Barney? What's he got to do with this?

As you set alliance goals and develop the relationship, you must consider the type of relationship that you and the potential partner seek, ranging from a simple joint press release to a strategic alliance focused on managed services or outsourcing, to value-added reselling, OEM and beyond.

The joint press release is fondly known as a "Barney" relationship because of its superficial nature, but it does have its place in the spectrum. As an aside, I have found that companies who overuse Barney will tend to lose credibility with analysts and press, making that strategic alliance press release harder to pitch.

As you walk across the Alliance Spectrum, you can explore a range of co-selling/marketing alternatives with both products and services. Further to the right on the Spectrum you will find revenue sharing and OEM deals, joint ventures and, of course, the exit: mergers and acquisitions.

As you engage your partner, I encourage you to share expectations about where each firm would like to start, and where you would like to end up on the spectrum. Many leading technology firms now have formal programs that are designed to evolve from a co-selling model at the start to a value-added reselling or OEM relationship as both partners gain experience and success. This makes good sense, and I applaud those who have recognized that truly strategic alliances evolve over time.

Under the Alliance Spectrum you will see a typical distribution of work between the partners. While the distribution of work varies from what is shown here, I have found it important to be clear about precisely who is going to do what. Who is going to build the product or the integration between products? Who is going to market the solution, and sell it? Who will provide customer support and other services? And so forth... From experience, I have found that companies name these types of relationships differently: For example, some companies use the terms "Strategic Reselling" and "OEM" to mean the same thing, and others use them to mean something quite different, so it is crucial to discuss in fundamental terms who is going to do what in order to determine how the relationship, and the contract terms, will develop. Failure to do so can result in misunderstandings and unmet expectations.

So, don't get caught expecting an outcome based on the "name" a relationship is given; talk to your partner about the distribution of work, and how your alliance might evolve across the spectrum so you have a clear picture about the value each is adding to the relationship over time. From there, you can set expectations, and determine how to allocate revenue, cost and margin to each in the term sheet.

Next time I will explore the corporate development arena, and how your eventual exit impacts how you act today, even if it is years away. If you like the game of Chess, we will have some fun!

Until later,

Michael