Forming private sector partnerships and creating wealth through economic diversification is among the aims of our country (Oman's) vision 2040; of course that is coupled with building world-class infrastructure, and preserving environmental sustainability.
Last week, my article revolved around the importance of creating strategic partnership for the necessary growth, success and sustainability; in the sense where resources, risks, decisions and ultimately rewards are shared between the companies that enter into a partnership or alliance agreement. This week, I would like to focus my article on the simple guidelines organisations can follow in order to create a profitable business partnership.
Harvard Business Review (HBR) study noted that about 70% of business partnership fails. On the other hand, a study done McKinsey noted that only 25% of business partnership achieve their intended goals.
Other reputable studies suggest that approximately 50% of SME/SMB (small medium enterprises/business) that enter into business partnership agreements fail within the first few years of the engagements. Furthermore, notable number of public private partnership (PPP) projects launched in the Middle East and North Africa (Mena) have been abandoned. How many times have you seen major release of two or more companies coming together to form an alliance in the form of an MoU (memorandum of understanding), only to see fail, maybe not publicly announce, yet no progression or whatsoever on the deal.
This is of course alarming and the proof is in the pudding in many local initiatives that continue to suffer due to lack of quality partnership and bad governance as a whole.
So what simple guidelines can organisations follow in order to create a successful business partnership? First and foremost, there needs to be shared vision (where they want to go together), and shared goals (what do they wish to achieve together).
It is critical that both and all entities involved have alignment on the same. Next, there needs to be trust (and transparency in all forms of its operation), and the parties involved must be reliable (and again trustworthy too), else, doom would just be around the corner. Then, a total commitment to the partnership’s vision so as dedication to delivering agreed goals as results cannot be underestimated (otherwise what for was the partnership formed at first place).
Lastly, knowledge, skills, expertise, resources (be it team, financial, etc) along with compatibility of one and another is very important for the solution (as a product or service) out of the partnership to work. Organisations that wish to embark into a partnership must take these simple guidelines seriously in order to build a solid foundation to start and grow with.
Entering into a business partnership in order to grow, be it capture new market, introduce joint product, or the likes as I had illustrated in my previous articles is indeed fruitful especially if the market and performance you are on is stagnant. Nevertheless, choosing the right business partner is critical for one to succeed, for it can make or break the mission, which as a result can be very costly.
High-level statistics I shared in the article today may illustrate a challenging mission, however, organizations needs to be very careful and follow some of the guide-lines, if not all, depending on the industry in question, in order to achieve fruitful alliance. Partnership that is built on a strong foundation at the most of the time produce outstanding results that sole organisations can’t dream to achieve.
Next week, I will be sharing selection criteria that organisations can utilise in order to on-board appropriate business partners. Until we catch up again next week, stay positive.
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