good example of this is the partnership between Tuft & Needle and Amazon. The bed-in-a-box e-commerce company has teamed up with Amazon to equip one of its brick-and-mortar showrooms with tablets, Echo devices and QR codes. This will allow customers to see product reviews on Amazon, ask questions and purchase mattresses through the Amazon app.
When looking for a partner to help you disrupt the market, conduct ample research to explore any potential opportunities together. Ask yourself: Will this partnership enable us to address a customer need or pain point that no one else does due to the combination of resources? Can this partnership help us win back or cultivate more loyal customers? Will this partnership broaden the market?
2. Creation Of Synergy
At the heart of any partnership is a belief by both entities that working together will create synergy. Synergistic partnerships provide both brands with expanded opportunities for exposure to like-minded audiences. The partnership between Hearth & Hand with Magnolia and Target is a great example of the sum being greater than the parts. Together, Target and HGTV stars Chip and Joanna Gaines created an exclusive line of home and lifestyle products that widely appeal to both brands’ target audiences. The collaboration allows Fixer Upper fans to infuse the Gaines’ aesthetic into their homes in a more turnkey and convenient way.
When identifying possible synergies between brands, ask yourself: Who is the audience for each brand? Do they align? Does the partnership have the potential to create a halo effect for each brand individually? Will this partnership make the customer journey more fluid and immersive?
3. Credibility And Resources
Strategic partnerships can be especially valuable for startups that are cash-strapped and having a difficult time innovating on the same plane as the rest of the market. A partner can add to a newer business’s credibility, expertise and resources. The relationship can help the startup scale quickly and penetrate a market segment faster and more effectively. Additionally, an established company can bring leadership extension to a newer company and force it to really think about why it exists — or the value proposition that it truly brings to bear.
Whether you find yourself on the startup side or the established company side of such a partnership, consider a few things before joining forces: Will this partnership enable the established partner to be positioned as innovative and forward-thinking? Who is leading each company, and do their reputations and business objectives align? What will the roles of each partner be, and how will each help to raise the ship?
4. Values Alignment
While important, creating a win-win scenario isn’t the only thing to consider when evaluating a potential partner. Strategic partnerships require a high level of commitment, discipline and respect. It’s important that any partner aligns with your organization from a values perspective. We’ve found that the best partnerships result when companies have the same beliefs about the customer service model, business ethics and practices and brand representation. Companies with similar cultures often create synergy faster through an unspoken code of trust that seamlessly adds to resources and workstreams.
To ensure that you’re selecting a partner with similar values, compare company visions, purpose statements and philanthropic endeavors. Ask yourself: Does each company have similar beliefs about the brand promise and customer experience? If so, it’s likely a strong match.
5. Trust In Expertise
As you forge a relationship with your new partner, it’s important to establish who does what early on. In our experience, each party must focus on their key area of strength and ensure that there are no overlaps that lead to redundancies in the go-to-market strategy, as this can ultimately confuse the customer.
Having a purposeful plan for how your partner integrates into your value chain is essential to empowering each company to leverage their core competencies and do what they do best. A clear plan for each partner’s responsibility and accountability can be a key to success. It also begins to establish clear guidelines for where the partner will integrate into your workflow and where you’ll need to cede control.
The Takeaway
A flexible partnership mindset is ultimately a vehicle for operational and organizational growth. At the end of the day, a strong partnership can add value to your business, with the true measure being the creation of unforeseen value for customers.
