Creating Profit Through Alliances - business models for collaboration E-book | Page 30
A partnership is hard to combine with a standard
purchasing relationship. In such a relationship, the
contacts between companies are managed by buyers
and sellers, so that the users' wishes arrive on the
desk of the product developers or service providers in
somewhat filtered form. The reason for this is that
such wishes are translated into requirements suitable
for a formal purchasing document, and these
requirements are subsequently interpreted in the
process of developing a solution. So at the end of the
day, the solution that is offered often does not meet
the original users' wishes.
extent to which your contribution is unique and not
easily copied, otherwise the collaboration will soon
lose value.
Moreover, a standardised purchasing process such as
a public tender often defines a minimum quality
level, and the cheapest bidder to satisfy that level is
selected. There is thus no incentive or even the
option to offer a more expensive product, which
might yield considerable benefits to the customer
further down the line.
It can be difficult for employees to view another
company as a partner, particularly if there is a strong
we-feeling and the partner is a competitor in certain
areas. It requires a lot of communication and
explanation by management, and some supervision
of how the employees of both companies get to
know each other. Moreover, acknowledging that the
other party perhaps has a better idea or better work
method implies that your own performance in this
respect is lacking. The tricky thing about working with
a (possible) competitor is that there are always
nuances to observe; adamantly exclaiming that
"These are my new friends with whom I can share
everything" is not going to work either.
A take-over or merger directly guarantees access to
an existing customer base or an existing unique
product portfolio, but often also implies investing in
overlapping people and resources or non-strategic
activities. Given the market preconditions, an alliance
with a complementary party is therefore preferable.
Competences are made available immediately, the
investment sum is often limited, and the risk of the
joint activity is shared.
The best collaboration results from both parties
contributing unique elements, such as:
geographic spread;
contributing market or product knowledge;
eliminating risks;
arranging the financing.
The essence of a partnership is that it is to both
parties' benefit. It is important to determine the
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A partnership also has its drawbacks: it means
making your company partly dependent on the
performance and continuity of your partner company.
This demands careful partner selection, mutual trust
and a solid contract. Additionally, you need to share
the revenue of the collaboration. The task is thus to
jointly increase the size of the cake, rather than
obtaining a larger piece of the cake.
In 2006, the major competitors Microsoft and Novell
embarked on a collaboration in which they would
adjust their software to one another in such a way
that their products became more compatible within
computer networks. Microsoft chief Steve Ballmer
was very pleased about the alliance with Novell.
Nevertheless, the two enterprises remain fierce
competitors. As Steve Ballmer remarked: "If someone
asks me what operating system is best for their
company, my reply is: Windows, Windows,
Windows!"