Alliance Partner selection: Why likability might not be the best criterium.
A personal lesson
20 years ago I answered the phone to hear my business partner in a joint venture tell me that from now on I had to fund our joint venture. In the setup of the joint venture we had agreed that he was the financial guy, he was funding it, and I would run the business. Now he suddenly had decided to pull his financing back. And oh, if I didn’t do it, he would blame me for mismanagement and sue me in court. This was the beginning of a nasty 6 weeks that led to a painful business divorce.
I liked my partner, but it appeared that likability wasn’t enough. If I had done my due diligence right I would have found out that the culture of his company was different than what I had in mind. I would have learned from public available information that his financial situation was not as good as he said it was. So, I could have known. But I did not, simply because I liked my counterpart and naively thought that it would work out well together.
It ended up in a 6 figure costly lesson on a personal level.
The same mistakes in large organizations
Since then I have learned a lot. Among those learnings is the fact that such an opportunistic approach based on likability does not only happen with small companies. My clients are in general larger organizations and I have seen my own experience happen at a larger scale over and over again. For instance, about 9 years ago at a client one business CEO mentioned to his innovation director that he met the CEO of another company at a neighborhood barbecue. At the barbecue they agreed that the two companies would start to work together. Their decision was purely based on personal likability.
The innovation director received the message that it was up to him to make this new partnership work. The innovation director struggled for a long time to find the right value proposition for a partnership. It did not work out, there was no value proposition to be found. Worse, there was no partner fit between the two organizations. Several months later, after a lot of exploratory conversations, the company finally threw in the towel, likability was not enough as a foundation for an alliance.
This alliance effort did not fail, because it never came off the ground. It only cost them time and money involved with the meetings and a lot of frustration for the people involved. If both companies would have continued their efforts and started an alliance and invested in it, a failure could have cost them a magnitude of what my failure had cost me.
So how should you do partner selection?
Partner selection, or partner assessment, should be part of the first steps you take in creating alliances and partnerships. It is one of the foundational steps for future success in alliance creation. The two examples illustrate that partner selection is essential on every level. So, how do you do partner selection? Clearly don’t build it purely on likability and don’t start with an executive barbecue conversation!
Partner selection is generally done by assessing partner fit in several areas. Partner assessment should also be done if you only have one candidate that you can work with. The purpose will be to assess where the two organizations are different. It is those differences that will lead to synergies and alliance success. Some differences however need to be managed carefully during the lifetime of an alliance to ensure that they will not hamper alliance success.
The most common areas to assess partner fit are strategic fit, operational fit, and cultural fit. Some organizations will add human fit and network fit to the assessment as well. Obviously you will also need to look at skills and capabilities: will you be able to generate new value together?
The 4-step guide to successful partner selection
The 4-step guide to successful partner selection describes a solid methodology for partner selection. The approach described in this book and its belonging tool is based on best practices from highly successful partnerships and is applicable to every organization, regardless of size.
This guide will lead you step by step in your partner selections in a structured, yet pragmatic, way that is based on four foundational steps:
Step 1: The strategic rationale
Step 2: Needs and contributions
Step 3: The ideal partner profile
Step 4: Approach the partner
Follow this methodology and you will increase your chances of building a solid foundation under your partnership. You will need to do the work first and then, when done right, it can bring you an endless return on investment!
Note: the book comes in a package with two formats: ePub for your ereader and PDF for any other platform. The package also contains the partner selection toolkit.