We humans have been forming partnerships for as long as we’ve been walking upright. Sometimes those relationships can be more one-sided, like the example below. However, the best strategic partnerships are those where both parties are able to achieve more together.
Strategic partnerships are handy unions whether you’re looking for a new market for your amazing new product, or you just want to outrun a saber tooth tiger. (Which is why you always befriend those who are slower than you. Because it’s not about outrunning the tiger. It’s about not being the slowest person running from the tiger.)
Modern-day strategic partnerships might not be as dicey, and they’re much more likely to be win-win, as both parties should benefit from them. Regardless of how fast (or slow) you are.
What is a Strategic Partnership?
A strategic partnership is an agreement between two commercial enterprises that is meant to be mutually beneficial. Let’s say your company has the experience to do a certain job, but it lacks the resources. While company B has the resources, but not the experience.
OK, that’s ridiculously simplistic, and just one scenario out of dozens, but you get the point. A strategic partnership can even be as simple as two competing businesses ordering from the same vendor at the same time to lower costs.
The 5 Types of Strategic Partnerships
One of the tricks to forming a successful strategic partnership is to first know exactly what you want or need from a partner. And that begins by identifying what type of partner your situation calls for.
- Horizontal Partnership – Collaboration between two competing businesses.
- Vertical Partnership – Collaboration between businesses in the same supply chain.
- Intersectional Partnership – Collaboration between businesses in different industries or areas.
- Joint Venture – Collaboration that yields a new company.
- Equity Partnership – Collaboration that involves acquiring an equity stake in the partner’s business.
Another way to decide what type of partnership you need is to focus on the purpose of the partnership. What areas do you need help with – sales and marketing, development, supply chain, technology?
Marketing is the key to any successful business, and that success begins with building awareness. Can your business benefit from a marketing relationship? Or how about sales? Do you have a program in place for those who refer, or recommend, or outright sell for you?
Are you looking for R & D help? Research and development can be risky and expensive. Bringing in a partner with shared objectives can drastically cut those risks and expenses.
Forming strategic partnerships with businesses in your supply chain can improve delivery times, lower shipping costs, and even yield ideas for new products. From raw materials to office products, and from manufacturers to distributors, there are always benefits that can be had with supply chain partnerships.
Every modern process or function is dependent on technology. Your company’s website, the software that you use, the hardware, everything with moving parts that you’re dependent on. Partnerships in this area can provide free access to otherwise expensive software programs, and perhaps discounts on hardware. And it doesn’t hurt to improve your relationships with whoever is in charge of fixing things when they break.
Strategic partnerships can be valuable for a number of reasons, as they help you more-quickly acquire assets, products, expertise, or services that you don’t already possess. And knowing exactly what type of partnership you’re looking for is the first step in the process.
Benefits of Forming Strategic Partnerships
Strategic partnerships are unique arrangements. Partners can share marketing, product development, branding, sales, HR, technology, and so many other functions. It’s based on need and limited only by creativity.
Smaller companies can gain access to valuable products and services they might not otherwise have access to. In a lot of ways, strategic partnerships are about leveling the playing field. Allowing smaller businesses to compete with the big boys.
Other benefits that businesses of all sizes can expect include the following:
Grow your customer base, grow your business. That seems pretty straightforward. Whether your goal is to gain access to a new market or increase your share of an existing market, new customer acquisition is the most common benefit of forming strategic alliances.
Expanding distribution and reach into new territories is a key part of growing a business. Doing so with the aid of a partner warms up that new base of customers, so you’re not starting from scratch.
Extend Product Lines
Whether you’re creating new products or improving existing ones, having access to key materials, expertise, or markets that a partner can provide will open up new doors and provide more ways to diversify and earn.
Access New Technology
This also includes intellectual property and the general sharing of resources. Success is often reliant on access – to a particular demographic, software, knowledge or experience, etc. Strategic partnerships help to supply these things quickly and without having to give up too much in return.
