We are Partners! But are you really?!

Whether you’re speaking about your partner at home, your life partner, or your doubles partner on the tennis court on a Tuesday evening; there are many instances where we refer to “partners.”

We are here to dive into the world of partners in the business environment. With a CMO, with a packaging company, with your logistics provider. The question here is: what is real partnership, what is the essence of true partnerships, and why do we seek business partners?

During our recent VP Dinner in Zurich, we discussed this topic with a group of professionals from different angles:

• What is not a true business partnership?
• What is a true business partnership?
• When and why do you really need a partnership?
• How to start a successful business partnership?

What is not a true business partnership?

Not every agreement is and/or needs to be a partnership. A basic contract agreeing on basic topics and pricing is not automatically a partnership. It’s simply common business.
A supplier agrees to supply products and/or services as described in the contract. Nothing more, nothing less. There are many successful business agreements out there and most of those are not defined as true partnerships.

Then, what is a true partnership?

A true partnership is valuable when both parties see added value in working together and there is a true win for both parties involved. In a true partnership both companies will surely grow together if the strategy is right. But the most important thing here is that the companies can create something unique. A competitive advantage, something they could not have achieved on their own. If you have or create a situation like that, you have a sound base for a proper business partnership.

When and why do you really need a partnership?

There is a difference between product and services. Products can (in most cases) be described more precisely. It is easier to translate that into hard requirements. Certainly, for strategic products you might consider a partnership with your supplier, but the partnership will be at the next level when there is an undefined area involved. Something that is uncertain and needs to be developed, something where both companies can create a “one plus one equals three” scenario. Examples of this could look like: a small CMO would like to work together with a big brand name. Or, that a logistics service provider would like to enter a subsector and is willing to invest in the partnership with its first customer.

How to start a successful business partnership?

Here comes the tricky part. How do you determine where you need a partnership? Or better, the additional value of a partnership? This can be different for every company. It does not depend on the size or the volume. You can see successful partnerships between a large company and a start-up. Of course, it is business and both should be able to grow and realize their objectives; but, in the end what really counts is the added value created. It is of the utmost importance to discuss this value and make it explicit from the start. Only if you understand your partners drivers and intentions can you start to build a mutually beneficial partnership, the million-dollar question being “why would partnering these two entities be the best thing since sliced bread?

Next is communication. A vital part of every relationship. Partnering companies should talk with one voice from every level, this meaning: something that is created on C-level does not necessarily work on an operational level. In a successful partnership all levels engage in communication and top to top communication is always part of it, at least once a year. Procurement can and should play a prominent role in supporting the development process towards a successful partnership.

In conclusion, we advise keeping the following guidelines in mind when thinking about partnerships:

• Carefully select the right area/product/services in which you need a partnership.
• Find the right partner to create a true win-win based on a thorough understanding of each other’s drive to partner.
• Make sure communication at all levels is aligned and taking place.

Do you still have questions about partnerships? Would you like to discuss the value in partnering for your company in further detail?
Reach out to either Patrick Heax or Martin Gouda and let us see how we can be of help to you and your organization.