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Partnering Best Practices: From Five People to Fortune 50

Guest post by: Sarah Gerdes

Article Overview: Learn what BusinessWeeks top 50 CEO Dan Wormenhoven and the owner of a four person start-up have in common: a partnering best practice model called Alliance Mapping. Used in over forty industries by hundreds of companies, AllianceMapping is a one-stop model that combines the 4-P's of marketing and adds a critical 5th-Partnerships.

Partnering Best Practices: From Five People to Fortune 50

Partnering Best Practices: From Five People to Fortune 50
Ask any executive of a large company about their partner strategy and you will probably hear that the company has a “partner model designed to fulfill specific requirements of company growth.” That’s exactly what CEO Dan Wormenhoven of Network Appliance said when asked about the partner planning process. Each partner was carefully chosen to get a job done and supply a specific function within our business.
Contrast this with the process followed by Phillip Benz, vice president of Advanced Vascular, a classic mid-size, fifty million dollar firm. He admits that the process to creating even his most profitable partnership was very informal. “I’d like to say it was on purpose and it worked out as I planned it, but it was actually somewhere between rigorous planning and dumb luck.”
If you ask an executive of a company with revenues of less than twenty-five million dollars the same question and you will likely hear a very different answer. “Pretty ad-hoc,” is what Mitch Mounger of Sunrise Corporation, a manufacturer of branded apparel and specialty products said about his firms’ partner strategy. And yet even Mounger was able to craft a very successful distribution partnership.
These varied experiences exemplify just how wide the chasm of partner planning and development is between the largest and smallest of firms. While large companies make long-term strategic business plans, those further down the financial food chain veer towards common sense and gut feelings. While Benz might like to have the time to plan out every partnership, and Mounger acknowledged that he probably should have conducted more due diligence, these lofty goals were not realized. When the demands of keeping up sales without sacrificing customer satisfaction are constant worries, most executives of small and mid-size businesses acknowledge that planning partnerships are a second priority. What’s more, even in a robust economy, CEOs are reluctant to spend for outside expertise on a partner development planning process when the same money could be spent on another sales representative.
However, this does not have to be the case. While few companies are endowed with the luxury of hiring dedicated alliance managers or spending months planning a partner strategy, these time and money constraints are no longer impediments to partner development. So how do you start the process of figuring out your partner model when you lack the background, expertise, or financial support to create your most strategic weapon? You start with the first and most important cornerstone of partner development; AllianceMapping.

AllianceMapping Defined
AllianceMapping a model that came out of working with hundreds of organizations across more than forty-five industries. It is a model that combines the 4 “P”’s of marketing (product, price, place (distribution) and promotion and adds one more P-Partnerships. The Alliance Mapping model is one that every organization can use to pinpoint the right partner for any given stage in its life cycle. If this is done correctly, you can then identify the predictable outcomes, resource requirements, associated risks, and revenue projections for the partnership. What this ultimately means is that each organization can create a long-term strategic partner roadmap, just like the big firms.
AllianceMapping helps you answer the most basic questions at the outset of the partner development cycle:
• Who would want to partner with my company?
• Am I at the stage of my business to consider a partnership?
• What is going to be required from my firm in terms of money and time?
• Is there a way I can tell if a PPO will be interested before I spend time on creating the partnership?
• Is there a way to figure out a fluid partner roadmap that matches the company’s expected growth?
• How will I know when my existing partners stop benefiting me?
The best business models are those that appear extremely simple and yet deliver incredibly powerful results. This is true with AllianceMapping.
Back in 1996, Christian Karr of Espresso Connection had no money, no means of outside capital financing, no land on which to place a coffee cart and no means to create visibility. Espresso Connection is a textbook example of how to use AllianceMapping from the initial company stages. Espresso Connection required idea validation and additional dollars to bring his product to market. With no more than an idea and a mocked up prototype, Karr approached a provider of coffee, Seattle’s Best Coffee, to aid in both the design of this final product but also to OEM their coffee beans. In this way, Karr progressed Espresso Connection from stage one to stage two.
In parallel, Karr was planning out the growth stages, and the necessary partners to bridge the gap between growth periods. Once Espresso Connection was in stage two, he had a product that could be tested, a resident OEM agreement with an established brand and was ready to move to stage three which was to test the first mobile coffee stand. To determine if the business model would be a financial success, Karr had to create a facilities partnership with zero money out. He also needed to create awareness for his new stand as soon as it was ready. Simultaneously, Karr created the facilities partnership for his first location and then enacted a new marketing agreement with Seattle’s Best Coffee.
While the time between each stage one through four was a matter of weeks and months, the time between stages four and five was about eighteen months. Karr maintained a vision of distributing the Espresso Connection products through a partner channel, but could not explore this opportunity until his initial business model was proven. In the meantime, Karr identified the right distribution partners for his product line and is now in the process of creating partners that can extend his product line to the masses.
Best practices means taking a model and reusing across product lines, vertical industries and even geographies. AllianceMapping is one model to identify and validate the right partnership model for the present, and future business goals.

More information on AllianceMapping can be found in Navigating the Partnership Maze: Creating Alliances that Work (McGraw-Hill 2002), www.bmginc.com or on-line at www.MyBizHomePage.com/Education under the Envoy Partner Development packages.

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Partnering for the wrong reasons - Well I guess the 2 biggest fears/mistakes are: 1.) Partnering with someone just because you trust them (i.e. a close family member or friend) and more importantly, need his/her money to implement YOUR unique idea. 2.) Giving away too much (in terms of company shares) too soon. For instance, let's say you gave away 50% of your company shares to a friend who was mainly just an investor who paid for more than 70% of the initial startup costs. You do more than 70% of the work, and the company becomes successful and you're able to repay all of your debts. Then going forward, you're stuck doing the majority of the work still, while you investor friend has been repaid in full and sits on his/her laurels because of the initial written agreement didn't require him/her to help out as much. What would you do then?
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