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LICENSEES, ANGELS & SHARKS -
Deal Making And How Not To Be Eaten Alive
In Bed With the Enemy: How to Successfully Partner With Your Competition
By Edwin Richard Rigsbee
Today, strategic alliances are commonplace among large corporations. The advantages allow these companies to successfully compete in the global marketplace. Powerful synergies are the outcropping of these alliances. Smaller companies can derive the same advantages through alliance relationships. I would like to focus on what I call synergistic partnering alliances where competitors can realize great value by building relationships of integrity with one another.
1. Search for the perfect mate. How do you find competitors with whom you can successfully partner? First, talk to your suppliers. They already have a great deal of experience with your competitors. They also have a good handle on your competitors' integrity or lack thereof. Trade associations also can be quite helpful.
Other possibilities are your local chamber of commerce and the Better Business Bureau. The key is to find a partner with the same core values as you. This will make life together better. Ask IBM and Apple why their alliance did not work out. If you can find anyone that will tell you the truth, they will most likely blame the fact that the cultures of the two companies were so different.
One significant point in selecting a partner is to keep in mind that your alliance will only be as strong as its weakest link. By that I mean that you want a winner, not a loser, on your team. Do not build an alliance with a needy business that cannot make it on its own. You'll likely survive to regret it.
2. Court your future alliance partner in order to start building a relationship. Assisting your alliance partner to develop an emotional ownership in the partnering paradigm will be your primary mission at this point. Intellectually, your partner can see and realize the benefits of a synergistic relationship, but the fear of losing control might block their emotional ownership of a commitment. Without this, any commitment will be built on a shaky foundation.
Now, potential partners might be experiencing the "getting married" jitters. You must successfully deal with the fears and issues in synergistic alliance partnering with competitors. Sensitivity and understanding of your potential partner's situation are crucial at this juncture. Talk about the up side and the down sides to your intended alliance. Talk about how you might deal with the relationship if things do not work out. Plan an exit strategy. Getting fears and issues out on the table rather than hiding them in the dark will serve all involved.
3. Where are you going to live? The question is about your individual and combined marketing areas. Also, talk about new buying habits and information recovery systems. You will need to track new information to detect the value gained in the alliance. Selecting the alliance marketing area, both in terms of geography and service/product mix, is no easy task. You will need to pay close attention to the small and large details alike. Will the alliance include sharing warehousing or delivery facilities or possibly even employees?
4. Who's going to do the chores? Alliance partner responsibilities and activities make the relationship a success or failure. Too often, this is the area where unrealistic expectations of one another reveal themselves. Be clear: Commit to writing exactly who will be doing what. The palest ink is better than the most powerful memory. It is too easy to forget your commitments six months, a year, or a decade later.
Regular value updates on the alliance relationship will be very helpful. Too often we keep issues to ourselves and the issues fester like a splinter. This is not the way to build a successful relationship. The relationship value updates should consist of expectations (met and missed) and profitability targets. This information will assist you in determining to upgrade, downgrade, or maintain the relationship as it is.
5. Tying the knot. The synergistic alliance partnering agreement should be in writing. It should contain detailed descriptions of activities, expectations and responsibilities of each partner. This document will be your guiding light or road map for your successful alliance. When in question, you will refer to this partnering charter.
Now that you are in a relationship, it will be necessary to make regular relationship bank deposits of physical and emotional energy. Always meet your partner more than half way. By giving more than your half, a robust synergy follows. So much more is possible by working in concert, rather than singularly.
6. Under the Sheets? Yes! Being in alliance relationship is much like being married. Once the synergistic partnering alliance is in place it becomes essential to learn how to become successful cohabitants. While each of you is responsible for your own success, you now must consider how your actions will affect your partner's business. Be aware of the things you do and how your actions might create a need for your partner to change their strategic plan. Confer before you act; after all, you are in bed together. To get space, you must give it first.
When your partner takes all the covers it is not much fun. To successfully deal with the regular and normal issues and challenges of the relationship, you must get past the denial syndrome. Denial is an insidious situation that generally results in personal destruction. The expression "putting your head in the sand like an ostrich" is applicable to denial. The problem with putting your head in the sand is that you leave your posterior undefended. Too often in conflict, it's easier to ignore than confront. A confrontation does not have to be a knock down drag out affair, especially if you selected your partner well. Often communication is key in dealing with missing covers, or anything else. Remember if you steal your partner's sheets today, they might take yours when you are cold and in need.
7. We gotta go to the marriage counselor. When relationship roadblocks occur, it may be necessary to seek third party counsel for mediation. In this situation, authenticity and openness are meaningful. Since you took the time to choose well, it is usually worth the time, energy, and expense necessary to rebuild the partnering bridge. Mediation is becoming a popular method for resolving conflict and it is easier than you might think to find a qualified mediator. In this process of reconciliation, focus on the reasons for selecting your partner and the benefits you hoped to receive rather than the anger or hurt feelings.
8. Oh no, divorce... For myriad reasons, this sometimes happens. But you need not feel like a failure or declare that you'll never again be in a partnering relationship. In dealing with separation issues, be the bigger person and again meet your partner more than half way. Otherwise, anger and resentment will fester and you will become immobilized. If there is "community property," dispose of it fairly or offer to buy out your partner. Either work it out, or take court ordered pennies on the dollar. Only outsiders win in this situation.
9. We did it, and look at the profits! Yes, success is my hope for you and your partner. Enjoying the journey with your partner and looking for additional opportunities makes all the work worth the energy. Maybe your alliance will simply be a buying consortium. Perhaps it will be an alliance to serve a large multi-regional customer base. It could be sharing a pool of employees or starting and advertising co-op. Whatever you do, have fun. Enjoy the process, do it right, and there will be rewards.
This article is adapted from Ed Rigsbee's book titled "In Bed With the Enemy: How to Successfully Partner With Your Competition". Rigsbee is president of Rigsbee Enterprises, Inc., a strategic management and marketing consulting firm. Phone: 805 371-4636; Fax: 805 371-4631. P.O. Box 6425-IBI, Westlake Village, CA 91359. E-mail: firstname.lastname@example.org