Add Value to Customers
Anytime you can add value to the customer experience, you’ll add value to your business. A supply chain partnership could mean faster or cheaper delivery for your customers. A new manufacturing partner might result in better products. Focus on giving your customers what they want, and your customers will reward you with their loyalty.
EVA Air and Hello Kitty – Perfect Strangers Turned Perfect Partners
In June of last year, the city of Chicago got some pretty exciting news. The city found out that it was getting EVA AIR’s heralded Hello Kitty service.
EVA Air is a Taiwanese airline. Hello Kitty is a Japanese cat cartoon. And while they’re both Asian, the similarities probably end there. But that didn’t stop the two companies from becoming strategic partners last year.
It began with one Boeing 777, and one Taipei to Houston route. It has since grown to 12 routes on three continents. It’s also become more popular than anyone expected. This partnership involves much more than simply painting a cat cartoon on a few airplanes. Because the outside of the plane is just the beginning.
Hello Kitty EVA AIR’s branding has expanded to include more than 100 Hello Kitty items inside the plane, most of which travelers can purchase. It’s a branding, exposure, and sales experience unlike any other, and it’s all-encompassing from start to finish.
This special service even has its own website, where getting your flight information is a character-driven experience.
From EVA AIR’s perspective, they probably didn’t lose any customers because of a few cat-themed airplanes. But think about all the new customers they acquired because of them. Hello Kitty is hugely popular in Asia. Children crying to get what they want is popular everywhere. All it takes is a small percentage of parents giving-in to create a lot of extra revenue.
At first glance, the match between EVA AIR and Hello Kitty might not seem ideal. However, if you look into each company more closely you’ll notice that their branding efforts and customer bases are much more similar than not.
Tips for Creating Powerful Strategic Partnerships
There are so many reasons and ways to use strategic partnerships. And understanding exactly what you want from them is definitely the first step.
"Why" is the most important question to ask yourself when considering a partnership. Why do you want this partnership? What is the end goal of it? In what ways can the other company help you? In what ways can you add value to their company?
Perhaps the best way to do this is to envision your desired outcome if all goes perfectly. Now work backward in order to figure out the steps necessary to get there.
Once both parties know exactly what they want, it’s time to divide up duties and decide upon the contributions of each. Clarity is key here. Misunderstandings have a way of creating bad feelings.
There’s no need to hurry. Rushing into a partnership probably isn’t the best approach. Take a little time, ask a lot of questions, and make sure all goals are clear.
Too much excitement has a way of blinding people, which has a way of inspiring poor decision-making. So take a step back, try to be as neutral and objective as possible, and allow yourself the clear head needed to make certain that the fit is a good one.
It’s important that both parties are equally committed to the partnership. And that both have an opportunity to prosper if successful.
The Company You Keep
Think back to your high school days for a moment. Imagine yourself walking into school with the captain of the chess team. Now imagine yourself walking into school with Christie Brinkley.
Was the perception of those around you different in those two scenarios? We are always being judged, and this goes for businesses as well. Which is why the company you keep is critical for how you are perceived.
For this reason, choose partners with good reputations. But also choose based on commonalities, a shared vision, or shared enthusiasm for a project. Something that will sustain that relationship through any tough stretches.
Strategic Partnerships Increase the Odds
The phrase – strategic partnerships – sounds like a marketing buzzword that’s trending and shiny and new age. But it really isn’t. These partnerships have existed for as long as we humans have. And they’re everywhere once you begin looking for them.
When Batman wanted to fight more crime, he went and got Robin. When peanut butter wanted to be more delicious, it went and grabbed some jelly. And when Beavis wanted to feel like the smartest person in the room, he went out and found Butthead.
Forming strategic partnerships is all about achieving more together, just like the unlikely pairing of a Japanese cartoon cat and a Chinese airline. What is good for one, is good for both. Because a good partnership is meant to benefit both parties. Whereas a bad partnership involves one of those parties wrestling with a large prehistoric predator.