The Problem With B2B Partner Ecosystems

Note: This is the first in a series of weekly (ish) essays exploring the challenges and nuances of B2B partner ecosystems. Each article will delve into specific issues across four main topic areas: believability, structure, scalability, and predictability. By the end, I hope to have provided readers with a comprehensive understanding of the challenges and potential solutions to enhance the value and effectiveness of partner ecosystem strategies. Originally published on Medium (Link)

Chapter 1: “Believe Me, It’s Working…”

So, I’m trying to untangle a complex set of problems underscored by a McKinsey & Co. survey showing that 90% of CEOs believe their B2B partner ecosystem teams “do not add significant value.”

Put another way, B2B partner ecosystem strategies fail nine out of ten times, which means the profession I love—which has given me immense purpose since I stumbled into it over a decade ago—is struggling badly, and companies simply aren’t reaping the incredible benefits realized when ecosystems work well.

Before we get into those struggles, it’s probably helpful for readers to understand how I got here, why I’m so passionate about this profession, and why I’ve dedicated my life to making it work the way it should.

My journey to this profession began at Integrate, where I was fortunate to be in the right place at the right time. There, I carved out a niche in the nascent world of technology partner ecosystems. It wasn’t about selling the Integrate product anymore; it was about aligning product, marketing, customer, and revenue value with the same motivations from our partners.

Instead of being pigeonholed as “just a seller” (a label I vehemently disagree with, though many who haven’t “carried a bag,” and even some who have, use all too frequently), I found myself part of strategic conversations at the executive and board levels. For the first time, I felt like I had a real purpose and a golden opportunity to showcase what I could do, and I seized that opportunity with everything I had.

Building Relationships and Creating Value

I threw myself headlong into the worlds of data, predictive analytics, and marketing automation — the three main technology areas where I’d be aligning with partners. True to my hyper-focused nature (thanks, ADD!), I absorbed as much knowledge as possible in a very short amount of time.

I leveraged the networks and collective knowledge of our executive, revenue, and marketing teams to make the right connections and set up and gain access to the right partners. I studied the intricacies of the Integrate product and began regular discussions with our product and engineering teams to explore potential product integrations with our partners.

Engaging cross-functionally, I endeavored to understand the market and Integrate’s go-to-market strategy as thoroughly and completely as possible. I learned how to add and extract value across various internal departments and from an ever-expanding number of distinct partner organizations. I hit the road, attended every event that would help advance business objectives, and met with as many partners as possible to build the types of relationships significantly enhanced by face-to-face interactions.

I advanced sales opportunities, identified and coordinated numerous marketing opportunities with partners, built and expanded executive relationships, spearheaded the development of Integrate’s first-ever data appending capabilities, created direct revenue opportunities from those integrations, and generated new leads for the company.

It was an exhilarating ride… until it wasn’t.

The Challenge of Justifying Existence

Despite adding value across multiple parts of the organization, the direct, sourced revenue didn’t meet our CEO’s standards, kicking off what became the first in a series of a recurring interpretive dance I, and every single partner professional I’ve ever met (no, that’s not an exaggeration), has had to perform countless numbers of times throughout our careers. That dance? Constantly having to overexplain what we do to justify our existence.

To my fellow ecosystem professionals, stop me if you’ve heard this one before: “What, exactly, do you do all day?” I’ve heard variations of this exact question innumerable times, with an uncomfortable percentage of those questions coming straight from CEOs and other senior executives.

In the case of Integrate, since the direct, sourced revenue targets for partnerships weren’t being achieved, the tedious exercise of writing detailed explanations of all activities, contributions, and outcomes became routine.

While I strived to hit the numbers set for me and my teams, we frequently fell short, frustrating CEOs along the way and regenerating the cycle of having to justify my existence.

Unbeknownst to me, my teams, or the executive teams setting the numbers, what we’re tasked with delivering was then, and remains so today, nearly impossible to consistently achieve and even less possible to scale.

Misalignment with Traditional KPIs

Again, I’m aware that using a term like “impossible” may come across as hyperbolic, but if you stick with me through this series, you’ll come to see the quagmire that is the current partner ecosystem organizational structure and mandate, why a 90% “failure” rate isn’t surprising, and why I use the term “impossible” when it comes to creating consistent, scalable ecosystem strategies today.

To kick off the “learning,” we’ll briefly explore one of the primary misalignments, hoping to give you some food for thought before we explore each in depth in subsequent chapters.

So, why do I say that traditional KPIs and ecosystem strategy are mismatched?

I firmly believe that the non-linear nature of ecosystem strategy fits poorly into the traditional linear KPI business models that have driven company success until recently. Partner ecosystems, tasked with adding and extracting value at organizational and ecosystem levels across all GTM functions (product, marketing, sales, and customer), are held to metrics that contemplate only a fraction of their value.

This square-peg function in a round-hole organizational structure creates a relentless cycle where partner ecosystem teams constantly justify their value. This leads to executive leaders’ growing frustration over the perceived lack of results, stemming from teams' inability to meet unrealistic expectations.

The Need for a New Approach

Mountains of research (I’ll link several sources in each post) from almost every major analyst, management consultant, and investment firm reinforce the value and potential of well-executed ecosystem strategies. However, these voices also highlight the incredibly high failure rates and significant hurdles that must be overcome for successful execution.

In the coming weeks and months, we’ll dive deeply into the problems facing companies investing in ecosystem strategies and those already invested. We’ll explore the challenges my peers and I face, the philosophical and structural issues creating these environments, and why we can solve this problem today when that wasn’t possible until very recently.

For simplicity, I like to frame the problems under four main headings: Believability, Structure, Scalability, and Predictability. There are several subtopics beneath each heading that I hope will help readers understand the nuances of these broader topics and set us on a significantly better path forward.

I hope those who join me on this journey will find value in this breakdown and realize that even though it’s tough out there right now, we can solve the problem, and there really is a glimmer of hope on the horizon.

If we can face the challenges I lay out in this series head-on, we will fix this. Doing so will allow people like me, who have found their passion in the evolving discipline of partner ecosystems, to contribute the level of value we’re capable of.

Ultimately, even though this will benefit my peers, the companies they work for, and the colleagues they work alongside, solving the problems we face will unlock solutions along a much bigger swath of their organizations, paving the way for them to meaningfully participate in the projected $70 trillion integrated network economy by 2030.

If I do my job well, by the end of this series, I hope you, too, will see why solving the ecosystem conundrum has much broader implications than most might imagine…

TL;DR

• Value Misalignment: Despite significant contributions, ecosystem teams struggle to meet direct revenue targets and must constantly justify their existence.
• KPI Mismatch: Traditional linear KPIs don’t align with the non-linear nature of ecosystem strategies, leading to executive frustration.
• Cycle of Justification: Teams face relentless cycles of explaining their value due to unrealistic expectations.
• Need for Change: High failure rates of ecosystem strategies highlight the need for a new approach.
• Future Focus: We will explore believability, structure, scalability, and predictability to pave the way for a $70 trillion integrated network economy by 2030.