What is a strategic partnership?

- Let me ask you a question, how many strategic partnerships does your organization have? Don't worry, there is no right answer, but whatever you might say, you can be sure that your colleague would say a number that's higher or lower. Perhaps even by five or 10 fold. That's what I found in every company I've worked with. Why is this? Well, the term strategic partnership means different things to different people. We each have a different definition of the term. Is a particular business relationship a strategic partnership or should it be called something else? The reason why it's important to agree on this definition is because what you call a deal often shapes how you manage it. So, when I say strategic partnership, I mean a formal relationship between two or more organizations that has three features. First, it's intended to create value for the organizations in some way. For example, by raising the revenues or lowering their costs or generating new ideas and innovation. Second, in a strategic partnership, the work that is done together is managed by both sides to some degree. It's not just one party that rules. Third, the risks and rewards of the joint venture are shared in a strategic partnership, not necessarily equally, but both sides get something out of it. Let me give you an example, IBM and Apple started a strategic partnership a few years ago to combine the corporate services of IBM with Apple's mobile products and platform. Together, the partners are developing iPad applications that are used by IBM's large clients to manage field operations and analyze data in real time. This arrangement is creating value for both IBM and Apple. The companies coordinate their R&D and sales deliberately and they each get paid through their sales of new products and services. There are many other examples like this and there are many forms of strategic partnerships. Apple and IBM tied the knot with an alliance contract. But partnerships may also involve investments that one organization makes in its partner or that the organizations make together. Common deal types that are all strategic partnerships are alliance agreements, joint R&D agreements, co-marketing agreements, minority investments, and equity joint ventures. Mergers and acquisitions are a special case. They often behave like partnerships, but one party clearly rules and usually owns the full risks of the deal. Because so many types of deals qualify as strategic partnership, it's natural that your count and your colleague's count will differ. You might also differ on whether a particular deal is strategic or not. But I think this is a bit of a red herring. The deals we're talking about are all ways to grow or develop your business. So they're all part of your strategy. The deals themselves may be large or small or your partners may be large or small. So, some of your strategic partnerships will be more important than others. But in the end, you will need to manage each of these strategic partnerships smartly. If it's worth tying that knot, it's worth working together to make it pay off. It's my goal to give you the keys to success in managing strategic partnerships and to show you the tools and tips that you can use right away.