Tech Execs Advice on How to Select Strategic Partners
For our June blog, we asked five tech execs to offer insights on how they approach strategic partnerships to grow their business. You’ve heard us talk about this topic a lot, because as entrepreneurs and CEO’s, we’ve experienced the substantial benefits of good partnerships, and conversely the drag of the wrong partnerships. Strategic partnerships are worth the effort, because they can help you grow your business, gain competitive advantage, and often become a prime source of future exit for your company. We have seen this prove out in many tech companies we’ve grown and exited over the years.
So what criteria do you use to choose the right strategic partners? Before we dive into the panel’s insights, we wanted to offer our take as former CEO’s who have created many partnerships, and often exited the company to existing partners. Selecting the right partner involves thinking about both hard (business) and soft (people) issues, and the best partnerships usually have alignment on both. Our panel covers both hard and soft issues.
Successful partnerships start with a solid business case built on the proper structure. The business case must align mutual benefits to both partners and your mutual customers. The combination of revenue, product synergies, competitive advantage or other factors must ‘move the needle’ for both partners. Structure can include co-sell, integration, reseller, white-label, or others. Structures that align with the partners current go-to-market operations work best as they can be launched faster with less resource.
Philosophically – approaching partnerships with a ‘crawl – walk – run’ approach has served us well over the years. Often, we have focused together on serving a handful of mutual customers with an MVP approach, double entrende ‘Minimum Viable Partnership’. Early proof points build momentum for both partners to invest in the partnership success.
That’s our take. Now on to our panel of tech executives for excellent insights.
Expand Range Through Partnerships
When I'm considering a strategic partnership, one of the most important things I evaluate is range.
Too many companies pair up with counterparts because of what the businesses have in common. This is a mistake. Leaders should do the opposite: look for businesses in your industry that are doing the things you aren't, and vice versa.
It's about expanding your range. Collegial relationships are great but tread on the well-worn ground. Push your company out of its comfort zone by handpicking partnerships that reach new segments of the market, whether it's through location, process, or services.
That's how well-rounded companies are built.
Rob Reeves, CEO and President, Redfish Technology
Align Values for Strong Partnerships
In order to truly grow and thrive, it's not just about finding a partner with the right skills and resources. Alignment of values is crucial. When you share the same core beliefs and priorities, you can work together more seamlessly and effectively towards common goals.
This can lead to a stronger overall culture, a more productive and fulfilling work environment, and ultimately greater success as you navigate the challenges of building a successful business.
Of course, it's not always easy to evaluate the alignment of values during the partner selection process. But in my experience, taking the time to really dig deep and understand a potential partner's underlying values can be the difference between a good partnership and a truly great one.
Lorien Strydom, Executive Country Manager, Financer.com
Partner With Complementary Businesses
Find a business that complements the strengths and weaknesses of your enterprise when looking for a potential strategic partner. You can fill in the gaps in your business model and open up new growth prospects by partnering with a company that possesses the skills or resources you lack.
We at Compare Banks sought to add investment products to our financial comparison services. After carefully assessing potential strategic partners with knowledge of the investment industry, we collaborated with a FinTech business that specializes in investment management. Through this alliance, we could expand our selection and give our clients a more thorough financial comparison service.
Percy Grunwald, Co-founder, Compare Banks
Be Realistic About Partnerships
Strategic partnerships are difficult to form, hard to maintain, and the long-term benefits are rarely as profitable as everyone wants them to be. After 30 years of building partnerships with other companies, I've learned to keep the excitement of a new relationship and its possibilities from overshadowing and understanding the long-term cost and benefit of working together.
Those early meetings are full of brainstorming and great ideas, not to mention the relief of having someone else join you on the battle line. No one wants to be the negative person who points out issues. Tone down those initial projections to something attainable and dig deep enough to understand the full costs of working together.
A great way to overcome the bias of a fresh relationship is to prove why you shouldn't partner. Starting from that position will force you to find all the negatives and be more realistic. If things still look good after that, get back on a positive track and form the partnership.
Eric Miller, Co-owner and Principal, PADT, Inc
Ensure Shared Ideals and Communication
My experience as a leader in the technology industry has taught me the importance of carefully vetting any partnership. I constantly consider the long-term benefits of my business to determine if cooperation is worthwhile. The best advice I can provide is to favor collaborations that match the ideals of your business.
You should investigate a potential partner's track record, industry knowledge, and reputation before deciding to work with them. Will it give a leg up on the competition or will this facilitate fresh developments to our current offerings? If they say yes, I'll know we can work together to achieve outstanding success.
Aside from sharing common beliefs and objectives, it's crucial to set clear expectations and communicate early on. This guarantees that the goals of the two parties are aligned and reduces the likelihood of future disagreements.
Jeff Mains, Founder and CEO, Champion Leadership Group