Our High Performance teams series now enters part 20 and we enter the final part of our pillar on Tools. So far we’ve covered Scoreboards and Metrics, Hardware, Systems and Processes, and Frameworks and IP.
So, in this episode we cover Partnerships:
- How all the best HP Teams and Businesses use partnerships in a completely different way to competitors;
- How partnerships can lower your risk, increase quality, vastly grow your business IP, accelerate your growth and improve your culture;
- When to partner and when not to; and
- How to select partners.
Why is partnering so important?
There is one universal truth in business – you’ll see it in all the strategic papers around the world – focus on your core business and leave everything else to the experts. What this means is that high performance teams don’t do everything; they work out what they need to be the best at and then they partner with key high-performing teams or groups or organisations to fill the gaps in their service delivery.
But let’s set the record straight: partnering is different to outsourcing. We’re not just talking about getting a vendor to supply something to your business. A partnership is something that goes right into the very DNA of your business. You’re inviting someone inside the fence, into your inner sanctum of your business, and vice versa. This is about an alliance and everybody being driven towards a single, shared goal.
How is partnering different to outsourcing?
About five years ago, I was coaching the executive team of a mining business. There was significant debate about whether or not the business should outsource the underground mining operations at a number of its mines. Now, to resolve this, what the business did was created a full value chain of their business, combined that with a SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats), a PESTLE Analysis (Political, Economic, Social, Technological, Legal and Environmental), and some really solid strategic development to come up with an understanding that there are really only three elements of the value chain that they needed to be the best at in their environment.
The very first was exploration, which they don’t want to give to anybody else, because it is where huge amounts of money can be made in mining. The second was in technical services; they had some very complex underground mine deposits and if their business can be the best at analysing those deposits, working out how to extract them from the ground better than anybody else, then there was a sustainable, competitive advantage to be had there. The third was in people development; a lot of mining companies in this particular geography were not good at developing their people and, as such, suffered high turnover and poor-quality decision-making on the frontline.
So, this business decided to invest heavily above market rate in those three particular elements of the value chain, and agreed then that for all other elements, they could partner with someone that would reduce the risk. What happened was as soon as they had locked in that decision, they all knew straight away, based on their analysis, that underground mining could be outsourced if a partner could do it cheaper, better and at higher quality than they could.
Then, what they did next was incredibly smart. As part of the contract, they added a few additional components, such as technical services expertise and education frameworks. As a result, the partner would teach the staff as they were doing their job, thereby lifting the performance of the business and the people. This is a wonderful example of a strategic partnership or an alliance where two businesses came together and everything lined up beautifully.
How do we know whether to find a partner or not?
If you are looking at your particular team, whether you are leading an entire organisation or a department, here are the two key questions that will help you decide whether you should partner with someone:
1. Which parts of the service that we deliver do we need to be expert level at, with high capacity?
These should be parts in the value chain of the service that you deliver, including all the different steps in that process. These activities are critical functions for the business.
2. Will it take us years to build the expertise and capacity, or can I already have it right now?
If you don’t have the expertise or capacity in a critical function and it would take years to get it, that would be a good example of being able to plug in capacity and expertise with a partner.
If you already have the expertise or capacity in your business, you don’t need to go to a partnership. In this instance, you might just go to a basic vendor relationship or you might just try and bring in more people internally.
How do we select the best partner?
This starts with your mindset, chief, and that mindset is to look for someone to partner on the journey to success.
This isn’t a classic buyer-vendor relationship; this is a wonderful opportunity to bring someone inside the fold and really learn from one another. What this will result in is everybody profiting or growing together. It’s just a fantastic way of doing business.
So, how do we find the best or optimal partner?
1. Build some relationships with some potential partners
Don’t look at one; find three to five in the market and build some relationships. Bring them inside your business, and get to know each other both on a personal and social level. Whatever it takes, you’ve got to have a sense that they’re a solid business, they’ve got good values and their values align to your personal and organisation’s values. You want to make sure that there’s not going to be conflict down the track that will make it awkward.
2. Make sure you’re getting the best in the market
Look deeply at the quality of the service that they deliver, and ensure that you will be able to get a sustainable, competitive advantage through this partnership. Look at who they are (you want really good quality people), and what they do (you want to know that they deliver to a high quality and it will really give your service delivery a boost). If this partnership is going to be a success, you need the best partner who can help you be even better than anybody else in the market at what you do.
3. Get the commercials sorted
The key thing here is that you don’t want to drive them to the lowest possible number; you want to make sure that they can still make a fair buck out of this. Everybody must benefit from this relationship, so don’t make it too adversarial. This is a great opportunity for everybody to be more successful, so make sure their commercial and service level KPIs are aligned to them being successful and, also, to your own success. If there’s any internal conflict in the KPIs, something is going to fall over. This is so important, so triple check that particular part of their business.
How do we make our partnerships stronger?
Now that you’re in an alliance with another organisation, run some alpha test cases of services being delivered and then get everyone in a room and do a shared review session so that you can refine your processes.
Ask questions like: How could we do that better? How did that fall over? What happened there? Did this particular thing work? Did we have the right data, the right information, the right product?
Do it together – make all of the production and the operational meetings shared. Make it a partnership where everybody benefits. What you will then get is a really high-quality delivered service that immediately plugs into your business. You can lock in service levels, focus on what you’re already good at, build capacity and knowledge by partnering with this business.
Over time, your goal is to keep the alliance ticking along such that they’re going to give you more value above and beyond what you’re paying for. If you manage the relationship well, I’m sure they’ll teach and coach your people, and drive everyone to be better. That’s one of the benefits of partnerships, particularly if you give it back to them. Remember, reciprocity counts in partnerships. The more you give, the more you’re likely to get back.
No matter which industry you’re in, there are strategic partnerships available at every corner. So look far and wide and then use the methods above to build a solid platform. A partnership is going to take a lot of the stress out of your business.