A recent discussion with a venture investor triggered some thoughts about a skill I took for granted until recently: establishing business partnerships.
I was explaining some of my previous work, my skills and my aspirations. One area we discussed in relative detail was partnership negotiations and agreements. So far in my career, I have negotiated and established over 30 partnerships with outside companies and organizations. Almost every time I was in a negotiation situation, we ended up creating trusting partnerships with common goals and close personal connections. In my opinion, creating a strong business and personal connection is important because my line of work (business innovation) deals with ambiguous and risky prospects.
After my conversation with the investor, I thought about what fundamental values I take to the negotiation table and came up with the following list:
I believe in transparency and honesty. While many think that one should keep their cards close to their chest in a business negotiation, I believe in laying objectives clearly on the table. Hidden agendas and trump cards destroy trust and I certainly want the partnership to be based on trust.
In my dealings, the reasons why we wanted a partner varied from access to intellectual property to access to geographic presence to risk sharing. In all cases, we were entering into a pact to help each other progress and prosper by developing a product or service. When both parties are facing many unknowns and dangers on the road to success, the last thing an organization wants to learn is a hidden agenda at the peak of heat.
Business innovation is like starting a journey to slay the dragon. One needs someone who will watch their back when facing the dragon, not someone who wanted to steal the princess from you while you are busy with the dragon. The best way to find that partner is through transparency.
Opponents of my argument may suggest that being transparent makes one vulnerable and reduces negotiation power. My experience after tens of negotiations is the opposite. In most, if not all, cases we ended up with agreements that served both parties well.
The secret to the success of a partnership is alignment of goals. To use a cliché, one has to look for win-win-win scenario among three players: you, the partner and customers. Typically, the win-win among the partners is financial. This is not surprising as companies enter development initiatives to capitalize on an opportunity and expect to make a profit. The end-result (product or service) has to deliver a real value to customers and fulfil an unmet need.
In my dealings with partners, I have to be convinced that the partnership will deliver an offering that will be better than sum of its parts in the customers’ view.
If I cannot shake hands with the partner and feel comfortable about doing business together, I’d rather not enter into a business dealing with that company. One may consider this “old school” and outdated but, I believe people are the most important part of a partnership. Corporate cultures rub on people and mostly shape the way they operate. Ethics, responsiveness, risk tolerance, accountability are few cultural components that make or break a partnership.
This is my secret sauce to partnerships.
I welcome your comments on my blog. If you have specific questions, please feel free to contact me at firstname.lastname@example.org.