Partner for Success Presented by Lynda Smith, Fenwick and West - PowerPoint PPT Presentation

Partner for Success Presented by Lynda Smith, Fenwick and West Consulting Professor, Stanford Technology Ventures Program .

Typical Partnership Results • 200 high-tech companies surveyed – 94% stated alliances were important to their overall corporate strategy – 70% had only achieved initial goals or failed outright • Why Do Partnerships Fail? – No formal governance infrastructure – Lack of agreed-upon performance metrics – No regular assessment – No senior management involvement – Insufficient resources Source: Robert Frerichs, Andersen Consulting Stanford Center for Professional Development •

Agenda • Frameworks for thinking about partner relationships • Tools for structuring success • Putting it in action Stanford Center for Professional Development •

“ Partnership ” is Used Across a Broad Range of Institutional Relationships Expected Length of the Relationship Depth of Commitment & Short Unknown Long Exclusivity Shallow/ Single Renewable 5-Year Usually Transaction VAR Sourcing Polygamous (not a Agreement Contract partnership) Deeper/Often Cooperative R&D Joint Venture Polygamous Advertising Partnership Deepest/Usuall 1 year Renewable Merger/ y Monogamous exclusive Exclusive Acquisition license Terms (not a partnership) Stanford Center for Professional Development •

Some Partnerships Focus on More Than Profits Revenue & Profit Potential from the Partner Earning Strategic High Partner Partner Limited Learning Partner Partner Low Low High Source: Kosnik and Montgomery Partner ’ s Potential to Help You (1994), “ Managing Cross Develop Your Core Competencies Cultural Alliances: Can Trust be Achieved in a Polygamous World? ” Stanford Center for Professional Development •

Partnering Lifecycle Life Cycle Stage Description • Partners are sizing each other up Early Phase • Firms mobilize internal support for alliance • Firms demonstrate commitment Growth Phase • Firms revisit relationship Maturity Phase • Firms understand value • Contracts may be up for renegotiation • Firms may decide to dissolve relationship Source: H. Adobor, The role of personal relationships in inter-firm alliances 6 Stanford Center for Professional Development •

Agenda • Frameworks for thinking about partner relationships • Tools for structuring success – Defining the Partner Business Proposition – Aligning Resources to Value – Building an Alliance Program – Essentials of Partnering – Measurment • Putting it in action Stanford Center for Professional Development •

The Partner Business Proposition A business proposition answers: “ Why should we bet our resources and reputation on you? ” (partner question) This contrasts with a value proposition that answers: “ Why should I buy your product? ” (customer question) Source: Rhoner & Associates 8 Stanford Center for Professional Development •

Contrasting the Propositions Value Business Proposition Proposition Focus Product Partners Objective Sell products using Create bias thru the the value prop. business prop. Attributes • Features • Profit • Benefits • Incremental Sales • Strategic Value 9 Source: Rhoner & Associates Stanford Center for Professional Development •

Orphan Status: When the Business Proposition Isn ’ t Strong Enough Higher Mainstream Products Adjacent/ Revenue Productivity Contiguous Products Unworthy Orphan Products Products Lower Lower Higher Potential Worthiness 10 Source: Rhoner & Associates Stanford Center for Professional Development •

What Partners Can Give and Get in a Partnership Potential Stakes to bet on the Partner can give: Partner can get: Partnership Technology ( product, platform, and process technologies) Resources ( money, time, talent, and knowledge ) Relationships (with customers, channels, investors, government) Reputation (visibility, credibility, brand equity) Core Competencies (critical capabilities for execution) Chemistry of Key People (culture, character, personalities, values) Company Vision (purpose, mission, values) and strategy Adapted from: Kosnik (2000), “ Managing a Portfolio of Polygamous Partnerships? ” Talk for Stanford Center for Professional Education, January 26, 2000 Stanford Center for Professional Development •

Partner Synergy Drives Stratification and Resource Alignment High Strategic Opportunistic Misfit Tactical Low Low High Value to Company 12 Source: Lynda Kate Smith Stanford Center for Professional Development •

Establishing Guidelines for Partner Investment  Joint Development  Joint Business Plan  Technology Exchange  Pre-packaged,  Demonstration Centers repeatable solutions Resources  Joint client development  Solution Offering  Training  Knowledge Exchange  Seminars & Conferences  Marketing Collateral  New Sales Initiative  Subcontracting Time 13 Source: Kevin Kew Stanford Center for Professional Development •

Typical Alliance Program Structure • One person assigned to manage many alliances • Not run as a business Lac Lack of of fund unding f for or the the alliance ances No signi nificant e ant executi cutive e accounta countable f e for t the succe cess o of the a e alliances ances Lack o of oper erati tiona onal syste tems to to sup upport and and (or (or) measur ure p e perfor ormance nce Stanford Center for Professional Development •

Why Do We Need an Alliance Program? Not to be Confused with “Why Do we Need Alliances?” • Manage our Resources more Effectively and Efficiently – Investment Matches Partner’s Value-Add / Revenue Contribution • Supports the 80x20 rule. e.g. Provide the 20% of our Partnerships that Drive 80% of our Channel / Influence Revenue the Lion’s share of Resources – Address the largest possible partner audience while gaining the maximum possible revenues through partners – Address organizational alignment to ensure we’re “putting all the wood behind the arrowhead” • Manage Partner’s Expectations – Defines a Hierarchy of Conditions for Preferred Access to MatrixOne Resources – Offers a set of predefined standards that guide the agreement terms and conditions for which Partners will (or can) Interact with MatrixOne • Increases Quality for Solution / Services – Certification Programs – Developers Programs • Serves as a Differentiator • Aids in the Recruitment of New & Desired Partners Stanford Center for Professional Development •

Key Building Blocks of a World-Class Global Alliance Program • Clear & Measurable Program Membership Criteria • Pre-Defined Rights & Privileges – In particular, rights & privileges that we are prepared to deliver in consideration of the requirements / expectations set behind membership • Training & Knowledge Transfer – Informal and Formal • Effective & Frequent Communication – Inbound and Outbound • Controls & Reporting – e.g. Application Approval Process, Legal Agreement Architecture, Access to Demo Software, Fees, etc. • Effective Alliance Management / Coverage The Special Sauce: Making the Program Appear ‘Bigger than Life’ While Managing All of this Within the Context of your Limited Resources & Other Constraints Stanford Center for Professional Development •

Partner Needs Fulfilled by the Alliance Program • Improved Access to Training & Content – Educational Services, Knowledge Channel, & PartnerLink • Clear, Achievable Expectations Set – Consistent Agreements Across Geographies – Access to Sales Force & Customers – Understanding How to Work with Company & Whom – “On-the-Air”, Web Page Promotion, Success Stories & Co- Branding • Focus on Quality & Customer Satisfaction – Certified Professional program Stanford Center for Professional Development •

Essentials of Partnering Be sure you understand the contractual relationship you have • with your partner. Be sure your partner understands what value you bring to the • partnership. Be sure you understand what value your partner brings to the • partnership. Have a business plan that includes your partner. • Get the top people in your organization behind the partnership. • Personally work to make the partnership successful. • Find a good reason to partner. • 18 Stanford Center for Professional Development •

Essentials of Partnering Don't tell your partner what you think he wants to hear, tell the • truth. When conflicts arise, seek to understand your partner's position. • Never talk in a negative manner about your partner in front of • clients or other 3rd parties. Respect your partner's way of doing business. • Don't let one incident or one person spoil a partnership. • Stick with your partner in good and bad times. • Focus on his added value. • 19 Stanford Center for Professional Development •