Getting the Most Out of a Partnership
Frequently asked questions about forming an alliance
Have you ever thought about forming a strategic alliance with another
business? Here are some frequently asked questions to help you get started.
We've culled our answers from business consultants, attorneys, and
companies who view partnerships as a viable strategy for growth.
Q: How do you know when you need a partner?
A: It's time for a partner, when you see a business opportunity you
can't take advantage of on your own, or when an important client asks you
for a service that's beyond your capability. Finding a partner is often
driven by such necessity and the knowledge that it would take too long
or be too expensive to acquire the capability internally.
Q: But are these relationships only driven by necessity?
A: No, in fact the strongest impact may come from strategic considerations.
You might ask: "What do I need to really take my business to the next level.
How might a partner help?" This might force you to consider new products,
services, and markets. At the very least, involving an outsider in these
discussions can lead you to consider new strategies for doing business.
Q: Once I know what I want in a partner, how do I find that company?
A: Use your existing networks of contacts, whether they be professional
associations, alumni groups, or people you have worked with informally
in the past. Even the Internet can be a tool to find the right group or
business to team up with. You can join online discussion groups, research
local businesses with Web sites, or use a search engine to find out
about experts in a specialized field.
Q: Are there any words of caution when proceeding to set up an alliance?
A: Larraine Segil, a partner in the Los Angeles-based Lared Group,
which consults on forming alliances, says it's paramount that partners
be a good fit: You need to understand each other's corporate culture, make
sure the personalities involved mesh well, and clarify the strategic importance
of the partnership to your business. If one partner is strongly committed
and really counts on the alliance, while the other party is only lukewarm,
the relationship and the deal are likely to disintegrate. For that reason,
Jessica Lipnack, consultant at NetAge Inc., West Newton, Mass., which
helps companies form teams, advises that you go slowly and make sure you
and your partners are fully compatible before you make a firm commitment.
Q: Why should I sign a contract with my partner?
A: Lawyer Richard Horan Jr. of Hogan & Hartson in McLean, Va. also
advises partners to sign a contract that spells out the way proprietary
technology or intellectual property will be used. With the prospect
of management changes, takeovers, and other events that can change your
partner's business, it's just too risky to proceed without a document.
Q: What happens if the relationship should change?
A: Expect it to evolve over time -- hopefully for the better. As partners
work together time and again, you'll build up trust and develop new ideas
for working together effectively. As the alliance develops, you should
do periodic reality checks to make sure you're still getting what you need
out of the partnership and that it's moving your company in the right direction. When it isn't, it's O.K. to let go. "Partnerships aren't necessarily a failure if they end. Sometimes companies just decide to take a different
direction," says James Atwell, global managing partner, private equity/venture
capital, at PriceWaterhouseCoopers in Silicon Valley. And that just
might be the opportunity to search for a more perfect partner.
By Samuel Fromartz, in Washington, D.C