We just wrapped up our 13th business building block sprint on Key Partners. In summary, the sprint for Project 1.13 on Key Partners completed 2 objectives:
- Questions regarding the canvas for Key Partners
- Understanding what delivery components to give to Key Partners
1st – Questions to Ask on the Canvas for the Key Partners Block
We defined the questions that should be added to our business model canvas for helping practitioners define their Key Partners.
- Who are our Key Partners and what do they do for our business model?
- Are there any Key Intermediaries that we need to make into Key Partners?
- Are there any Key Influencers that we need to make into Key Partners?
- Which Key Resources are we acquiring from partners?
- Which Key Activities do our Key Partners perform?
2nd – How to Know What You Should Give To Your Key Partners
An alliance by definition is a relationship between your company and another – formed to tackle a common business objective, yet each remaining independent in their structures. It is through this cooperation on a joint project that two companies can share risks and rewards. Alliances can be something as simple as Channel partnerships all the way to the complexity of joint ventures. Business models can use strategic alliances to:
- Reduce costs through economies of scale,
- Enter new markets through shared insights,
- Reduce cycle time for product launch,
- Improve research and development efforts, and
- Improve product quality and customer experience.
How to Form a Key Partnership
Partnerships usually fail because there is a disconnect on the work done by the partner regarding the business model requirements. Unfortunately, this leads to damaged relationships between the groups and creates a vicious cycle that leads to an unfavorable ending. Vantage Partners estimate that up to 79% of the potential value of the partnership is lost once the alliance turns corrupt.
Forming a good partnership is simple to understand in these 3 steps. Mastering them is obviously much more difficult. This can be somewhat alleviated if these elements are defined within a business models’ Key Activities.
- Define how the Key Partner fits into the business model canvas and list objectives that will be measured for its delivery.
- Select a Key Partner based on the commitment and fit with the business model canvas, both today and as the company grows.
- Sign a formal and well-written agreement that includes well-understood protocols for measuring mutual performance.
How to Manage a Good Key Partnership
After this stage, it is a matter of managing the business objectives met through the Key Partner, as you would organize your own Key Activities. This means actively and consistently evaluating how the partnership is actually performing according to the binding objectives and performance measures.
Again according to Vantage Partners, a partnership should have 10 key components. Depending on your company size, this may be spread across multiple resources or lumped into one role. But no partnership will last the impact with the market unless these components, or something similar, are in place.
- Building and maintaining internal alignment.
- Evaluating and considering relationship fit with potential partners.
- Building strong working relationships while negotiating optimal deals.
- Establishing common ground rules for working together.
- Having dedicated alliance managers.
- Having collaboration skills in alliance employees.
- Having a collaborative corporate mindset.
- Managing multiple relationships with the same partner.
- Auditing alliance relationships.
- Managing changes that affect alliances.
What is Next?
We are going to do a short two-week sprint on Costs and Revenue.
Interested in what we are doing? Step up to the plate and become involved.
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To your health,
The Team at imagine.GO