Remind yourself what value B2B relationships bring to the table. Remember to fight tough but also to chill out with your B2B partners. These B2B partnerships need to be designed to bring value to all involved.
Customers are demanding better services and solutions from their suppliers. These often include very different capabilities, and time to market is critical. In addition, low upfront investment to test innovations is seen as favourable. Many suppliers are delivering complex services with their partners. Sometimes these partnerships even include competitors. The partnerships are described as complex, as they combine multiple company cultures, and differing processes and expectations.
We have had multiple meetings with experienced partner companies to define case partnerships, how their design process works and where problems and barriers have arisen. Our researchers analysed the material gathered and organised a two-day meeting between specialists from the partnership companies.
We defined a four-stage process:
- An internal company discussion defining the need for a partnership, strategy and capability.
- The proposal must be announced to a potential partner company. The company must be updated on what needs to be done and cultural inclusion has to take place on its processes, as well as needs and worries. The outcome should be a future state vision for which the partnership should be aiming.
- Both partners should then agree to enter into a partnership design stage, where the overall value exchange, commercial model and management and government structures are defined.
- When the partnership is fully defined, the management and delivery phase begins, whereby the partnership is executed and starts delivering to the customer.
After the workshop, further analysis has led to the partnership process that is presented in this briefing.
Overall, the process should be reviewed and renewed at all times. One aspect that emerged from the research is that change needs to be implemented, monitored and managed stringently.
This paper has been deemed useful by practitioners as a handrail for the building of partnerships. Indeed, there are distinct differences between different industries and company cultures. However, as one of the participants stated:
‘Add this to the memorandum of understanding and aid for communication with your future business partner.’
Podcast interview with Dr Urmetzer
key quotes: “We have been looking for partnerships where we can take a learning out of, where we can turn around and say it was pretty much a nightmare or that was very interesting. Normally you don’t know what is going to happen in a B2B partnerships. We wanted to draw together a handrail process that would help managers to guide them to build a stronger relationship with collaborators who they may also compete with on other parts of the working relationship too.
“It is a five stage process. First is internal discussion, what does our customer get out of this partnership? Second is the proposal stage and you try to explain to your partner what they will get out of it, it is an entry point and you will need to draw up a memorandum of common understanding. Every step is an investment from both sides. Third is the design phase, and you say “how does it work, and how will we integrate and together make money, what is our common culture”. You will need some kind of management structure and work out who problem solves? You will need a strong governance and management structure and a legal contract. Fourth you need to be able to manage and deliver, and manage the communication, who talks to the press if things go wrong? How do you measure performance, how do you structure and deliver these partnerships. They may change over time, and you need to know how to manage that. The fifth phase is the review phase, you need to be able to go back to the relevant organisation and ask if the relationship is still right, and you need a process to do this and to have an exit process particularly if you have been working with your partners for some time. Who has the liability?”
Dr Urmetzer ends by saying: “It is a handrail it is not a decision making tool. In today’s world it is quite normal for companies to compete in one part of the market and collaborate in another. You need to ring fence what can be said and what knowledge you can share. You need to prevent people from stepping over the mark or going native. Governance and management is very important, you need to have a process where you can go for help. This is in the review and exit strategy. Who makes the decision you are going to exit and when to do it, who makes these decisions?
“Business means throughout the day you may be fighting fearsome but it doesn’t mean that at the end of the day you shouldn’t go out and have a meal and a beer together. We are all still humans and we make mistakes and we need to step back and say we may need to start again. It is humans making these contracts and if it gets too competitive a partnership is not really possible in the first place.”