In conversation with Sal Mohammed, who led Strategic Partnership Development at Google, and currently CEO of partnership consulting QTA.
This is part 2, check the beginning here: How to create Win-Win-Win partnerships
How to measure success of partnership? Should you measure pipeline, ecosystem, revenue?
Whatever it is you want to happen from the partnership, make it clearly defined in the business plan before you launch it. So that's in the agreeing stage.
Different things are necessary to measure for different partnerships. For instance, if you want the sales partnership it's very easy to just look at the revenue that's coming in and see if it's doing well or not. If one partner is after customer service enhancements, then it's completely different thing.
Example of Uber + Shopify partnership
For instance, a partnership that Uber and Shopify did, they teamed up in cities in the US for Uber drivers to deliver Shopify customers' items, which basically is giving SMBs a quick delivery route, which may be Amazon or somebody else might have. But what success look like for two companies was very different:
Uber is looking at the per delivery fee;
Shopify, amongst other things, they're looking at customer satisfaction, fulfilment for a problem which they can't solve on their own.
But as long as each of them knew what they wanted from that partnership, it works. So you need to establish what you want to track before you can look at what success looks like.
You need to establish what you want to track before you can look at what success looks like.
Sky and Netflix in the UK
Another example would be Sky and Netflix in the UK. Sky is a broadcasting company and basically if you're a Sky Q customer, you can get Netflix attached for a very low price.
Which then asks the question: "Who does that do well for?", because both of them are looking for two different things:
Netflix want rapid expansion into a customer base, which they don't have.
Sky is a dominant player in the UK, but at the same time Sky want to make sure that people retain their Sky services without switching to what you would maybe consider as a competitor in Netflix.
So retention would be the main driver for Sky, new acquisition and eventual monetization of those customers might be the objective for Netflix. So it really depends on what you need and try to extract from the partnerships, but the only thing is that should be defined way upfront.
It’s a very interesting example about co-opetition. Do you see a lot of similar examples on the market or would you think it's an exception?
You don't see as much of that, as you should see, because it's quite counter-intuitive. Because typically it works well for both companies in some way to achieving an aim that they need to achieve. But the thought of partnering with what might be a competitor in the future usually stops people from exploring those things.
Again, a lot of the time it could also be just a bad idea, but there's a lot of uneasiness about that. Because you can't have a partnership work without transparency, but if you're working with someone who might be seen as a competitor, even if not immediately, you start to worry about information sharing, database sharing, and all the other things that come with it.
What is the partnership process stage by stage?
Typically, I like to split them into four areas.
1. Search and select
This is a process of finding out what partners you should be working with on what propositions. There's a huge world out there,
Do you work with someone in the same industry as you,
Do you work with someone one stage before in the value chain or one stage after?
And out of all those companies, which ones do you pick?
It's not just the biggest company - let's go to them - it's which ones are aligned to your objectives under incentives.
2. Engage and agree
The second would be to engage and agree.
You need to get meetings booked,
you need to deliver the partnership message clearly and succinctly
and then you need to come up with a model you all agree on the commercials, the legal, etc.
The next stage is then to launch it. So you need to mobilize a team that can do that, from designers, from lawyers to acceleration specialists. It could be the same person, but there are roles that you need to do within that.
And then the last phase we would have then is to optimize partnership:
that's tweaking things like sales plans or incentives,
that's making sure that you're putting marketing budget behind it,
getting it out to a far enough audience,
seeing if the partnership works or not or if the click-through rates are what you thought they would be.
But that's an area again would be a lot of people just miss and forget, they think let's celebrate the partnership is up and running. But this is the most important phase to keep you game hat on, and make sure it's actually driving the results, which you thought were in the business plan.
Optimization of a partnership is the most important phase to keep you game hat on, and make sure it's actually driving the results, which you thought were in the business plan.
Why alignment is crucial from the beginning
I see this as a one of the biggest missed opportunities and potential, because too many people shake hands and forget about it, and they expect each other to do something, and nobody does anything and partnerships basically die. How do you produce different result?
It's a tough one, right? And this actually starts way before. It's like when you have a problem with your back and you go to a physiotherapist and they say "Actually it's starting from your toe, because you're walking a little bit funny and it's causing everything else to be out of place". It's the same way with a partnership.
Typically, it was because things weren't clearly aligned in the beginning, that you now having problems in the end.
Typically, it was because things weren't clearly aligned in the beginning, that you now having problems in the end. Because when it becomes time to deliver results of the partnership one party might be like, actually this isn't as important for us anymore. Because you weren’t that bothered to figure out the alignment in the beginning, or their stakeholders weren't completely bought in. So it's easier for them, new quarter - new partnership, let's just throw that one away.
It's particularly common when big companies work with smaller companies. Unfortunately, you see that a lot. So you really spend a lot of time in that first part, the search and select, making sure you have the right partner who's going to be with you for the long term, not just somebody because it seems like it could be a nice idea.
How to build engagement on both sides of partnerships?
So I've seen it for multiple sides. I've seen it from Google, where if you want to engage with a partner or with someone in their leadership team, it's generally quite easy to do. Doesn't mean that partnerships for Google are easy, because it comes with some pressures and demands, people think you're a big rich company why are you giving me hard commercial terms, etc.
But I've also seen it from the startup side, where you're engaging with people who have never heard of your company before, and you really then need to get the proposition clear enough, the WHY clear enough, navigating through the company clear enough, the resources behind it you need to be thorough as well.
So there is no one model for this is how you enter, engage and launch a partnership, but generally you want the stakeholders that need to be involved, bought in. And that could be:
the CEO needs to sign it off,
head of product and head of marketing,
the engineer that needs to build it,
the sales team leader that needs to watch the trainees team to sell it.
The worst thing you can do in partnerships is just say: "Oh, the CEO, the C-level bought in", because they don't determine the success of the partnership.
The worst thing you can do in partnerships is just say: "Oh, the CEO, the C-level bought in", because they don't determine the success of the partnership. You can't just turn it to somebody's and say "hey, you need to build this" or "this is on your team's agenda now". Unless you brought people along on the journey with you, it won't work. So that engagement is just as key as a senior level engagement, is what I would say.
How to align your internal team and your partner team?
I always viewed myself at O2, at Google, even now, as working for both - the company that is paying me and the company I'm trying to partner with. You need to sit in the middle of the ecosystem, otherwise you can't broker a deal that works for everybody, which ultimately means one side will pull away and back out. You need to sit in the middle of the ecosystem, otherwise you can't broker a deal that works for everybody,
you sit in this awkward position, or great position, dependent on how you look at it, where you're neither the company is paying you neither the company is partnering with you. And from there you're able to pull strings, bring people in together, understand how both organizations work, win the trust of both organizations that you're doing the best thing for the partnership, not for your side or for their side.
So you need to see arguments from both sides. If your partner says the commercials are unfair, you can't just stay tough, you have to go "why they are unfair?" and figure it out. So you sit in this awkward position, or great position, dependent on how you look at it, where you're neither the company is paying you neither the company is partnering with you. And from there you're able to pull strings, bring people in together, understand how both organizations work, win the trust of both organizations that you're doing the best thing for the partnership, not for your side or for their side.
Check part 1 of this conversation: How to create Win-Win-Win partnerships