Why Do Global Partnerships Fail? The 5 Reasons and Tips to Achieve Partnership Parity

Partnerships are the lifeblood of any enterprise. As an arrangement between multiple parties to cooperate to advance their mutual interest, they take many forms. Partnerships can include investor/company, supplier/distributor, employee/employer, JV, strategic alliances, etc. The need for these relationships to succeed seems, on the surface, obvious. So then, why do they go awry? What starts as sincere intentions to achieve value-creating outcomes can quickly descend into chaos and ultimately break apart. Building partnerships globally creates its own set of challenges. Cultural differences layered on top of individual personalities, and unique business customs add new levels of complexity. This complexity increases the risk of failure. Building strong foundations for balance, harmony, and partnership parity remain the core challenge for any partnership development team.      

My views reflect the decades-long experience in developing partnerships around the world. Being on the frontline of partnership development for various organizations, including SWFs, venture capital, and family offices, involved an eclectic mix of regions and industries. I've worked in frontier markets such as Mauritania, Turkmenistan, Iraq to middle income, and upper-middle-income countries like Brazil, Indonesia, China, to the more developed ones such as UK, Japan, South Korea, and Switzerland. Adding to the mix has been a diverse set of industries such as hospitality, automotive, private aviation, agriculture, financial institutions, oil & gas, and many others. Fortunately, success outweighed the failures. Reasons for failure vary but conceptually fall into three overarching themes of people, resources, and goals. Our war stories are all different but shape our perspectives. Below are my top 5 reasons.  

The Top 5

Lack of Internal Clarity

Organizations plant the seeds of failure at the outset due to a lack of understanding of internal objectives. At the highest level, pursuing a particular partnership path is accompanied by some basic business logic. Validating the business case, in theory, should be a simple undertaking. However, agreements are signed, the partnership begins without regard for adequately vetting the company, the business model, or the market. Not vetting partners can have disastrous consequences. Causes for this apparent lack of clarity can vary but include malignant influences, poor internal stakeholder management, or just old fashion hubris. 

Misaligned Interest

The initial lack of clarity undoubtedly leads to an outcome of misaligned interest. While the honeymoon stages of a partnership will sometimes obfuscate these challenges, longer-term engagement will reveal them. It gives rise to the proverbial blame game. Understanding the true motivations of your counterparty can be a difficult read at times. Recognize that throughout the life span of a partnership, interest and objectives will converge and diverge. We expect shifting goals and priorities as an organization grows and evolves. Developing effective mechanisms to manage these ebbs and flows to realign interest is the key to a sustainable and successful partnership. 

Sheer Incompetence

A bit controversial but needs mentioning. Ideas are great, but it's the execution that matters. I've seen partnerships unravel due to sheer incompetence from one or both sides. Poor management, suboptimal resource allocation, organizational inertia, intense politics, and accelerating vacillation by decision-makers can quickly derail partnerships with enormous potential. Opposing forces can sometimes take on a life of their own, threatening the guardrails established to maintain the alliance. Develop multiple plans (B, C & D) to manage through these crises. Alternative strategies are essential if a firm conviction exists in the merits of the partnership.  

Lack of Resources

Lack of resources is a common struggle for many partnerships. Resources are not just about money but people as well. Lack of that internal clarity from the outset typically leads to suboptimal resource allocation. We do recognize that organizations come in all shapes and sizes. Some may be large organizations that can throw lots of resources at a strategy while others may be startups with small teams wearing multiple hats. However, if appropriately planned, even the smallest organizations can achieve sustainable and value-creating partnerships.   

Absence of Trust and Mutual Respect

Partnerships are not abstract concepts but a collection of personalities with shared goals. Trust and mutual respect are the bedrock principles for the success of any commercial relationship. Without these principles, the partnership will undoubtedly fail. It is a less tangible element, but very clear when absent. The absence of trust and mutual respect early in the partnership development process should raise red flags. These are principles that transcend cultures, borders, and organizations. In practice, trust and mutual respect should always extend beyond the frontline partnership teams to the broader organization or group.

Achieving Balance and Harmony

Reaching that partnership sweet spot takes time and hard work. We can only achieve partnership parity if the proper foundations are in place. Now how do we avoid the pitfalls?

• Avoid Confirmation Bias: No one wants to be a spoiler, but it is crucial to have difficult conversations with your partner at the outset. Be realistic. 
• Do Your Homework: Then do more homework to know your partners. Take the time to fully understand the real market opportunity and the true capabilities of your potential partners.  
• Understand Your Partner's Cultures: This relates to both organizational and geographic cultures. Learn where the internal and external points of inertia exist. It is also essential to know the real decision-makers. Understand that behaviors and triggers differ vastly across geographies. Differences exist between North and South Americans as well as Southern and Northern Europeans. While East Asians, Southeast Asians, and South Asians differ considerably from Gulf Arabs, Levant Arabs, and North Africans. Across all these groups, sub-ethnic differences also shape the dynamics of partnership development. However, one should never compromise the principles of trust and mutual respect. 
• Advocate with Real Conviction: Develop your conviction and advocate for the partnerships. Passion is persuasive. Others will feel it and fall in line.  

Partnerships, when successful, can create immense value. Avoiding many of the traps will create a strong foundation for sustainable and winning alliances.