Developing 
world-class partnerships 

Different cultures and geography bring varied meanings to partnership expectations.

Why does the word “partnership” mean so many things to different people? In many industries, important customers are often referred to as partners. Large multinational suppliers often use the word, partnerships, to describe business relationships with their global customers. How do the best companies develop world-class partnerships?

Webster’s dictionary describes partnership as a “relationship involving close cooperation between parties having specified and joint rights and responsibilities.” This definition makes all the sense in the world, but can have different meanings if you are a supplier or customer. World-class partnerships usually require more specificity in defining partnership expectations and meaning, depending on the culture and geography. 

In Asia, for instance, partnership can mean close ties and common financial interests, resulting in decreased productivity and market competition. In Latin America, partnerships can mean friendly unwritten agreements and directed business relationships based on family ties. In North America and Europe, partnerships tend to be a bit more intellectually based, resulting in complex business relationships intended to create global competitive advantage.

During my 20 years in the communications industry, I have had the opportunity to lead teams that have created global agreements with companies such as Lucent, AT&T, Nortel, Cisco, Motorola, British Telecom, Fujitsu, NEC and Ericsson. Complex business relationships require a common understanding and expectation of business goals and objectives. 

The science of partnerships dictates contextual understanding. Partnerships have to be put in context of other business relationships in order to make sense and add value. Mutual trust, cooperation, understanding and synergy are essential ingredients for successful business relationships.

The Information Age and Internet, in particular, enable lightning-fast communications and innovation. This environment creates significant opportunities and complex business conditions for most companies. Companies must focus on value-creation and build enduring relationships with their customers in order to thrive and survive. 

In order to develop world-class partnerships, first think about a partnering model that increases in strategic importance and value over time. The partnering model would typically have seven types of business relationships. These include supplier, co-marketing, partnering, strategic alliance, joint venture, investment and acquisition business relationships.

A supplier relationship is typically a buy-sell relationship with minimum customer commitment. A co-marketing relationship is when two companies or more reference sell each other’s products or services. A partnering relationship is a dependency on each other where common goals exist. Strategic alliance is a close alignment between two companies at a strategic level. Joint venture is an economic investment by each company in each other.

Investment is a strategic interest, typically resulting in minority equity ownership. Acquisition is a strategic interest resulting in full equity ownership. The communications industry is a good learning model for understanding partnering relationships. During the past year, Microsoft, Intel and Cisco have invested in or acquired more than 100 companies, resulting in a market-leading complex set of business relationships that further their company and industry strategic interests.

The key lesson from this partnering model is to understand the details of business relationships and deliver expectations associated with each level of partnering. World-class companies consistently take the supply of goods and services to a much different level of thinking and successful implementation.

Faw is author of “World’s Best Value—Global Competition in the Information Age.”