Partnering for Success

Partner To Partner

Background

As a business developer for more than 12 years in the technology Industry I have been by hobby studying trends and what common factors do I find in successful businesses that grow fast and what are the common trends on business that commonly lag or stay in a stasis for a long time.

My intention with this article is to provide a toolset of ideas and practices that may come in handy at that next networking event were you are faced directly with your competitor. Can you really make use of that time with them?

I made my own challenge 2 years ago, to sell and grow with my competitor and I have seen that this really work for my business. I learned this nifty trick from the Microsoft Partner Program and how they use it to dominate territories. It is actually quiet genius. In simple terms: “have your competitors do the development of your supply chain for you”. As a partner to partner evangelist I want to share my train of thought as I think this answers the question: How can I stand out from my competition in a global economy?

The Challenge

The actual marketplace is a very saturated market for any business starting up. What makes it tough is that generalist companies or small companies don’t have specialized products and services at the beginning and it’s tough for them to really shine when there are world class companies that many times can supply the service in a cheaper and more secure way for the customer.

How can a small company develop long standing and fruitful market and customer relations? The answer to that question is easy: you must stand out from the crowd, provide a solid value proposition and develop a successful, lean and innovative organization and business model.

If this answer is a given simple fact why don’t many companies stand out and stay chained to their plateau?

Here are some answers:

–          Lack of specialization:

  • Problem: Many small companies tend to lean towards the one stop shop approach for their customers instead of a more specialized approach.
  • Why? Small companies tend to have a limited amount of customers and develop contracts with smaller, shorter scopes and revenues than bigger more established companies thus they cannot risk to loose opportunities. This is from my personal experience the reason why many of them take a long time to grow.
  • Solution:
    • Niche specialization: is a requirement to quickly grow a small / medium sized company to its next level. Niche specialization allows customer to quickly understand the vendor’s products and services as they are targeted and have the buzz and keywords that turn into business drivers.
    • Product Specialization: A product is something by definition ready to be implemented and has a solution for a specific set of issues the customer may have. It is easier to train sales, customer service and technical staff on a specific product with demand thus guaranteeing a higher return of investment than to be tailoring specialization for every customer request to a particular set of customers which typically has a lower post demand in other even similarly niched customers.

–          Lack of a mature business network:

  • Problem: Many companies focus on product development or service development but do not have a balanced portfolio of business network relationships.
  • Why? A balanced business network portfolio is a very powerful tool for growth for any business the majority of companies that graduate into world class service providers have graduated from small business rankings by developing their business network alone.
  • What is a balanced portfolio and why develop it?
    • I define that a company has balanced portfolio if it explores and develops with equal importance the following areas of its business partnership portfolio:
      • Government Relations
      • Manufacturers or Tier 1 Companies Partnership
      • Education Industry Partnership
      • Competitors and Private Sector Partnerships and Collaborations

This chart has a small summary of benefits of developing each sector:

Chart

Partner to Partner Relations

Now this is a very sensitive topic for most companies with a low level of business network maturity. Demystification of this topic may indeed be very beneficial for many developing companies. Business owners need to put aside their egos and realize that this is a global economy, everything and everyone is interconnected thus we need to be friends with our neighbors in order to collaborate and foster coopetition instead of competition. Closing the door on your competitor and just develop boundaries can cost your business a lot of money. These are some examples of why to have a competitor on an amicable and mature relationship:

–          Competitors that are friendly are less likely to spread negative press about your services.

–          Information our most sacred asset: you will be surprised how open your competitors can be the gathering of trade secrets can give you an advantage in your next presentation and spark that much needed value proposition further if you have a better understanding of what they do and don’t.

–          Out of mutual respect they will be less prone to make offers or hire from your key personnel.

–          Competitors especially on moments of down curves in their business may prove as a powerful future ally in tactical projects or business that they cannot pursue due to budgetary or ethical constraints.

–          There are competitors that reach a maturity point that they even respect each other’s accounts and prevent any efforts from their employees from disrupting the partner’s accounts.

