Tip 1: Know Your Initial Reason to Partner

When you form a close and personal relationship with someone, either a marriage or a long-term relationship, do you take the time to think of the benefits you will receive when you enter that relationship, or are the words “I love you” reason enough for you? Many long-term relationships and marriages do succeed because the people involved love each other. But any marriage counselor will tell you that for such relationships to work, the couple has to find reasons to love each other and to work on those reasons constantly so they can live together in harmony.

The same principle applies with business partnerships and alliances. You have to figure out what your reason for entering the partnership in the first place before you actually sit down for your first meeting with your potential partner. This initial reason for a partnership will define its scope, and it will be one of the leading elements in the process of creating the alliance or partnership. This reason will be one of the factors that will help you see this partnership through.

Of course, once you start talking to your prospective partner, you will learn to know their organization better, and they will learn to know your organization more as well. These exchanges may lead to spotting new opportunities for partnering, and it may be very challenging to decide not to include these opportunities in the creation of the alliance.

For sure, additional opportunities can be included as a list with potential areas for later expansion. However, it is essential to limit the scope of the initial alliance for now, as it will make the process of alliance creation easier. Laurence Capron and Will Mitchell indicate in their book Build, Borrow or Buy: Solving the Growth Dilemma (2012) that the cost of coordinating the alliance will also rise substantially when the scope expands. In a research study they surveyed among telecom companies, 65% of the executives involved in alliances report high cost and coordination tensions with their partners. The most successful firms were the ones using alliances for focused collaboration only.

Capron and Mitchell concluded that an alliance will be most effective and manageable when a limited number of functions, activities and people are involved. To quote:

“Limiting the points of contact helps you control the alliance’s direct and indirect costs, by avoiding duplicative investments in R&D, plants, staff, and coordination activities.” (Ch. 4).

It also indicates that, from an alliance management perspective, a limited scope is desired when starting an alliance or partnership.

The takeaway here is you should focus on the initial reason and the initial scope for partnering during the formation of the partnership. Once the partnership is formed and operational, you can expand the scope of your partnership into other areas more easily rather than creating a partnership that has a continuously expanding scope from the get-go. When you create your list of potential areas for growth during alliance formation, you can then decide at what stage the alliance partners will evaluate if an expansion is desired. 

Decide your initial reason for entering the partnership and focus on that reason in the formation process. You can expand the scope of your partnership later.

I will publish my ebook “25 tips for successful Partnerships and Alliances” in parts here on my website. Every other week a tip from the book will be shared, in the weeks in between I will publish my regular column. If you prefer to read the tips in the ebook faster rather than wait a full year then click here to purchase your own copy of the book.