Selecting partners

One challenge faced by Business Development professionals and executive management is deciding which partners are the best to approach at a given time in the company's life.

Clearly, one can play roulette by betting on every number and, while it feels good to have so many small wins, as roulette players know the pile of chips gradually gets smaller. Further, the opportunity cost is huge and approaching the right vendor at the wrong time can be damaging to a future opportunity. So, we need techniques to target better.

Now, there are some 1D approaches to this that can work, such as: which partners might optimize near-term revenue; which are the most likely companies to acquire; which are the most interested in forming alliances with us? While those can certainly bear fruit, and I am never one to scoff at revenue, these approaches are, in my experience, less likely to lead to the desired strategic outcome.

More interesting ways to find strategic partners are available, and use 3D techniques:

• Try building a heat map with tactical and strategic X/Y axes, showing your company at the center. Plot potential partners on the tactical (revenue, near-term outcome) and strategic (ability to drive significant revenue, potential acquisition, etc).


• Plot more interesting vendors closer to the center


• Plot vendors that offer indirect paths to strategic outcomes as themselves strategic

It is also worth looking at your competitors and exploring what strategic alliances they might form, or grow substantially, that could damage your chances of success - those could be some of your top targets!

Repeat this at least quarterly for maximum effectiveness.

This is an art, not a science, but this approach should help maximize the outcome.

Until next time.

Michael

Turning over "Rocks"?

First, I would like to extend my apologies for taking so long to post again! With music performances, Kerrville Folk Festivals and client work, it has been a busy year!

Following my earlier posting on JVP's and Extracting Value, I thought it would be interesting to discuss an example where finding strategic Joint Value unlocked an alliance discussion and led to a unique opportunity for both sides.

In this case, the two companies were participants in the adjacent segments of enterprise security. One large company - call them BigSecure - with a mature customer base and an ageing product in this market, and the other, a smaller company - NewTech - offering complementary technology. During some relatively tactical go-to-market discussions, NewTech realized that its own product direction would eventually compete directly with the mature product from BigSecure.

An interesting dilemma. Should NewTech (i) continue down the go-to-market path, which promised some exciting revenue opportunities, albeit tactical, ignoring the eventual, likely inevitable, collision that risked alienating BigSecure when its new product came to market, (ii) drive the go-to-market discussions off the road and avoid wasting any more time, or (iii) try to figure out how to engage BigSecure in a discussion about the potential collision.

NewTech knew that BigSecure's adjacent product was old, but there was still considerable momentum in the field and a huge installed base to be reckoned with. More importantly, NewTech could turn this approach to its advantage, by finding ways to integrate its technology with BigSecure, and realize even more upside (than a tactical GTM). Finally, there was the threat that NewTech's competitors would get to the table first, eliminating the opportunity. But, NewTech also risked the loss of competitive IP and marketing plans to BigSecure if they opened discussion too far.

What to do? What to do? Tactical gains vs. longer term strategic gains vs. a complete blowout!

The answer is often found in how you negotiate, rather than an "either-or." NewTech decided to negotiate down path (iii). But before showing its cards, it spent considerable effort in a short time negotiating away from the table exploring ways to move forward. NewTech began by carefully assessing BigSecure's options and possible moves, before making a more of their own, introducing a 3D approach into the strategy. With more information about BigSecure's challenges, and its plans with other partners to improve customer satisfaction with the ageing product, NewTech decided it would be able to gain advantage and decided to disclose its own new product plans.

This resulted in (i) identifying competitors who were vying to partner with BigSecure in addressing the problem; and (ii) unlocking new Value Creation opportunities to work with BigSecure by delivering its innovative capabilities into BigSecure’s installed base and new initiatives, both huge strategic advantages.

Lesson learned: It wasn't foreordained to turn out this way. “Turning over rocks” at BigSecure yielded significant rewards. But it was certainly true that the partnership would remain only a tactical GTM alliance if they did nothing. So the key was to explore strategic options in a 3D negotiation paradigm. Then decide a way forward.

Think 3D - it really can make a difference in the outcome and help identify and unlock Value in a relationship...

As aye.

Michael
PS Thanks to my friend John Soper for his invaluable editing!