The Art of Partnering
When I went through the security line at San Francisco
International Airport this morning, I noticed this laptop with an Apple
sticker pasted over its Dell logo (click to enlarge the photo if you
don’t believe me). I thought this was very funny, so I asked its owner
why he did this. He explained that he was tired of explaining why he
had a Dell. I told him that I’d never heard of an Apple owner pasting a
Dell sticker over the Apple logo, and he agreed that this was unlikely
to happen. (At that point, he noticed my PowerBook’s Tony Hawk
autograph, but I digress…)
This got me to thinking about how companies form
partnerships–pasting each other’s logos on products and services and
ending up with crap. The fallacy of partnerships–and how “partner”
became a verb–is rooted in the dot.com days of 1998-2000. During these
years, most startups didn’t have a business model, so they blew smoke
about having “partnered” with big firms. Surely if a company partnered
with Microsoft or IBM, it would be successful.
To this day, whenever an entrepreneur uses “partner” used as a
verb, it bothers me because I hear, “Bull-shitake relationship that
isn’t going to increase revenue.” However, I am not an angry little
man, so in the spirit of improving what has become a flawed process, I
offer The Art of Partnering.
- Partner for “spreadsheet” reasons. Most companies
form partnerships for the wrong reason: To make the press and analysts
happy. This is stupid. The right reason to form a partnership is to
increase sales or decrease costs. Here’s a quick test: Will you
recalculate the spreadsheet model of your financial projections if the
partnership happens? If not, then the partnership is doomed. You can
wave your hands all you like about “visibility,” “credibility,” and
“acceptability,” but if you can’t quantify the partnership, then you
don’t have one.
- Define deliverables and objectives. If the primary
goal of a partnership is to deliver “spreadsheet reasons,” then
execution is dependent on setting deliverables and objectives such as
additional revenues, lower costs, penetration of new markets, and new
products and services. The only way to determine whether a partnership
is working is to answer quantifiable questions such as, “How many more
more downloads of software occurred because our two web sites are now
- Ensure that the middles and bottoms like the deal.
Most partnerships form when two CEOs meet at an industry boondoggle.
The next thing you know they’ve concocted a partnership that “the press
and analysts will love,” and the next step is to get the PR people to
draft an announcement. Is it any wonder partnerships seldom work? Some
people believe that the key to successful partnerships is that
top-management thought of it. They’re wrong. The key is that the
middles and bottoms of both organizations like the partnership–after
all, they will be implementing it. Indeed, the best partnerships occur
when the middles and bottoms work together and wake up one day with a
de-facto partnership that didn’t involve top management until it was
- Designate internal champions. Long after the press
conference and announcement, one person inside each organization must
remain the champion of the partnership. “A bunch of people contributing
to the partnership when they can” doesn’t cut it. For example, during
the desktop publishing days of Apple, John Scull (not Sculley) was “Mr.
Desktop Publishing” at Apple. His counterpart at Aldus was Paul
Brainerd. So the responsibility for the success of desktop publishing
came down to John and Paul–not John, Paul, George, Ringo, and a host
of other part-time contributors.
- Accentuate strengths, don’t hide weaknesses.
Companies form most partnerships to hide their respective weaknesses.
For example, Apple and DEC formed such a partnership in the 1980s.
Apple’s weakness was a lack of data communications strategy. DEC’s
weakness was a lack of a personal computer strategy. So the two
companies tried to put two and two together. In the end two and two
didn’t even add up to four because DEC’s data communications strategy
couldn’t help Apple, and Apple’s personal computer strategy couldn’t
help DEC. The deal between Apple and Intel has better prospects because
it is based on the companies respective strengths: Apple’s ability to
design great consumer devices, and Intel’s ability to build fast chips
with low power requirements.*(see footnote) And this partnership
certainly has “spreadsheet” reasons for both parties.
- Cut win-win deals. A partnership seldom takes
place between equals. As a result, the more powerful side is tempted to
squeeze the other party. The weaker side, for its part, will
begrudgingly accept such deals and try to get what it can. Bad idea.
Bad karma. Bad practicality. If the partnership is a win-lose deal, it
will blow up because concrete walls and barbed wire cannot hold a
partnership together. Only mutually beneficial results can. In the
long, the bitter seed of resentment planted at the start of a
partnership will grow into a giant, destructive weed.
- Put in an “out” clause. No matter how great the
deal looks, put in an “out” clause so that both parties may terminate
the partnership relatively easily. This may seem counter intuitive, but
if companies know that they can get out of something, they’ll work
harder to make it successful. This is because easy out clauses can
increase motivation: “We’d better keep up our end of the bargain
because we need these guys, and they can walk.” Frankly, if all that’s
holding the partnership together is a legal document, then it’s
probably not going to work anyway. It’s hard to imagine that indentured
servitude is a motivating model of employment.
- Ask women. Men have a fundamental genetic flaw.
Actually, they have many fundamental genetic flaws, but I am only
concerned with one here: The desire to partner (verb!) with anything
that moves. They don’t care about practicalities and long-term
implications. If something is moving, men want to partner with it.
Women, by contrast, do not have this genetic flaw. When you come up
with an idea for a partnership, don’t bother asking men what they think
about it because they will almost always think it’s a good idea.
Instead, ask women and gain some real insight as to whether the
partnership makes sense.
- Wait to legislate. Remember in the Art of
Recruiting entry when I said that an offer letter is the last step in
the process? An offer letter is not properly used as a “strawman” to
get negotiation going. The same thing applies to a partnership. After
you’ve reached closure on the deal terms–the result of many meetings,
phone calls, and emails–then you draft an agreement. This happens at
the end of the process because you want the people to have
psychologically committed themselves to the partnership. If you start
the drafting process too early, you’re asking for nit-picking delays
and blowups. Incidentally, if you ask for legal advice too early,
you’ll kill the process. The best way to deal with lawyers is to simply
say to them: “This is what I want to do. Now keep us out of jail as we
Written at: Marriott Hotel, Park Ridge, New Jersey
* Please God, take these two strengths and give us a laptop that has
the Macintosh interface and a six-hour battery life. But then, God, why
didn’t Steve talk about battery life in his keynote address?
Thanks, Tom Kang, for your outstanding contributions to this entry.