What is a strategic partnership? So many times we hear the term “strategic” and “partnership” used, abundantly and wrongly. But if you put them together, what does it mean? How do you form one and know if it exists?
In this series of “How Do You Know You Have A Strategic Partnership”, my last two articles discussed the first two of the 5 key pillars for forming strategic partnerships:
- Recognition of the Opportunity
- Leadership by Example
- Crafting and Communicating a Strategy
- Delivering the Tactics
- Finding ways to Add Value Constantly and Consistently
In this article, we move on to, “Crafting and Communicating a Strategy.”
Having recognized the strategic opportunity and the leaders demonstrating their commitment to the partnership, we now need to define the mutual benefits to ensure continual commitment by both teams.
The most effective way to do this is to identify the things that both companies are interested in. Obviously business results such as, revenue, profits and market share are of benefit to both. However, these cannot be jointly managed.
If we can be clear about leading indicators or metrics that will help achieve the objectives, then both companies can focus on these.
Let’s look at an example. Coca-Cola and McDonald’s were obviously both interested in greater revenue and profits. As Coke was the most profitable item on the McDonald’s menu, any additional sales drove their profit. Any such volume increases also drove Coke’s profits.
But what indicators could both companies focus on and measure together that would, in turn, promote the right activities to make a difference?
Together they realized that by tracking “incidence” (the number of times Coke products were purchased in a transaction) and “ounces” (the amount of Coke products consumed per person) on a chart, any gains on either of these metrics, but ideally both, would increase joint profits.
This meant they could both focus on activities that drove those numbers. So whether it was increased quality, higher combo or value meal sales or larger size drink promotions, such activities would increase incidence and ounces.
Joint Business Reviews and meetings at country, region and national levels started with reviewing the incidence and ounces numbers.
By both companies being focused on the same metrics at all levels of their organizations, meetings are more focused and engaged in activities that will influence the joint objectives.
In the next article, we will look at building on these three pillars and add the last two together.
Like “adding value”, “building strategic partnerships” is another overused and misunderstood terminology. By following this small series I hope I have helped a better understanding of whether you truly have a strategic partnership.
Peter M. Beaumont is Vice President of Sales at Hollstadt Associates & Inc and Principal of ConnXN. He is also the author of The Relationship Roadmap, a comprehensive guide to building relationships with strategic clients. Also, see more at www.ConnXN.net