Why Partnerships Fail and How To Save Them

Today we are honored to have Robby Slaughter, Principal of Slaughter Development, returning with Part II of his blog about business partnerships. Robby is a Maverick Public Relations preferred vendor and expert in methodology engineering and process improvement. He’s also author of the newly released FAILURE: The Secret to Success. Robby, the floor is yours!

We establish business partnerships because they make sense. Two companies offer complimentary products or services, and by working together both organizations believe they can achieve more than they would on their own. The sense that the collaboration is more powerful than working independently is the actual definition of the business buzzword “synergy.” Through partnerships, our productivity increases.

However, an agreement to work together does not guarantee a smooth relationship. At the turn of the last century, Henry Ford and Harvey Firestone formed a partnership around motor vehicles and rubber tires. The two companies worked together to provide high quality products to consumers and made incredible profits over the years. But in 2000, a series of accidents led the National Highway Traffic Safety Administration to contact the two organizations about a possible defect. Ford and Firestone, desperate to avoid responsibility, each blamed the other. The controversy ended their 100 year partnership.

Shifting, Not Sharing – That’s the first reason that business agreements fail. We sometimes think of a partnership as “divvying up” the duties. It’s true that Ford built the cars and Firestone made the tires, but a partnership isn’t about shifting responsibility, it’s about sharing responsibility. Accept that there will be challenges and that agreeing to work together means acknowledging that you will tackle problems as a team.

Another major challenge of business partnerships is communication. About the same time that Ford and Firestone were getting a divorce, Sony approached Toshiba and IBM about creating a new processor for the next generation of PlayStation video game consoles. A year later, Microsoft approached IBM with the same question. Everybody in the initial partnership knew that IBM would eventually sell the new technology to other customers, but apparently nobody at Sony thought about IBM offering the processor design while it was still being designed. Therefore, a significant amount of Sony’s R&D budget went to help create the chip for its biggest competitor: Microsoft’s Xbox 360.

Communicate and collaborate – Just because the partnership documents make it possible for you to work together doesn’t mean you are actually speaking openly about your business plans. Talk through all possible scenarios. Identify what could go wrong. Show trust by volunteering ideas that benefit you and offering to close loopholes. Work together by talking things through.

Finally, another major reason that partnerships struggle and collapse is because values change. For decades, school systems and soda bottlers had a profitable symbiotic relationship. Vendors would be able to sell their products to students unobtrusively while the public institution could raise funds for important projects. Yet in recent years, these contracts have come under fire and manufacturers have had to pledge to remove sugary drinks from schools. Therefore, a major source of discretionary funds is starting to disappear.

Strategy and Stakeholders – Just because a partnership makes sense today doesn’t mean it’s going to be perfect forever. Not only do the organizations need to plan for the future, but they must involve those people in their community affected by the partnership. That might include customers, suppliers or other officials. Get connected with the stakeholders that power your partnership, and make sure you have a roadmap to ensure their future in your agreement.

Keep an eye on your own partnerships. If you truly share, constantly work together and communicate, and focus on a long-term strategy, you’re likely to stick together. The sum of the parts can be greater than the whole–but only with attention and intention.

Top Five Factors in Selecting a Partnership

Today we are honored to have Robby Slaughter, Principal of Slaughter Development, providing us with some insight into selecting a partnership. Robby is a Maverick Public Relations preferred vendor and expert in methodology engineering and process improvement. He’s also author of the newly released FAILURE: The Secret to Success. Robby, the floor is yours!

No matter the size of your business nor the scope of your industry, you can’t do it all by yourself. We all need help to find success. We all benefit from the advice, support and feedback of others. That’s why partnerships are essential to any business.

But how do you go about building a strategic partnership? What are the criteria that make partnerships work? Consider these five factors when deciding if you’re ready to make the commitment to work with someone else.

1. Play the Customer – Before you can partner with another firm, you must understand and embrace what that company offers to their own clients. We obviously want to partner with people we know, like and trust, but it’s also essential that we believe that their customers are also pleased with their work. Take a look at some of their past successes. Read testimonials. Ask for references. If you’re going to partner, act like you’re going to buy.

2. Give and Request Homework – Anybody can talk about what a great partner they will be and how they will bring you lots of business, but the real work is in the details. Although the meetings might be positive, most of the value of a successful partnership happens when you aren’t in the same room. Before you even begin to discuss terms, make sure that both you and your potential partners have some homework assignments. Ask them to create something that will be representative of the work you will do together. This gives you the chance to test their commitment, accountability and competence.

3. Write a Partnership Plan – Just like a business plan is a living document that describes how your organization provides value and makes money, a partnership plan is an outline of objectives, systems and time lines. Write down expectations you have for yourself and your partners. When these details are put onto paper, they take on a new life. They begin to drive the partnership forward.

4. Run a Pilot Project – This is nearly the last step. It’s likely that you are interested in the partnership because of a specific project you have in mind. Run this together as a test at a level that you can afford to lose. The pilot project is like a prototype; not ready for full scale production, but it proves that the concept can work.

5. Draft and Sign a Partnership Agreement – Your Partnership Plan is just prospective; but your Partnership Agreement should be binding. Is the arrangement exclusive? Time-limited? Does it require confidentiality? How are costs and revenue shared? Does it apply to new clients or existing clients? These details must be written down and confirmed. And of course, ask an attorney to review this final document.

These are five essential factors in starting a new partnership. Tune in next time when I explain what makes partnerships struggle, and how to get them back on the right course.

To learn more about how Robby Slaughter can assist your company’s productivity and work flow, contact us. We’ll be glad to introduce you to our preferred vendor and good friends at Slaughter Development.