5 Considerations to Navigate the Pitfalls of Strategic Partnerships
Whether your company is an established powerhouse looking for cutting edge tech, a highly specialized custom shop looking to merge products with a big-name brand or a start-up just looking to break through, strategic partnerships can benefit your company. They can also get complicated fast. Being aware of, and planning for, them before they arise is the simplest way to minimize and mitigate potential complications.
Here is a list of considerations to make before entering into a strategic partnership
Is alignment possible?
The ideal partnership scenario leverages the strengths of all parties involved. Companies must be able to match strengths and weaknesses such that strengths do not compete. Think beyond product and technology and consider culture, size, locations and other factors before entering final contracts.
Mitigation: Find a company with strengths that will compliment your company’s weaknesses.
Who owns what?
Strategic partnerships often involve cutting edge technology and valuable new processes, but who ultimately owns the fruits of your partnership? Contracts need to include very specific descriptions of ownership, including potential penalties in the event of nonfulfillment of specific contractual details. If your strategic partner doesn’t live up to their end of the agreement, they shouldn’t be able to reap its benefits.
Mitigation: Contracts need to be comprehensive and crystal clear.
Deter Employee migration
Strategic partnerships afford the opportunity to see up close how another organization works internally, but your employees will have the same chance. This may be good or bad, depending on the ways in which your company differs from the one you partner with. Even if you manage to bring on new talent, doing so may sour the partnership.
Mitigation: Include language in the contract to prevent employee migration and take steps to boost your own company culture and engagement.
Ramp up the right way
You’ve sorted out the production details and built a complex process. Now is the time to go to market. An untested manufacturing process places a premium on competent staffing. That staff will need to master your process as quickly as possible to maximize delivery of the partnership’s benefits.
Mitigation: Bring in a responsive staffing solution provider.
Renewal and reinvestment
Maybe your partnership has been a tremendous success and you want to keep it going or maybe you’ve identified areas of potential improvement. Regardless, partnerships are likely to require adjustment as time goes by, so including this consideration in your contract is key to easing the discomfort that comes with committing to anything. Remember, if they know there’s a designated time to bring up concerns, your strategic partner will be as pleased with the contract as you.
Mitigation: Agree upon a renegotiation window with your strategic partner.
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