The Partnering Imperative

One of the most curious questions I am asked by prospective clients is: “Why do I need to partner?”. Curious, because on probing a little it nearly always becomes evident that the organisation asking this question would benefit greatly from having one or more partnering agreements in place.

The fact is that the business environment today is a very complex place.

Take, for example, the emerging online entertainment industry.

Delivering video and TV services to a PC or mobile phone may seem a straightforward proposition, but a September 2004 report by Analysys suggests otherwise. Based on a study of the take-up of such services in markets like South Korea, Analysys concludes that there is indeed a strong latent demand out there. The challenge for operators is to deliver such services profitably. Operators are advised to form partnerships. The partnerships will need to exploit the skill bases and experience of the partners in order to manage video-clip services and content costs in the short-term, followed by evolution to more integrated advanced cellular and DVB broadcast technology. What Analysys is strongly advising is: if you want to make a profit in this market, you need to partner. Or to put it another way: no one single company has the breadth of marketing and technology skills and efficient access to content that will be required to be successful.

European Social Fund (ESF)

The ESF is just one source of publicly-provided finance available in the European Union. ESF funding is shared out under three Objectives, which are designed to focus resources on those in greatest need. Objectives 1 and 2 target specific regions or areas, while Objective 3 develops human resources. Most regional Objective 3 ESF in England is available through Co-financing Organisations (CFOs), which provide 100% funding to successful applicants. CFOs make ESF available through a process of open and competitive tendering. In England, the Learning and Skills Council (LSC) is a CFO in all regions.

In its Regional Co-financing Prospectus for 2005-2007, the LSC has the following to say about collaboration and partnership: “We recognise that in many cases there is no one agency or provider that can deliver the full range of activities to meet individual needs. This may be because of location, cost and/or expertise. We would therefore wish to see agencies and providers working in collaboration and partnership within the sub-region or region when writing the proposal and also when delivering their projects.”

Local collaboration

In a paper written in September 2004 by Mike Sharpe of MS Consulting (email: mike@msconsulting.co.uk), reference is made to a presentation by Dr Paul Polakos, Director, Wireless Technology Lab, Bell Labs, Lucent Technologies, to the UK-Japan High Technology Forum held in Bristol, July 2004.

Mike argues that we are now entering the third stage of a process of globalisation of technology dating back over forty years (see The Globalizing Learning Economy, edited by Daniele Archibugi and Bengt-Åke Lundvall, OUP, 2001). In the first stage, “Global Exploitation of Technology”, new global trade markets developed through technology created domestically and businesses expanded overseas by establishing branch offices, factories and development centres. In the second stage, “Global Technological Collaboration”, companies entered into collaborations and alliances across borders and became involved in international projects. In the third stage that is just beginning, “Global Generation of Technology”, we come full circle, with localisation rather than globalisation being the predominant driver. To prosper against the tide of technological complexity, ICT firms (large and small) need to be more agile. Hence they are looking to optimise the location, scale and linkage of their research activities and are pursuing more open, collaborative approaches to innovation.

Drawing on the content of Dr Polakos’ presentation, Mike cites Lucent Technologies as an example of this new type of partnering. Many technologies now are too expensive to develop individually, even for Lucent, and local collaboration is the key to success:

  • From a customer relationship standpoint, collaborations help Lucent to understand the specifics of customers’ technology needs.
  • From a technology standpoint, collaborations help Lucent to work where “the buzz” is happening.
  • From a technology adoption standpoint, collaboration enables the company to be at the centre of standardisation processes.
  • And from an internal (technology innovation) perspective, collaboration allows Lucent to create a local lab, access the best technologies, and encourage communication: in short, to create an artificial technology ecosystem.

At a workshop organised in September 2003 by the West Midlands IT Association (WMita) in the UK, Alcatel UK said something very similar.

Partnering becoming the norm, rather than the exception

In high-technology industries, the type of partnering that is described in the three examples above is becoming almost a de facto aspect of doing business. Nobody questions the need to “partner” any more. However, there is still a tremendous amount of scepticism, mistrust and misunderstanding around. Managers remember what happened during the second stage of the globalisation of technology (“Global Technological Collaboration”) when larger ICT companies used “partnerships” to justify downward price pressure on their supplier “partners”. Smaller companies began to equate “partnering” with “being screwed” by bigger companies. Larger companies saw partnering as a way to transfer risk at low cost.

What the above three examples show is that this natural aversion to partnering is having to be overcome. If companies want to survive and grow, they must learn to collaborate in ways that are mutually beneficial and as open as possible. They need to be prepared to “agree to work together” when the projects they will be working on, and maybe even the technology or services involved, are not yet identified. Those organisations that recognise and accept this, learn how to do it well and make themselves easy to partner with are those that will prosper.

Within the West Midlands in the UK, smaller ICT companies, encouraged by organisations like WMita and Advantage West Midlands, are entering into similar, open-ended liaisons. Groups of SMEs are collaborating in order to bid for public contracts. Larger companies are beginning to establish ways of working with smaller, innovative suppliers that have the technology they need to fully exploit their market opportunities.

If you are not yet a part of this process, take a good look around you – at your competitors, your suppliers, your customers. I’m sure, if you haven’t already noticed it, that you will find evidence in your own industry and your own markets that there are similar partnering agreements being put in place. If you choose not to take part in this process, then you had better have a very good reason not to: it really has become “imperative to partner”.

Partnering Points on The Partnering Imperative

 

  • The need to establish a new type of partnering has arisen first in the Information and Communications Technology (ICT) industry, but similar pressures to collaborate are being experienced in other industries – make your company aware of these developments and prepare your organisation to embrace them.
  • Much has been written on what is happening in the ICT industry (see, for example, the text of an article written for the European Business Journal Vol 16 No 3: 113-119). Make sure you understand these dynamics and look for parallels in your own industry.
  • At conferences, exhibitions and networking events, find out how your customers, suppliers and competitors are positioning themselves to work together.
  • Start a debate within your own company about how you can best achieve your objectives through partnering.
  • Ensure your senior managers appreciate that what is now being referred to as “partnering” is not the same as they may have experienced in the past.
  • Once you are sure of why and how you want to partner, and you have the full support of senior management, only then is it the right time to approach potential partners.

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