What Is Strategic Partnership Management?
Strategic partnerships provide compelling opportunities for companies to team up and achieve mutually beneficial business objectives. Like any relationship, though, an effective partnership takes some work. At a bare minimum, it requires communication, accountability, and creative thinking. This all falls under the umbrella of partner management: the process of developing healthy and productive business relationships.
In this blog, we’re exploring that very topic—strategic partnership management. We’ll look at some of the main reasons businesses enter these arrangements, introduce the 5 pillars of strategic management, and outline some key success factors for winning partnerships.
What Is Strategic Partnership Management in Business?
Strategic partnership management refers to a wide range of functions related to the development and optimization of mutually beneficial relationships.
Why Do Businesses Form Strategic Partnerships?
There are countless reasons why businesses seek out—and develop—strategic partnerships, but the common denominator is that they provide benefits to both businesses. While the specific circumstances and objectives of any given partnership may vary, McKinsey outlines three key reasons, paraphrased below:
- Forming a strategic partnership is a quicker and more cost-effective way to “acquire solutions and capabilities much faster than you would building them in house.”
- The framework of a strategic partnership empowers both businesses with the flexibility to decide the extent to which each contributing business maintains its own identity and autonomy (vs forming a joint venture).
- A strategic partnership, when developed and implemented well, can drive innovation and growth in ways that often aren’t as feasible without at least one partnership in play.
What Is the Difference between a Joint Venture and a Strategic Partnership?
Distinguishing between these terms requires a bit of a vocabulary lesson. While “strategic partnership” and “strategic alliance” may sound synonymous, for example, they are not exactly the same.
As defined by Investopedia:
An alliance is a collaboration between two companies in which each individual company is expected to profit or benefit from the agreement. A partnership is a more formal type of agreement in which partners merge to create a single, shared economic interest.
Going a step further, then, there are essentially two main types of strategic partnerships—joint ventures and strategic alliances.
- In a joint venture, two companies merge their resources to create a separate, single entity.
- In a strategic alliance, two companies “undertake a mutually beneficial project while each retains its independence.”
What Is an Example of a Strategic Partnership in Business?
There are plenty of modern examples of brands leveraging strategic partnerships and mutually benefiting from those arrangements. For example, one that most American adults are at least familiar with is the partnership between Starbucks and Barnes & Noble.
What do a lot of people like to do while they read? Drink coffee.
And what do a lot of people like to do while they drink coffee? Read books.
The partnership between these brands made perfect sense, then—almost too much sense for them not to form some type of partnership. So now Barnes & Noble stores across the country contain Starbucks cafes, creating the perfect environment for browsing, reading, and relaxing. In these locations, you’ll often find Starbucks customers browsing the bookstore—and bibliophiles treating themselves to coffee while they browse—in roughly equal measure.
With as much sense as this partnership makes, why did the two brands not instead create a brand-new joint venture? Simple: the individual brands, and the customer base associated with each, were simply too valuable to compromise. Instead, the two brands worked together to develop a partnership where each company benefits equally.
What Are the Five Pillars of Business Strategy Development and Execution?
If you’re looking for some surefire tips around how to build strategic partnerships that last, Gartner highlights 5 pillars of strategy development and partner management. They include working together to:
- Formulating an inventive business strategy that benefits each brand. The key here is collaboration—if one brand dictates the nature and conditions of the partnership, the other party may not get reciprocal value. The best way to prevent a one-sided partnership is through frequent collaboration and transparent communication.
- Creating a plan for executing the strategy. Through collaborative planning, each brand can ensure that their business objectives are accounted for—and that they are feasible.
- Gauging the partnership’s value over time through performance management. Each brand should be tracking their core metrics and how the partnership is affecting them. While it can sometimes feel difficult or uncomfortable to do, a brand must not be afraid to speak up if the partnership feels uneven, or their needs aren’t being met. The sooner an issue can be acknowledged, the sooner it can be course-corrected.
- Communicating openly and honestly. A strategic partnership—like any relationship—benefits from regular communication and accountability. From the onset of a partnership, when its objectives are being hashed out, through the implementation and monitoring phases, both sides require transparency and advocacy to ensure that the strategy is helping each brand accomplish its objectives.
- Making sure there are enough resources available. Especially if the strategy’s objective relates to business growth, it’s essential to make sure that staffing and other resources are going to be sufficient in powering that growth. Without adequate preparation (i.e., increasing available resources), growth could actually be detrimental to a brand.
What Are the Key Success Factors of Strategic Partnerships?
Regardless of the industry, scope, or objectives of a partnership, there are 3 key success factors to consider:
- The Right People | You’ll need people with expertise, experience, and bandwidth. The better they are at communication, collaboration, and creative thinking and problem-solving, the better.
- The Right Mindset | Everyone—on both sides—will need to be on the same page. This underscores the importance of outlining clear objectives, identifying mutually beneficial solutions, and being proactive communicators.
- The Right Tools and Resources | With a platform like Torchlite, building meaningful partnerships becomes a whole lot easier. Our comprehensive strategic partnership management software streamlines your ability to engage partners, develop meaningful and productive relationships, and scale your program when the time is right.
Better Software –> Better Partnerships
No matter what you’re trying to accomplish, the right tools matter. Torchlite is proud to offer the world’s first “Simply Intelligent” partner management platform, with all the features and functions you need to build better and more sustainable business relationships. Book a demo today to see it in action!