What Makes A Good Business Partnership?

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Burkhard Boeckem, CTO of Hexagon AB. getty Forming successful partnerships is like composing a piece…

Burkhard Boeckem, CTO of Hexagon AB.

Forming successful partnerships is like composing a piece of music for an orchestra. Fundamentally, each section needs to work well together, but that’s not enough. Each stage of the process can create a triumph, a failure or something in between that doesn’t represent the effort involved.

As CTO of an innovative global tech company, I have experienced positive strategic alliances that evolved both businesses, and I’ve experienced partnerships with potential that didn’t deliver. What should you be looking for with a collaboration? What’s the secret to making joint projects work? Here, I discuss how, when and why to enter into a partnership and some of the reasons why cooperative endeavors succeed or fail.

Identifying A Good Strategic Alliance For Your Business

Creating a great partnership begins with a great foundation. To know what makes a good partner for your company, you first must know your own strategy inside and out. Once you have identified your own domain expertise and plan for development, you can then work out what you’re missing. That’s the basis of a beneficial partnership.

It is finding an overlap between you and them. What’s the complementary thing that brings both of your companies together, and what would the benefits be of collaborating? What could you achieve together that you can’t achieve alone? Often in technology, it’s accelerating innovation and commercialization—the reason that 94% of tech industry executives consider innovation partnerships a necessary strategy, according to a Harvard Business Review article.

To find that partner with the skills, technology or route to market to support your growth, knock on doors, make contacts and aim high. Sell those benefits you’ve identified. Building that initial agreement will depend on both companies being clear on the business benefits of the collaboration.

Building A Partnership With Purpose

After finding your potential ally, work out what kind of partnership suits you both. Will it combine both of your offerings (in our case, technologies) or combine your product with their go-to-market? Do their customers need something from you, or do your customers need something from them? At Hexagon, we rely on a network of trusted partners to serve our customers around the globe.

Usually, a good tech collaboration is built between two CTOs—they can see the business case in the technology or service and know how the solutions are going to fit together. In terms of what the partnership should do, it should solve a real-world issue, not revolve around a hyped-up press release. Figuring out the purpose of an alliance is about answering the question: “What’s in it for the customer?”

The reason for the partnership needs to be easily explainable. If you sit for too long around the table without a clear aim or unity present, then it’s unlikely the project will inspire your team or customers.

Getting The Timing Right: When To Look For A Strategic Collaboration

Partnerships can work in almost all stages of a company’s life cycle if the organizations connect well and the purpose is complementary. However, there are more risks if there’s a big imbalance between the parties.

If you are an early startup, for example, the bigger and better-known partner may overshadow you. Make sure to agree to co-marketing early on so you can grow your brand through the partnership. Assess if the benefits outweigh the risks. A pilot project is a good way to test the waters, followed by further rollout if successful.

Getting The Cultural Fit Right

Even though it’s a corporate partnership, you are always partnering with people. From my own experience, the personalities of those involved and cultural compatibility can be up to 90% of what determines if a partnership succeeds.

Invest in trust—two companies that get along very well will make things happen. Partnerships don’t just function on their objective compatibility but also on an emotional, human level. If there’s no connection and mindsets are very different, then it’s difficult to make a partnership work. You should communicate both externally and internally why you’re creating the partnership, which can get people excited and help that partnership work.

The Partnership Success Rate

Successful partnerships require a combination of strategic vision, effective execution and adaptability. They can be difficult to maintain. According to one McKinsey analyst, key challenges include disagreements on objectives, poor communication, governance issues and the ability to adapt to changing circumstances.

In my experience, it’s possible to tell early on whether or not a collaboration is going to work. Thankfully, it’s more unusual to get, say, 50% of the way through a partnership and then realize it’s not going to work. A partnership can be exciting initially but will fail without a strong foundation in purpose, compatibility and people. It is a tech cliche, but it is good to fail fast in this circumstance before you have invested too many resources.

Equally, it’s important never to close a door completely. A partnership may not work at a certain point in time because you might be in different positions in your strategic cycles. However, if you agree to talk again in a few years, it might be the perfect time.

Overall, a partnership’s success lies in its origin—identifying and solidifying why the partnership should exist in the first place and what problem it’s solving for people. For business alliances, the importance of the human element should never be underestimated.


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