The Connection Between Partner Assessments and Commercial Value - A Testable Hypothesis

The Purpose of this Newsletter

This newsletter is designed for people who would like to improve their strategic alliance relationships. The improvement process is simple:

1. Answer the partner assessment questionnaire on an alliance of your choice. This should take you no more than 20 minutes and you can find the assessment here: Alliance Assessment
2. Identify those areas which are underperforming and search for downloadable materials to help you improve them. Download Alliance Improvement Tools
3. If you would like help in explaining your assessment please contact us here: [email protected]

The remaining article explains why a partner assessment is a valuable exercise.

Why is it important to conduct partner assessments?

Alliance Best Practice Ltd (ABP) recently ran a partner assessment exercise for a Global System Integrator (GSI) in EMEA. The rationale for the exercise was interesting. The company already measures multiple aspects of their alliance relationships with partners (of course) but they measure objective not subjective measures. That is to say that they measure things like: sales, revenue, certifications, pipeline, training received, opportunities logged, etc. So they know what they are receiving in commercial terms from their partners but they don't know why?! The reason is that they are not asking subjective questions around topics like: trust, senior executive support, collaborative behaviour, culture, etc.

"We measure the hell out of partners objectively but we don't really know why some partners like us more than others." - Senior Executive in a GSI

What we found after we did speak to partners and ask them subjective questions was extremely interesting. It seems that partner sentiment leads to commercial value. Which of course is entirely logical. The more a partner 'likes' you the more business they will do with you (generally). But what do we mean by the concept of 'like'? ABP believes that it is not enough that a partner enjoys interacting with you as a business they also need to see some tangible commercial return as a result. In addition, its no good both parties wanting to partner if they haven't got any joint business value propositions to take to market.

This concept of partner sentiment can be expressed another way; and in a way which might be more familiar to readers. The concept is Partner Experience or PX and it is remarkably similar to Customer Experience or CX. CX is now a well established concept and indeed has spawned its own mini industry of advisers and consultants looking to help companies to improve the experience that customers have when dealing with their own organisation. An examination of CX usually starts with the mapping of a customer journey in their interaction with the selling company.

Similarly the concept of Partner Experience or PX is fast gaining ground in major organisations looking to set up or improve their partner ecosystems; and, just like the customer journey example, companies are now looking seriously and with great attention at the partner journey as it interacts with their own company. This was most adroitly summarised for me in a conversation I had with Professor Ard-Pieter de Man from the Free University of Amsterdam. In our conversation we were talking about the way that large high tech companies deal with their partners and he casually mentioned that in his opinion partner selection (making partners jump through due diligence hoops) had been replaced by partner seduction (meaning the active attraction of key partners who had multiple choices of who to partner with).

"Partner selection has given way to partner seduction!' - Professor Ard-Pieter de Man, Free University of Amsterdam

Going back to our partner assessment survey for the GSI. We asked 25 questions in 5 different categories to gain an understanding of the subjective elements in a range of strategic alliances. (You can find a link to these questions below to help you run a similar partner self assessment test for yourself). The categories that we used were ones that are familiar and proven to ABP members these were: Commercial, Technical, Strategic, Cultural and Operational.

The scores posted by the GSI alliance folks showed a 35% accuracy in predicting commercial success. But the scores posted by the partners showed a 72% accuracy in predicting commercial success. Again, I think this reveals an interesting insight which I have mentioned many times in my alliance best practice classes. Which is 'Perception is Reality'. Meaning that regardless of how well or badly you think an alliance relationship is performing the best person (or persons) to ask are your partners themselves, because if they have a perception that the relationship is not particularly good then they will act as if that perception is correct and they will be reluctant to interact with you as a consequence. This is a classic case of perception equals reality!

In strategic alliance partnerships very often perception equals reality and the best people to ask about partnership performance are the partners themselves.

Running a Partner Self Assessment Test

The great thing about partner assessments and their connection to partner value is that it is a testable hypothesis and it is one that you can test for yourself! Below is a link to a partner self assessment questionnaire. Simply score the questionnaire yourself on two different partnerships, one which is performing well and the other performing not so well. Now look at the respective best practice scores. What you will notice is that the relationship which scores better in best practice terms delivers more tangible commercial value in practical terms. A fluke maybe? OK, so try the assessment again with two other partnerships and you'll find the same causal relationship between best practice scores and commercial value. You can run the assessments as often as you like and what you will find is that the 'rule' is a universal one. We in ABP know this to be true because we have run the assessments over 800 times in the last 20 years! One final tip is to get your selected partner to answer the questions as well and see if his score is a more accurate predictor of commercial value than your scores.

Link to a Partner Self Assessment Questionnaire

What can you do with the answers?

So now you have run your partner assessment and you find that some areas don't score as well as you would like. What do you do now? Well one answer is to identify the underperforming areas and search in the ABP Downloads section for ideas on how to improve them. Remember an improving score will result in more commercial value. You will know what to look for because each area has an identifying code somewhere between CO1 and O52. The explanation of the codes is that there are 52 identified best practices that you can improve and they are in 5 categories e.g. CO = Commercial, T = Technical, S = Strategic, CU = Cultural and O = Operational. (Spoiler Alert! - This exercise is best done with the active cooperation of the partner concerned).

Link to Alliance Best Practice Downloads Section

About Alliance Best Practice Ltd (ABP)

Alliance Best Practice Ltd is a research and benchmarking company specialising in business to business collaborations. We have benchmarked over 800 alliances during the last 20 years and maintain a database of alliance best practices at www.alliancebestpractice.com The database is available to anyone who wishes to run alliance best practice assessments. If you would like to talk to us about your assessment and its implications please feel free to contact us here: [email protected]