Build your business partnership on a firm foundation.

A start-up CEO I shall call Charlie feels unsettled. A larger company has expressed interest to partner with him. He is undecided. Should he accept, or not??

Charlie’s startup has proprietary human resource management software to track employee performance. A more established software company recently approached him seeking a partnership. They offer to deliver Charlie’s product as a component of their solution.

Charlie fears that if agrees to that arrangement, the larger company will force a change to his roadmap. Further, he wonders how he will secure his ideas and intellectual property. He also thinks it is likely the potential partner could profit off his product unfairly. More than anything, he is worried the bigger company will dominate the relationship.

A common opinion is that startups get overshadowed once they partner with more established companies. While that is not entirely true,?research?shows that both small and large organizations experience frustration when they collaborate. Partnering companies can collide sharply over goals, responsibilities, how to split revenue, and more.

Charlie faces a tough choice. He understands that by not partnering; he stands to lose. The larger company promises to expose his product to more customers. As it is, riding on the more renowned brand name could be enough benefit for him.

Probably, like Charlie, your company is at a crossroads. You know that if you team up with a more established company, your young company will benefit. Such a partnership would expose your products to a larger customer base. Besides, it could give you relief by sharing the investment in development and other costs. Maybe it would increase your operational efficiencies.??

But you also know that is easier said than done. You are worried the bigger brand might abandon the partnership before you achieve anything tangible. Even worse, you could commit your startup’s limited resources and still not meet your expectations. To top it all off, you could lose your intellectual property. Or even your identity. Perhaps the concerns are more technical, such as how to achieve integration or how to work together when your cultures are worlds apart.

There is a lengthy list of concerns we could worry about where partnerships are concerned. Thankfully, these don’t have to stop us from achieving mutually beneficial business partnerships. There are shifts we can make, so we confidently pursue the partnerships our young businesses need.

How can partnering businesses collaborate effectively to achieve partnership goals while safeguarding the autonomy of the individual partner companies??

Set the right foundations

Many studies carried out on the subject show that for partnerships to work effectively, they need to be supported by clear structures and formal written agreements. These agreements, of course, need to be developed collaboratively. After all, in a partnership, we assume you have equal rights.

When you adopt a systematic and structured approach to setting up the business partnerships, it gives both parties an opportunity to express their expectations before the engagement even begins.??

The following 3 questions emerge from the broader business literature on proven principles and practices. They will guide you to develop agreements around:

1. The goals of the partnership
2. The systems and practices that will guide how you work towards the agreed goals.
3. Performance measures and review mechanisms to help you gauge progress.

Work through these questions to position your company to engage better and to tap into the opportunities that your partnership deal promises. This will set a foundation for the partnership to deliver value to both parties.

1.??What goals will your partnership achieve??

Every company is driven by its goals. And these goals are different for each company. From a startup perspective, this could be access to a wider market or to build a brand. For a more established company, could be access to an innovative technology capability. For the partnership to truly create sustainable value, it must consider the customers too. They must align these ambitions for both parties to create impact and to benefit. So, the question then is how are you creating value for customers, for your partner, as well as for your company???

Before you get locked into the partnership, ensure that you have aligned on the ambitions of both parties while delivering significant value for customers.

Successful partnerships are clear and aligned with what they want from the start.

2.?How will you work smoothly to achieve the agreed partnership goals???

Identifying common goals is not enough. You need to be clear about how you will work together to hit those goals. How well the partnership works will depend on the decisions made in both certain and uncertain times, transparency within the partnership, and the ways of working within the partnership.??

These, in turn, depend on the governance structures, processes, and values that together form the ground rules. These ground rules govern how the partners will work towards achieving the defined goals. Again, these need to be developed collaboratively.

For example, a common complaint with startups is big companies have slow processes.

Here are some considerations to keep in mind when negotiating and developing ground rules with the partner.?

• Define the values and operating principles that will govern how you work.
• Agree on how the partnership team will handle resources. This includes the financial resources, people, tools, and facilities required.
• How you will make decisions within the partnership.
• Develop a clear project plan to guide the implementation of the partnership activities.
• Establish communication protocols, processes, and schedules to promote strong, transparent, and open communication. These build and maintain trust between the partners.?
• Structures governing how you will share data, reports, and other info.
• An agreement on how to share the IP rights generated as part of the collaboration.
• Clearly define roles, responsibilities, and accountabilities for each party.
• Anticipate how you will manage changes.
• Establish a means for conflict resolution when things go wrong.
• Agree on how the partnership will be dissolved or progressed to a different level effectively.

When you develop clear formal governance structures, it allows the partnership to transition easily from all talk to action. It offers a solid foundation to drive accountability. That, coupled with proactive communication, will also build and maintain trust.

Successful partnerships define governance frameworks to strengthen accountability and to work effectively.

3.?How will measure and track progress towards the agreed partnership goals??

Once you have aligned on the goals, how the partnership performs against those goals is the accurate measure of the value created.

But there is a catch. Just as each company has different goals, companies define success differently. For example, a large company could be tracking only revenue generated while, for the start-up, the more indicative metrics could be around product uptake by customer and usage. Both parties must agree on a common scorecard to satisfactorily assess the health of the partnership.??

Besides, the partnership needs to be evaluated periodically to ensure strategic focus and continued progress towards the goals.??

Even before you engage the partnership wheels, ensure you have agreed on:

• The key metrics.
• How the key metrics will be defined and reported.
• Regular health checks to assess progress.?

Successful partners track and review the partnership’s progress towards the agreed goals.?

Don’t settle for less.??

Sound foundations make for great partnerships. And great partnerships can catalyze your growth.?

The reverse is also true. A shaky foundation can destroy a great partnership. And it can severely limit the success and impact of your partnership.?

Take the steps to address and overcome potential partnership pitfalls. Reach your partnership goals efficiently and harmoniously. Form mutually beneficial partnerships.

Don’t settle for walking the path alone when you could set sound foundations and gain great value through business partnerships.?