Now the question is how can I develop a relationship with my competitor? How can I do this without losing my customers, projects or my employees? To start on this journey you need to work first on developing the other two recommendations that I have stated in this article first. Partner to Partner (P to P) is more effective once you have a well-established niche or product line of specialization. This is the moment when the partner network can really kick in and drive your business to your next level.

There are basic types of partnerships once you mature them you can grow into more advanced forms of partnerships, I will detail the categories I have seen developed and what benefits you may want to pursue:

P to P Tier 1 / Sub contractor Relationship:

Benefits

  • Past Performance on projects / niche / products were you have no background
  • If the partner is big enough he can be your best customer for a good time

Words of advice

  • Bigger Partners can use you for a specific function and remove you from a project once not needed make sure you don’t bring in a tier 1 on a customer that you don’t have a strong relationship with and don’t want to lose.
  • Be sure to structure well commitments and payments schedules and be sure you do your homework to review the tier 1 behavior patterns with other subs.

P to P Complementary Partner Relationship:

Benefits

  • Complementary Partners are smaller sized businesses that have a service that does not in any way compete against yours even do they might be in the same category of industry. Example: A telecom company and a software development company. They both do technology but at different niches and have different focus. Now the power of their partnership lies in attacking the market together leveraging their customers for each other’s advantage once they drain the customer’s direct opportunities that can be developed they can always offer their partner’s services to see if the can generate additional business.
  • This is the easiest of all partnerships to develop as the companies are typically similar in size and have a natural synergy to drive their growth

          Words of Advice

  • Before starting on any partnership approach it is extremely important to review your partner’s performance with: their customers, other partners and current economic situation.

P to P Direct Business Niche / Service or Product Competitor:

Benefits

  • This niche might produce the big benefits for your business. What have I done with direct competitors?:
    • Staffing Opportunities
    • Strategic Niche Penetration
    • Product Distribution Channel Development to name a few ideas
  • This is the easiest of all partnerships to develop as the companies are typically similar in size and have a natural synergy to drive their growth

Words of advice

  • This is the toughest type of business partnership that one can develop, it requires a very mature business model and partnership experience. Contracts need to be iron clad and employees and legal team must be well prepared for surprises from the partner.
  • Partner background check and word from other partners that have done business in the past is a must before starting to do business with a direct competitor.

Summary

As a summary of these studies I would state the following:

–         Every company that wants to grow fast must have a balanced growth in their business network.

–         Partner to Partner relations are key for the following points:

  • Distribution channels
  • Background Information of other partners and marketplace
  • Additional services and products to your toolbox
  • Cost reduction in smaller temporary opportunities

“Coopetition is the key for successful product / services integration into the global supply chain”

About the Author

Industry   Background: Luis Pérez started his technology career providing technology courses in the year 2000 in the midst of the technology transformation inside the pharmaceutical and manufacturing industries. He helped hundreds of employees to transition from manufacturing and equipment monitoring positions into desktop based operators with the windows revolution. After the twin towers fell in 2001 the training industry started to shrink and thanks to Hewlett Packard, Abbott and Lilly accounts Luis tested his entrepreneur spirit and started up a small IT services business named Renaissance Group providing IT Training services to them and eventually migrating to e-learning and web development. In 2005 Luis   merged Renaissance Group with former Integratek owners and grew his customer   portfolio. In 2008 Pharma-Bio Serv developed interest in its potential and placed an offer to buy Integratek and help it grow thus making Integratek a public corporation. He currently serves as a Application Architect and IT Strategist for customers in the government, insurance, pharmaceutical and banking Industries.

                        

Author Luis Pérez

Author Luis Pérez

                                             

 Luis   currently is working as a Systems Architect and Consultant, he is the Executive   Director for the Puerto Rico Information Technology Cluster and a Board   Member in the International Association of Microsoft Certified Partners in   charge of P to P efforts. For any information luis.perez.cintron@gmail.com or visit   his   personal blog https://coquirobot.wordpress.com/
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