Be prepared

Early in 2005 I reviewed the Partner Plan for a small company in the mobile telecoms market. The owner of the plan warned me that this was very much a "first stab" at putting a plan together, and in fact was simply a table with headings in a Word document. The headings covered the major steps involved in moving from identifying suitable partners through to making a partner self-sufficient i.e. through to reaching the stage where the partner is effectively selling the company's products with little or no day-to-day involvement by the company's own personnel. Under each heading the company had listed the activities that would have to be performed and the tools the company had available to help them. In all there were over 50 activities listed.

The importance of having a plan

What amazed me most about this plan was the fact that it existed at all. Many companies, especially smaller companies with limited resources, never take the time to sit down and work out everything that will need to be done in order to make a partnership successful. Instead, they stumble along from activity to activity, all the while believing they are making progress, but never quite sure how far they have come and how far they still have to go. This unplanned, unstructured approach can often end in tears. At the very least, the company with no plan will easily be outmanoeuvred and out-played by the prospective partner. Major opportunities to gain significant advantage from the partnership are lost. What could have been a creative, well-balanced, "win-win" partnership degenerates instead into a typical "supplier-customer" relationship.

The tragedy is, the company that didn't plan usually doesn't recognise what it has missed out on. Since it had no plan and no objectives to begin with, it cannot recognise a sub-optimal outcome. The technical word for this approach is "satisficing", which means doing just enough to make the partnership workable, but not achieving all that could have been achieved.

Learning from experience

The small company in the mobile telecoms sector already has two partnerships with major players in the market. On the face of it the company has done well. Its products are being distributed by two large companies and its market reach has been considerably extended. But the management team includes people who have previously been partnership managers in other organisations. They recognise that more could have been achieved, particularly since the company has a very strong product set with good customer references.

The two existing partnerships were set up when the company was quite young and eager to gain a foothold in the market. The agenda in each case was very much driven by the larger players. Consequently, the deals, although valuable, are not as good as they could have been. They were, in fact, "satisficing" deals. The key to the company doing better in future partnerships is to be prepared. Which is why the company now has a Partner Plan.

Getting started

Developing a Partner Plan can sound a daunting task, but the most important thing is to get started. Sit down with your management colleagues and between you discuss and agree what are the major steps you will have to go through to establish a truly successful partnership. Then within each major step identify the key activities that will need to be undertaken. If you do this properly you should end up listing dozens of activities. If you like, you can also, under the activities, write down what resources you will need (including human resources and skills) to get the activities completed.

Establishing a time line

How many partnerships do you want or need? By what date? A simple project management tool can help here, but a spreadsheet can be just as effective. Work back from your target end date, applying realistic elapsed times to each activity. For each activity ask yourself the key question: "Are we sure that with the limited resources we have available we really can complete the activity in the time allowed?" Bear in mind that for some activities you will be relying on input and decisions from your prospective partner(s).

The requirement for outside help

If you do undertake such a partnership planning exercise, I guarantee two things will happen:

1. You will realise that to develop a partnership successfully is going to take you a lot longer, and involve a great deal more effort, than you had anticipated.
2. You will realise that you cannot possibly meet your target end date with your current resources – unless, of course, you start cutting corners.

So why bother to plan? Well, without a plan conclusions 1. and 2. will still be true, but you just won't realise it. Instead, you will launch into a series of crucial discussions with your prospective partner(s), the outcome of which could determine the ultimate success or failure of your company. As time drags on you will start to wonder whether you will ever get a deal agreed. You and your key staff will be distracted from the day-to-day running of the business. Your prospective partners will make suggestions, new offers or compromises, and you will not have the time to analyse them in detail. Eventually there will be a deal on the table and you will breathe a sigh of relief, eager to get back to developing your business. After the legal advisors have provided their input, you will sign the deal and announce it as a major breakthrough, a significant step forward. Already you are thinking about the next partnership ... Strangely, hardly anyone ever asks the question: "Was this the best deal we could have done?"

With a Partner Plan you will know which activities you have the time and resources to do well, and those where you will need to seek outside help. Cutting corners is not even a consideration. This is much too important a task to do sub-optimally. Satisficing is not an option.

So you establish a team of your own staff plus suitably qualified external help. You use the plan to allocate activities and monitor progress. By the time you start talking to your prospective partner(s) you will have done your homework, developed your positioning, understood the joint business case for working together, know the sensitivity points in the proposed deal, will have briefed all the people in your team (both internal and external) and possibly also your stakeholders, will have defined the boundaries within which your people can work, will have established a firm timeframe that you know you can resource, and will consequently be in a powerful negotiating position.

You will, in fact, be prepared.

Partnering Points on being prepared

• The most successful partnerships are those in which both (or all) partners are motivated to behave in ways that bring the greatest benefits to all partners. The reason you need to be prepared is not so that you can negotiate a good deal for your company at the expense of your partner(s), but so that you can identify what would be the best possible deal.
• You must start by deciding what outcomes you want to achieve from the partnership. These outcomes should support your business objectives and contribute to your overall partnering strategy.
• You should also make a good attempt to understand your prospective partner's business objectives and how the proposed partnership would help the partner to achieve those objectives.
• Develop a positioning statement that clearly sets out what you will be bringing to the partnership and why any prospective partner should be interested in working with you. For each prospect, ask yourself the question: "Why would XXX want to partner with us?"
• Start putting together an outline joint business case that shows the benefits accruing to each partner and the level of resource expected to be allocated to the partnership. Use your own cost profile to calculate your company's return on investment, payback etc. Use your best judgement to estimate your prospective partner's cost profile. Change some of the assumptions in the case to explore where the sensitivities lie. Understand those aspects of the proposed partnership where major changes would make little difference to your (or your partner's) returns, and those areas where small changes would make a large difference.
• Finally, before opening up talks with a prospective partner, ensure that all the key people and stakeholders at your company have bought into and agreed the proposed partnership and outline joint business case. You don't want the rug to be pulled out from under your feet at a late stage in the negotiations.

You are free to use material from istarisArticles in whole or in part, as long as you include complete attribution, including website link. Please also send an email to enquiries@istaris.co.uk, notifying us where the material will appear.

Next article
Previous article