Successful Business Partnerships
"To team, or not to team," that is the question Shakespeare might have asked were he writing a play on the subject of establishing strategic partnerships. In the early days of industrialization, most companies in the United States opted not to team up with others. Henry Ford believed that the Ford Motor Company should not rely on other businesses. Consequently, Ford owned its own steel mill, iron ore boats, and mines – even it's own electrical generation facility. Today, however, most companies – including Ford – realize that partnering often makes sense. It allows companies to work together, each focusing on what it does best, and spreading the cost and the risk of expensive projects.
Effective partnerships are built when two or more companies can execute an idea or product better than they could on their own. Common reasons for partnering include the need to generate investment capital, or to obtain access to technology, markets, management expertise, or other important knowledge. The first question is wherever now is the time to establish a partnership. As King Solomon wrote, "There is a time to tear apart, a time to sew together" (Ecclesiastes 3: 7).
Successful partnerships are based on common interest, trust, communication, and genuine agreement. The prophet Amos wrote, "Can two walk together, unless they are agreed?" (Amos 3: 3). Neverless, some companies view partnering as getting everyone to do exactly as they desire. True partners, however, involve give and take, openness, and a willingness to cooperate.
Stampings Incorporated, based in Fraser, Michigan, established an operating agreement with Saxonia, a German company. Saxonia provides engineering, special press equipment, and tooling to Stampings, which in turn provides Saxonia with sales, marketing, and customer service support in the United States. A complete, detailed agreement was established between the two companies, highlighting the responsibilities of each party, and determining the division of income. Using Saxonia's technology, Stampings has been able to obtain new customers, while Saxonia has quickly entered the US market utilizing Stampings's access to markets and customers.
Stampings has also developed partnerships with its customers – including Bosch, a company well known for partnering with its suppliers. Stampings president Don Veryser says, "Our first contact with Bosch on a new project is with engineering, not purchasing. We work together to design the needed product, and develop complete quality planning. input and everyone listens because we understand that our goal is to create the best product at the best price. " No prices are negotiated until agreement has been reached on all the product details.
Veryser has worked with other customers who talk about partnering on projects, but in practice the companies seldom "walk the walk" when it comes to promoting a long term relationship. Often they will use your expertise in engineering and then shop for the lowest cost supplier. The buyer then dictates most of the decisions with little thought to the supplier's perspective. "The communication is top down, not an even dialogue," says Veryser.
It's important for a business to develop its own philosophy on partnering. Effective models include both a top-down style and a joint-venture style. The key is to determine which style works best for you. Organizations that favor a top-down approach should be honest with their customers and vendors and make it clear that partnerships are not a part of their operating philosophy. King Solomon wrote, "Through presumption comes nothing but strife" (Proverbs 13:10). Better to establish the ground rules clearly in advance than to create future conflict.
When a buyer contacts a prospective vendor with the intent of creating a partnership to develop a product together, both parties must agree on the style of partnership to be established. The customer always has the last word, but the best partnerships are formed when ideas from both sides can be brought to the table for consideration. Effective partners create stronger organizations on both sides of the agreement. Partnerships allow many companies to grow more rapidly, and to leverage effectively the assistance and strength of other companies.
An organization that desires to create partnerships must develop an internal culture that supports partnering. Include in your performance reviews a section for recognizing and rewarding purchasing agents and engineers who successfully adapt ideas from customer input. Place an equal value on ideas without regard to their source and make a point of celebrating each improvement. The key is to cultivate a teamwork atmosphere that encourages cooperation and humility and minimizes individual self-importance and pride. "For where jealously and selfish ambition exist, there is disorder" (James 3:16).
Determine in advance if partnering with others is in your best interest. Next, establish what you require and desire in a partnership and then clearly communicate those needs to your prospective partners. A little foresight and planning will help you build strong relationships.