Mutterings of a consultant

March 8, 2008

Strategic partnerships and marriage

Filed under: General rambling — grantfrear @ 1:00 am
Tags: , ,

I have been thinking a lot recently about strategic partnerships. Is there really a difference between the moral/ethical codes established within a strategic partnership and those of a marriage. While I will not dwell deeply on that particular point I will note some of my thoughts on strategic partnerships in general.

Strategic partnerships are common in many different businesses and take numerous forms. Considering car sales and distribution as a simple example. When you go and buy your car from a Toyota dealer you are not actually dealing with Toyota, rather an agent for Toyota that has an exclusive, some may say strategic, partnership with Toyota (it is likely to be strategic for the NZ dealer, less likely for Toyota themselves). In this example the local business is coupling its fortunes to Toyota and has a limited ability to influence its own future if the future of Toyota is not so rosy (other than starting to court other car makers). To me this relationship seems to have many of the hallmarks of a marriage including exclusivity, joint liability, shared futures. There are clearly other examples in the automotive industry of a dealer representing many brands, Continental Cars is a good example. This model seems to be more of an open marriage, similar to those depicted in the TV show Big Love.

While I am by no means the best strategic thinker there are some issues that come to mind when thinking about the model of strategic partnerships.
1. Size of the addressable market
2. Market perception
3. Resilience

If the formation of a strategic partnership puts a limit on the addressable market, as is the case in a marriage, then one needs to ensure that the market you have restricted yourself to is large enough and robust enough to support your business plans (or linking back to the marriage example to support your life plans).

Just as with a marriage, a strong partnership affects market perception, in personal relationships often the couple surpasses the individual, in business relationships this can also happen which can have an influence on brand perception in a local market.

Finally to the idea of resilience. If we go back to the Toyota car dealership example, while there are many benefits for the local business in establishing an exclusive relationship with Toyota as the fortunes of Toyota change so to do those of the local business. In tougher times the ‘open marriage’ strategy of Continental Cars may prove more resilient than that of the ‘traditional marriage’ dealer.

So why have I been thinking about this. For a consultant focus (doing less but doing it well) typically results in growth and good results. There is no better way to drive a consulting business into the ground than spreading resources too thinly. However there is a paradox here. At some point focus can and will limit growth. If strategic partnerships were established during times of focus then you need to make sure these relationships can survive the transition from ‘traditional marriage’ to an ‘open marriage’. Perhaps we should be studying with more interest the TV show Big Love to see how this is done in practice.

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