Nov 6th, 1980, is notable as the day that launched the personal computing movement, when IBM, the largest computing hardware enterprise at the time, agreed with Microsoft, an upstart software maker at the time, to build a personal computing solution for the masses. Importantly, it was a break from IBM’s historic approach to building everything by themselves - it was a partnership to bring an innovative new product to the market. While the nuances and implications of that agreement are enshrined in history and have generated spin-off parables of their own, the significance and lessons of the partnership approach between major industry participants to bring innovative new products to life are as relevant today as it was then.
Unlike a decision to build a product or buy it outright in the marketplace, many factors drive companies to enter into partnership arrangements. Non-core, non-differentiating, and commoditized capabilities tend to attract the largest share of partnership arrangements between enterprises; however, these types of vendor-client relationships are generally simplistic, transactional, and generally lower in the value spectrum (at least from a client perspective). The focus of this article is on differentiating product partnerships - ones that are specifically designed to result in products and services that individual enterprises would be unable to (or at least struggle to) deliver by themselves.
Entering into an enterprise partnership begins with a clear understanding of why it is needed for your business to be successful. Aligning the elements of the partnership that define success for all members of the partnership is a crucial next step. Finally, establishing a cohesive partnership structure, both legal and operational, will ultimately determine the viability of the combined product or service.
Partnerships are Good for Business
Demand for innovation, from clients, competitors, stakeholders, and broader market dynamics is constant, and enterprises have a deep and urgent desire to innovate, but often fall short of acquiring and maintaining the organic material to do so. Capability acquisitions can be a viable source of innovation; however, capital constraints and complex (and often lengthy) integration initiatives preclude timely innovative outcomes. The manifestation of technology to drive product and service innovation requires new capabilities (or at least new expressions of existing capabilities) to be developed, and more often than not, leveraging the focus and specialization of partner organizations can lead to accelerated and better products for clients - after all, externalized and specialized teams are unencumbered by internal organizational dynamics and can more easily iterate on subsets of the overall product without distraction or compromise.
" Successful products that continue to be client relevant and continuously innovating do last a long time; as long as all members of the partnership are striving along the same product journey, successful partnerships will span multiple generations of a product and the enterprises that formed it "
As hard as it is for an enterprise to acquire new capabilities, it is even harder to build up expertise and sustained operational competence in maintaining and servicing the newly acquired capabilities. A partnership approach can significantly lower product launch risk from an investment, operational, and governance perspective. Product partnerships are really about focusing on the mutual client and bringing the best possible product experience to life over a protracted timeframe.
Clients do not care about which company built what part of the product - they want (and deserve) products that are relatable, consistent, intuitive, reliable, and leaves them feeling better having used it. Ultimately, the power of partnerships is in the ability of an enterprise to deliver value beyond the sum of its capabilities.
Making Partnerships Successful
Product partnerships are most successful when there is the strategic alignment of enterprise intent, purpose, and goals, along with an unwavering commitment from all partners to share responsibility for the product experience, help each other succeed, and do the right thing for the client. Partnerships should not be approached as a path of last resort. Structured and executed correctly, partnerships will create a winning solution for all parties involved in the product, with the primary beneficiary being the client.
It is also essential to identify and address common issues that arise when different enterprises, with varying business models, organizational structures, leadership styles, operating cultures, strategic priorities, and motivations, attempt to establish a partnership. The goal is not to force alignment through organizational and operational change; rather it is to determine the best way for all parties to bring their unique strengths and be both individually and collectively successful. The easiest way to accomplish this is to focus on the commonalities, i.e., the mutual client and the product, along with clearly defined (and mutually understood) partnership success criteria for each partner.
A source of partnership breakdown is when the product fails to meet client expectations, with the largest contributors to product dissatisfaction being a subpar customer experience and lack of innovation. At the heart of product partnerships are the product, and the overall product experience must be fluid and seamless, over-indexing on client value. As with all products, clients care most about whether a product meets their needs, wants, and desires and the overall product (or service) must deliver this with the least effort and friction.
Partner organizations may outgrow the product and partnership, which is most often due to a change in an organization’s business strategy - all partners must have a relationship construct that accommodates this natural dynamic. Partnerships may not last forever, but successful products that continue to be client relevant and continuously innovating do last a long time; as long as all members of the partnership are striving along the same product journey, successful partnerships will span multiple generations of a product and the enterprises that formed it.
