Partnerships & Alliances: The Turnkey Approach to Growing Your Company
July 31, 2018 in BUSINESS
JON-BACHRACH
July 31, 2018 in BUSINESS
Your business’ competitive landscape probably isn’t so different from the ocean — a dynamic ecosystem in which each organism is fighting for survival.
That’s why the turnkey approach involves taking a lesson from the pilot fish.
Pilot fish have figured out how to team up with sharks: They nibble on all the food left in the shark’s mouth, and stay safe from predators in the process. In exchange, the shark gets clean, parasite-free teeth.
That’s a smart partnership. But just as the rest of the fish in the ocean survive simply by outmaneuvering sharks, it’s not most fish’s first instinct — and a business owners’ first instinct to grow our businesses on our own. We keep trying to boost sales, land new clients, or improve our customer retention.
However, some companies take the approach of the pilot fish. They identify partners with complementary goals and cooperate with them for mutual success.
Strategic alliances aren’t just for big corporations, and they don’t have to be complicated. Leveraging other business’ strengths tends to create win-win solutions that are particularly cost-effective — just what small and medium-sized businesses need to thrive.
Consider whether any of the following alliance types could work for your company.
All businesses can benefit from more brand recognition among their target audience. But marketing campaigns get expensive fast.
By joining forces with one of the many other companies toiling away for the attention of the same audience, you potentially get twice the exposure for half the cost.
Marketing alliances are one of the most common ways businesses cooperate. Often referred to as co-marketing, co-branding, or cross-promotion, these efforts can vary from a simple shared ad to a huge co-branded event.
A Local Example – Jewelry Store and Pizza Shop
There is a story of a jewelry store owner and a neighboring pizzeria who partnered for a fun promotion. Every couple who ate dinner at the restaurant got to pick a gem from a bowl containing 200 cubic zirconia and one diamond. After dinner, customers took their gem to the jewelry store to find out if it was the diamond. The promotion was a success: Customers ate dinner more frequently for extra chances to win, and the jewelry store won several custom jobs and a long-term client.
A Corporate Example – Red Bull and GoPro
The caffeinated beverage and personal camera companies have both long targeted an audience of adventure-seekers. After many collaborative marketing efforts, they recently entered an even closer partnership that “includes content production, distribution, cross promotion, and product innovation,” according to FastCompany.
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No company can specialize in everything it needs to do to run its business. Vendors, third-party companies, and other partners make it possible to get our jobs done.
Some companies take these relationships to the next level by really buying in, giving their partners exclusive rights and committing to build infrastructure that benefits them both. These companies mutually enjoy each other’s success and work together to get through slow times.
If you’ve been struggling with a certain area of your business, there could be a partner who would love to take it over for you.
A Local Example – Breweries and Local Restaurants
As the popularity of craft brewing continues to grow, plenty of local brewers and distilleries have emerged in the local business scene. How do they compete for the happy hour crowd who also wants some dinner with their drinks? By partnering with a local restaurant to provide bites at the bar, like this brewery did.
A Corporate Example – Netflix and Amazon
Despite the fact that they’re competitors in other areas, Netflix’s streaming TV services are completely hosted in the cloud by Amazon Web Services. It has taken years to migrate Netflix’s programs from Netflix’s own data centers to Amazon’s, which Netflix cited on its blog as being more reliable and scalable. Letting Amazon handle this part of its business lets Netflix focus on managing the rest of the business.
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In these types of partnerships, the idea is usually to combine forces against other shared competitors, or use their common competencies to dominate new markets.
Of course, you should take care not to violate anti-trust laws, so a discussion with your lawyer will be in order.
Before you start working with a competitor, Martin Zwilling advises in Forbes, “Always start with a formal proposal, limited in scope to a specific common objective or technology, for a limited amount of time, bounded by a two-way non-disclosure statement. With this agreement in place, there are a host of ways that both sides can win.”
A Local Example – Independent Toy Stores Unite
One great example of competitors working together on a local scale is this story, covered in Inc. magazine. Five different small toy stores in Massachusetts formed an alliance with the goal of getting an edge on corporate big box toy stores. According to the article, “the group cohosts promotional parties, holds joint raffles, offers a collective frequent-buyer card, and shares bulk discounts.”
A Corporate Example – Pharmaceuticals
A few years ago, the drug company Pfizer made news when it announced a joint venture with competitor Merck. The venture’s goal was to bring potential cancer drugs to market faster by sharing knowledge, technology and prior research.
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Of course, identifying potential partners is only the first step to this turnkey approach.
Any time you work with another company, you’ll need a clear working agreement or contract that’s been reviewed by your lawyer. Your agreement should include clear expectations of responsibilities and payouts on both sides, including any relevant dates and deadlines.
Make sure you’re both getting an equal benefit out of your partnership.
Finally, remember that your partnerships reflect directly on your own business. Your partner companies should reflect your values and fit well with your culture.
Which types of partnerships have worked the best for your business? Tweet us at @TKOfficeSpace and let us know.
