After a recent business dinner, my seven year old daughter began to quiz me on the whole concept of going out to a restaurant in the evening for business and what went on at these dinners. Having dinner as part of my work seemed strange to her.
I told her I was meeting with someone from another company that my company wanted to partner with. I explained that we were able to have a different, more casual sort of conversation over dinner. We used that time to help us determine if our two companies would want to do more business together.
That seemed to make sense to her and she said, “Oh, so it’s like a date, but for your work.” I don’t know why that statement surprised me so much. We all use the metaphor of dating and marriage when talking about two companies partnering or merging.
The fact is, she was right. A business dinner is exactly like a date. In fact, the whole process of forming partnerships is like dating. So what are the most important things in a partnership?
Personalities – You need to make sure that the personalities of the companies are compatible. A large company with very formal regimented policies and procedures may find it difficult to do business effectively with a smaller, less formal, more agile company. You also need to have some compatibility with the people involved. Any time you are going to make a partnership, make sure you meet as much of the management team as possible — especially the CEO. Sure, the people you deal with may change, but the personality of a company is driven by its people. Make sure you are compatible with the people too.
Financial Benefits – When forming a partnership, you have to make sure that there is equal opportunity for both companies to profit. If the relationship is too one sided, then there will always be less motivation from the company that receives less benefit. A true partnership must provide equal benefit to drive equal motivation to make the partnership work. If both companies aren’t actively engaged in moving the relationship forward, the partnership will fail.
Key Points – In any partnership there will be certain key points that each company wants out of the partnership. You need to be clear about what those are. You need to make sure that you clearly convey what is important for your company. You also need to make sure that you clearly understand what is important to the other company. Don’t assume. Ask what they want to get out of it. Then restate what you just heard and make sure you heard it correctly.
Exclusivity – Not every partnership will permit exclisivity, nor should it. But if exclusivity of some sort will be important for you or the other company, by all means, talk about it. For example, if you are partnering with another company to add some key differentiating feature to your product, you may want to see if the partner will agree to not partner with your competitors.
Remember, that working out the details of a partnership is like dating. It may take a little while to come to a clear and mutual understanding of what you both want. Don’t drag things out just to be polite, but take the time to understand what you both need. When you negotiate the terms of a partnership, try to see things from the other company’s point of view too. Your job is not just to get the most favorable deal for your company, but also to ensure that the relationship is balanced enough to provide benefit for both companies.
Sometimes, just like in dating, you may both decide that now isn’t the time to form a partnership. If that happens, don’t be upset. Don’t think your companies can’t talk to each other. Things change in business. Just because a partnership doesn’t work out at one time, doesn’t mean that it won’t work in 6 months, a year or two years later.
Leave me a comment to let me know what else you think is important when developing partnerships in your company. I’m interested and so is my daughter.
photo credit, Patrick Q
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One of the biggest mistakes companies make when forming partnerships is not making sure that both companies adequately compensate their respective sales teams to sell the product. Partnership agreements on paper will not move anything forward unless the benefit is reflected in the sales compensation plan.
Great point, Debbie. I was mentally lumping this into the “equal financial benefit” category for the sake of simplifying the post. But I think you are right. This point deserves its own section. You may even want to specify in the terms of an agreement how you and your partner will sell each other’s products and what the compensation to the sales team will be. My experience is that add-on type products tend to be very difficult to have a sales team (even from your own company) push. Usually you get the best results out of a partnership when you and your partner both offer some major functionality that benefits from or is often purchased along with the other.