Getting to Meaningful Partnerships

We’ve all seen this story before. Company starts shipping products and is growing revenue but wants to expand faster. What better way to grow than to partner with big companies? So Company hires BD manager to form relationships, create solutions, and drive leads. BD manager meets with like-minded BD personnel at other companies, signs contracts and referral agreements, creates partnership programs, and puts colorful logos on the website. Press releases are issued and backs are patted. Life is good.

There's only one problem … nothing happens.

This scene plays out every day. I’ve been part of this myself. Guilty as charged.

At Citrix, I got a call from a well-known CEO of a large private company. He wanted to do a partnership with Citrix and the pitch went something like this: “We’ve got product X and we’ve seen your product Y at several of our customers. They work together very well. We should do a joint solutions guide and market this to our customers and field sales team.” That all sounded great and I was really pumped up to do it, except for one small question … WHY?

Who cares if our products work together? My product works with ethernet cable and I’m not going to do a partnership with a cable manufacturer. Why is this any different?

For a partnership to make sense to a big company, there needs to be compelling rationale along one of these dimensions:

1.   I can acquire new customers

2.   I can retain existing customers that I would have otherwise lost

3.   There is some strong strategic reason to work together

#1 is by far the most important. Partnerships are built in the field, and if your sales guys can sell more product because of it, it’s guaranteed to be successful. #2 is a tough case to make but may work. #3 is the traditional dumping ground for why a partnership should be created – “this is strategically important.” That may be the case, and if so, it’s a great rationale. But more often it’s not true. And, by the way, if it’s really strategically important, most big companies will buy rather than partner.

No BD manager should approach a big company without a presentation that clearly quantifies the impact of the partnership along those dimensions – using real numbers. You won’t have perfect info but you can make assumptions. Be bold and back-up with real facts wherever possible. If the partnership can create $5M in new revenue for the company, then say it. That will be a great target and rallying point. If it’s not going to create any new revenue, then that’s fine too. Move on to something else which is a better use of your time.

If the partnership moves forward, create a business plan which documents key activities, sets goals, metrics, roles/responsibilities, and business results. Both companies sign this, execute, monitor and fine tune.

To sum up: do less, go deep, and get to something meaningful.

- Raj

Comments

[Milan]

Raj, could not agree with you more on this. As a BD person working at a large company, i have a lot of wanna be partners come to me with the same approach. Some of them have not even thought through the WHY question you raise, and when i ask them, they appear stunned. The small company wants to show our customers their great technology, but have no answer for why we (large company) should be interested.