Why Partner Orgs Don't Partner

Your partner organization is, oops I misspoke (mistyped).? Your multiple, overlapping and non-collaborative partner organizations didn’t get that way on purpose.? It’s a natural and all too common outcome as different partner activities emerge along the maturation process of a large organization.? So why does that matter?? Well besides the inefficiency this creates for your organization, it also creates headaches for your partners.? Moreover, the lack of collaboration costs your enterprise missed opportunities to evolve partnerships through and across the organizational relationships that drive profit.??

These missed opportunities take several forms; a VC Investment should at least be considered as a potential acquisition and very likely also a technology partner, but I rarely see M&A talking to the in house VC.? Even more often I see technology partner orgs, simply populating their partner portal with VC invested companies rather than building real product enhancements and new product offerings through technology integrations. The sales channel, while closest to many of our customers and their needs, is rarely tapped to understand where to invest and acquire.

Before we can discuss a model for resolving these shortcomings, we need to understand how and why the problem arises and let’s start with that ever powerful island unto itself, the sales channel.

Sales Channel

We’re in this to make money, you and me and the companies we work for.? So naturally the first, most focused on and best measured/funded partner type is usually the channel.? At Cisco during the 2010s, the channel surpassed 75% of sales revenue and their largest partner represented 7% of all sales surpassing $3 ba ba billion in sales.? Yeah I stuttered.? The team supporting that partner counted no less than 200 strong and appropriately garnered the attention of every single member of Cisco’s ELT. For fear of risking those $3B in sales, the partnership was untouchable, even unapproachable by most teams outside the sales channel.??

However, Cisco leaders understood that this company had insights into 7% of its customer base and unlike our sales employees wasn’t afraid to tell them when Cisco was missing a trick.? A great example is when Cisco decided to evolve from a transactional hardware company to one that sold software Enterprise License Agreements.? Their #1 sales partner was also the #1 sales partner for SAP, Microsoft 360 and several cyber security software products.? Their groundbreaking work with product management, sales operations and our legal teams was pivotal in reducing Cisco’s time to market with this new sales approach.? AND, it actually helped grow revenues with the partner, not risk them.

Technology Partnership

Let’s start by acknowledging that this term encompasses a wide variety of relationships from simple interface and API compatibility to jointly developed and patented new technologies.? The product development and engineering teams are usually tasked with these partnerships after being tipped off by the sales team to large potential deals and markets that could be accessed post integration.? It’s important to underscore that it’s nearly always the internal sales team, and not the sales channel.? We should also admit that the deal driven sales teams often demand integrations that help close a one time deal and never fulfill the “3 year TAM” they concocted to convince engineering to take on a new workload in the first place.? Not surprisingly, the technology teams are reluctant to have even more requests come in from 3rd parties, the sales channel.? As a result, many engineering teams inadvertently turn away from these customer informed needs and depend on their engineering colleagues at other cool tech companies.? This is how “tech for tech’s sake” features and integrations can infect a company.? Add to that the “Net New Logo” metric of many tech partner portals or marketplaces and we begin to understand why tech partner orgs can easily become misguided.

Potential Acquisition

When sales and engineering do get it right, it doesn’t take long for the finance and strategy teams to start looking at acquisition.? They’re pretty good at having a roadmap for growth through acquisition and a finger on the pulse of key start ups in core and adjacent markets that would compliment their business, grow their revenues or eliminate a competitive threat.? One unique component to this partnering type is the involvement of HR and their focus on cultural fit and talent retention.? In many regards, this secret sauce of a successful acquisition also fosters a great pre-acquisition partnership.? More than a few effective partner management lessons can be learned from your HR team engaged in M&A.? Unfortunately, those skills don’t always translate to great cross organizational collaboration.

VC Investment

Executives like Michael Dell and Jeff Bezos have access through conferences, panels and industry exhibitions to high level discussions around all sorts of technologies.? They also have something else - boat loads of money to invest.? To capitalize on these opportunities, large tech firms eventually form an in house VC. In contrast to the sales channel, this is usually the last partner org to emerge as it requires a high degree of success in the form of amassed capital often generated by the other partner orgs.? In the case of Dell Technologies Capital, they have 135 companies listed in their portfolio of VC investments of which several have gone public.? Many more have been acquired, 59 to be exact.? Dell is one of the best companies in the industry at involving an M&A mindset into their VC evaluation process.? If you want to integrate these practices, look no further than the “spin in-spin out” case of EMC/VMware.

Strategic Alliances

By far the most evolved and comprehensive type of partnership, these are usually led by alliance professionals who are adept at CxO level communication and cross organizational collaboration.? They also usually enjoy an executive sponsor who is tasked with seeing the broader and longer term value of the partnership.? As a result, these partnerships are less at risk of isolation, but if underfunded or understaffed they will nonetheless miss areas of opportunity.

So why aren’t we all talking?

While the common thread here has been that partner orgs develop at different times and out of different needs, they are also developed by teams with divergent personalities and skill sets.? Add to that the unique goals of each partnership type and you have a recipe for chaos. Take a look at the table below and guess why you have uncollaborative partner organizations:

Let’s face it, we’re all busy and cross organizational collaboration is hard work.? Furthermore it contributes to a long term benefit for which no individual organization will be able to take full credit.? No surprise we don’t jump on it as our first priority.? But, it might not be all that hard.? In the next blog, I’ll suggest a model for enhancing collaboration and finding the “value in the seams” between partner organizations.