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Partnering as a Business Model
The importance of partnerships runs parallel with key developments in the new economy, or the digitized world. We understand that the requirement and infrastructure for increased interaction among individuals and organizations is headed rapidly up the “s curve.” We understand that the explosion in mergers, acquisitions and joint ventures is enabling companies to leverage each others' capacity and capabilities. We understand further that people represent strategic advantage in an economy increasingly driven by ideas and successful relationships.
All of this points to the validity and viability of partnership as an overarching business model, much as various strategy, quality, process and operational management systems have functioned as business models in the past. As we undergo the most significant structural economic transformation in human history, we are able to understand the relative import of various sources of competitive advantage.
We can quickly scan history to understand the time when capital and labor created mass production capability, a clear source of competitive advantage at the time. We can look forward to the time when companies leveraged process standardization to increase output and decrease unit costs. We can look still further and see the import of quality as a business model at a time when defects were driving companies out of business relative to their Japanese competitors.
In more modern times, we see strategy and technology as key drivers of business success. In a global economy, the import of strategy rose, we can say, based on the simple dynamic of multiplying markets. As for technology as a key business driver, we don’t need to look too far back to see the impact of the computer revolution, and, more recently, the client-server and Internet revolutions.
As the developed countries moved from agriculture to industry to service to information, they increasingly relied on people as a source of competitive advantage. In other words, the further we move toward a knowledge economy, the more we need people to function as the “means of production” for that economy. We have reached a turning point in advanced society where the playing field has become leveled for capital, labor, information and to some extent technology.
If you look at companies like Microsoft, HP, Intel and other leaders, you find that they practice aggressive recruiting and hiring tactics for the sole purpose of attracting and retaining the smartest, best people. These companies understand that, in a changing, open economic environment, smart, adaptable and driven people across all disciplines are the only non-replicable source of competitive advantage.
Recently, a coalition of 95 software development groups requested help with improving their partnering skills because the structure and dynamics in their industry are demanding more and better inter- and intra-organizational cooperation and coordination. It appears even high-tech industries are, by necessity, recognizing the value of partnerships.
Given this, the question becomes not whether to develop a strong partnership capability and capacity but how strong and how quickly. Some companies have recognized the import of partnering intelligence and skill to the extent that they have elevated it to very top of the corporate agenda, as has HPs Carly Fiorina.
The next logical step along the historical continuum is to elevate partnerships from a source of competitive advantage to the status of business model. In doing so, we must thoroughly understand how partnership intelligence and acumen can be organizationally systematized, if you will, and leveraged from the very top of a corporation to the daily interactions that touch individual customers on an ongoing basis.
At the core of such a transition to partnerships as a business model are the two realms of organizational life: the material and the ethereal. While the material realm covers such organizational activities as strategy development, process execution, product manufacturing and service delivery, the ethereal realm covers such aspects of organizational life as vision, values, ethics and culture.
The key performance deterrent in most companies today is that their leadership spends more time in driving the material realm than it does in driving the ethereal realm. In other words, executives are preoccupied with aspects of the business that can be quantified, such as profit and loss, operating margins, productivity and so on. While this focus is necessary, it ignores the invisible dynamics that truly drive corporate performance
What many business executives are coming to realize is that the intangible factors drive performance as much or more than the tangible. Specifically, these are the human energies that drive relationships – the vision, values and culture of the organization. In other words, many business leaders are coming to grips with the fact that the working environment is as important as organizational goals, objectives, standards and compensation.
The fact is that the material and ethereal realms of the organization are inseparable, two halves of the same whole. Developing one without the other results in imbalance and sub-optimization, inasmuch as developing the left side of the body while ignoring the right might cause some balance problems.
The Partnership Continuum model is the first of its kind that provides a structure and system for developing both the tangible and intangible factors that drive a business to higher levels of performance. It is based on the premise that organizations develop in one of two ways: by evolution or by design. While the former is subject to inertia, the latter is a result of effective intervention.
The Partnership Continuum essentially gives us a construct for simultaneously engineering success into the material and ethereal realms of the organization. It juxtaposes the tangible and intangible elements of success at each stage of the business cycle. While the material activities are the internal and external tasks that need to be accomplished, the ethereal activities are the dynamics that need to unfold to develop productive relationships.
The key point about the Partnership Continuum as a business model is that both the operational and relationship aspects of performance improvement must be managed on an ongoing basis. Inasmuch as we identify, measure, analyze and improve business operations, we identify, measure, analyze and improve the relationships that drive those operations. This is the level of sophistication required to achieve strategic competitive advantage.
While we know the elements of business success are strategy, objectives, processes, technology, products and services, we also know the elements of relationship success are self disclosure and feedback, win-win orientation, ability to trust, comfort with change, future orientation and comfort with interdependence. As we move through the business cycle, we turn the PDCA wheel on each of these elements in both realms, creating synergy among operations and relationships that maximizes performance. If we don’t do this, ultimately, we will have unsuccessful partnerships and an unsuccessful business.
Many more articles in Partnering & Alliances in The CEO Refresher Archives