Sunday, November 28, 2010

The Power of Partnerships

In every aspect of life, there have been numerous, successful partnerships -  from history to music, Hollywood to pop culture, business, sports, politics and human relations.  Let’s take a look at some examples.  In history, the Lewis and Clark Expedition of 1804-1806, led by Meriwether Lewis and William Clark, was an overland exploration which laid much of the groundwork for the westward expansion of the United States.  In Hollywood, the partnership of the Warner Brothers Sam, Jack, Albert and Harry became a leading television and movie industry giant that has brought entertainment to the world since the early 1900s.  In 20th century pop culture comedians and musicians formed unforgettable partnerships such as Abbott & Costello, Lucy & Desi, Rodgers & Hammerstein, Sonny & Cher, and Simon & Garfunkel.  In today’s sports, the team of Rafael Nadal, the number one ranked tennis player in the world and winner of 3 Grand Slam tournaments in 2010, and his lifelong coach Tony Nadal (Uncle Tony) has been a hugely winning combination.  And Bill Belichick coaching the New England Patriots football team has been a fabulous partnership leading to 3 Super Bowl victories with this club. 

In the high technology industry, there have been many famous partnerships that have changed the way we work and communicate.  In 1976, Steve Jobs and Steve Wozniak founded Apple Computer, a world leader in technology innovation.  One year earlier in 1975, Bill Gates and Paul Allen formed Microsoft, now the largest software company in the world.  In terms of partnerships, Bill Gates has said the following:

 “Our success has really been based on partnerships from the very beginning.”

Microsoft has built one of the most active, world-wide partner networks in the high technology industry with 640,000 member companies.  Many organizations strive to become Microsoft Certified Partners because this gains them access to new technologies and customers, credibility and opportunities to drive revenue.

In high technology business today, strategic partnerships are at the forefront of propelling companies to new stratospheres in the marketplace.  Many of these partnerships take the form of technology, financial, legal or sales alliances that help drive up revenues.  To illustrate, let’s examine types of strategic sales partners a software company can establish.

A software company develops a product and establishes a direct sales force to sell the solution to its target market.  The sales force has limited time and resources to reach a broad audience in marketing their solution.  To expand their sales reach exponentially without hiring additional headcount, the software company will build strategic sales channels or partners. A channel partner markets and sells the product for the company that produces it.  Channel partners may be technology providers, systems integrators (SIs), value-added resellers (VARs), original equipment manufacturers (OEMs), or industry associations, as examples.

Technology Provider.   A software company may establish an alliance with another firm to share technology and innovation to add capabilities to their solutions.

Systems Integrator or IT Consultancy.  A software company may seek a partnership with a systems integrator (SI) where the SI builds a solution using the software company’s technology.  The SI will develop professional services, or a consulting practice surrounding the software technology and market it to existing or new customers.

Value-Added Reseller (VAR).   A software company may approach a VAR to resell its solution.  Typically VARs add features to an existing product and then resell it as an integrated product, such as in electronics, where the software has been embedded in the hardware or electronics solution.  Often times a VAR simply resells an existing product without making any changes to it.

Original Equipment Manufacturer (OEM). – A software company may partner with an OEM that would purchase its product, or a component of it, to be used in its own products.

Industry Association.   These associations provide current industry information and trends as well as sales opportunities to their member companies.  A software company may become a corporate member or sponsor for maximum benefit of the alliance.

Professional Association.   A software company that specializes in software license compliance, as an example, may partner with a law or auditor firm to provide services related to the compliance process.

By building partnerships, the software company expands its sales reach without the expense of hiring numerous full-time employees.   Naturally there is an expense associated with this effort in the form of time invested to develop the partnership, travel, legal expenses associated with finalizing a formal partnership agreement, joint marketing and any agreed-upon referral fees or commissions to be paid once sales are generated.  However, a productive partnership should result in revenue that far outweighs the time and expense to form and maintain the alliance.

Simply stated, some things work better together, like peanut butter and jelly or cake and ice cream.

No man is an island.  Grow your business through strategic partnerships.


  1. Great 1st blog.

    I like how you clearly defined each different partner type.

    Also, your examples of teamwork really hit home when understanding how partnership can make or break your business.

    Look forward to reading more of your blogs


  2. Jeckyll and Hyde?

    But seriously, great first blog!

    You'll have to share some examples of successful strategic partnerships that you've helped form over the years, and maybe comment on what key factors made them so successful.


  3. Thanks for your positive feedback. I will be happy to share key factors that have contributed to successful partnerships, in a future blog post.

  4. Steffani,

    Great post. What's in it for them?

    The best alliances are ones in which each party sees how the relationship will grow their respective core businesses.

    Only thing I would add is that I've found that if you find the "partner" is overly focussed on how much of your product revenue they are going to get, it is a sure sign that they don't see the relationship as supporting their core business--the alliance will fail. I suppose that the converse is a necessary (but not sufficient) condition for success.


  5. Bill, this is a very good point. Thanks for your comments.