How to scale your business with strategic partnerships

When executed well, strategic partnerships have the potential to drastically change the trajectory of companies, catapulting both partners to new heights.

But what defines a strategic partnership? And how do you identify your next strategic partner and the factors that contribute to making the relationship a success?

Here’s a quick overview of strategic partnerships and how you can best create them for your business. Ready to get started?

Before diving into the details, let’s define what we mean by a strategic partnership.

Strategic partnerships differ from other types due to the complexity and commitment required to form and sustain them. These are long-term, mutually beneficial relationships formed to achieve a shared business objective or goal.

Typically, there are several characteristics that are true of a strategic partnership, including:

• Organizational significance: Strategic partnerships are critical to the core operations and strategy of the participating companies. These partnerships are often conceived at the board level and hold significant importance for the growth of the companies involved.

• Deeper commitment: Unlike other partnership arrangements, these relationships involve a deep commitment, often necessitating dedicated teams and significant financial investment.

• Leadership and ownership: Strategic partnerships are managed by dedicated individuals within the company who champion the partnership and oversee its integration into the broader business strategy. Unlike other types of partnerships, where a partner manager may handle relationships with many partners, strategic partnerships are typically overseen by a single person. An example is Danielle Horne of CloudZero, who manages their pivotal partnership with AWS—a relationship that drives substantial revenue for their organization.

‍

Given the significant commitment in terms of resources and capital required, why would a company choose to enter into a strategic partnership?

Broadly speaking, the decision to pursue a strategic partnership is driven by the desire to achieve objectives that would be challenging to accomplish alone.

These objectives might include expanding market reach into different countries or verticals, enhancing technological capabilities, filling product gaps, or combining resources to facilitate complex projects.

To better understand this, let's detail some examples of strategic partnerships and analyze the reasons behind their formation.

‍

Microsoft and OpenAI

OpenAI has rapidly become one of the largest tech companies in the world, with its growth significantly boosted by strategic partnerships with other technology giants, notably Microsoft.

This partnership holds equal significance for both Microsoft and OpenAI. For Microsoft, it enables the integration of AI technology into their product suite, reinforcing their position as the premier workplace software provider. For OpenAI, it offers mass distribution of their technology and a substantial capital boost, with Microsoft investing close to $3 billion into the technology.

This represents a monumental strategic partnership, with clear mutual benefits and substantial technological and financial commitments.

‍

Salesforce and Slack

Before acquiring Slack, Salesforce had established a strategic partnership with them.

This noteworthy partnership was initiated by Salesforce, who sought to enhance workflow, data sharing, and communication across teams and departments. This collaboration aimed to create a more connected and efficient workspace, improving the overall adoption of the Salesforce platform.

The teams developed a highly effective integration between their platforms and established a robust co-sell framework that generated significant revenue for both companies.

The strength of this partnership eventually led to Salesforce's acquisition of Slack, demonstrating that some strategic partnerships can indeed pave the way for acquisition if executed correctly.

‍

Allbound and Reveal

We'd be remiss if we didn't highlight Allbound's strategic partnership with our friends at Reveal.

Reveal, another leader in the partnership space is known for its software that enables partner teams to account map and boost revenue from existing partnerships. This partnership provides significant benefits, not just financially—we have recommendation(or referral) language for each business baked into our sales and CSM outreach processes to customers and prospects—but it also adds substantial value for our joint customers as combined solutions.

Keep your eyes peeled for what we’ve got coming up in our joint ventures! 

So, you now fully understand what a strategic partnership involves.

But before you get too excited and rush to sign your first strategic partnership agreement, there are several factors you should consider to ensure you don't invest a vast amount of time and money into a relationship that ultimately fails.

Fortunately, we have compiled a checklist to help you determine whether the strategic partnership you are considering is worth your time and effort.

Here are some factors to consider when assessing a potential strategic partner:

Alignment of values and interests: This is crucial. If you are about to enter a multi-year, highly complex partnership agreement, you need to ensure that the other party is as committed to the partnership as you are. Strategic partnerships are typically long-term commitments, so signs like executive buy-in and participation in partnership discussions indicate mutual interest. Additionally, it’s important that both parties are culturally aligned and share the same inherent values.

Reputation and reliability: This step is straightforward (and perhaps not necessary if you are a giant like Microsoft or OpenAI). Before committing to a strategic partnership, take the time to understand the reputation of the company you are considering. What do their reviews on platforms like G2 say? Can they connect you with satisfied customers? It's also wise to understand their financial health, especially if the potential partner is an early-stage startup. Consider their financial runway, as partnering with a company on the brink of going out of business can be risky.

Economic and resource commitment: Both parties should be prepared to invest comparable resources to ensure the success of the partnership. Often, when signing a strategic partnership agreement, it is advisable to create a contract that specifies the commitments, both in terms of dollars and headcount, that each side agrees to. Without a clear agreement, there is a risk that one side may end up investing more into the partnership than the other, potentially leading to imbalance and conflict.

‍

After selecting the right strategic partner, it's crucial to devise an effective go-to-market (GTM) strategy tailored to your organizational size and capabilities. 

Each approach offers distinct benefits depending on whether your organization is a small business or a large enterprise.

‍

For small businesses

Joint co-marketing: Small businesses often have limited marketing budgets and brand recognition, making joint co-marketing especially advantageous. Collaborative marketing efforts such as email campaigns, webinars, and joint promotional events can amplify reach and resonance in the market. By pooling resources, small companies can access a broader audience and share the burden of marketing costs, allowing them to punch above their weight in competitive markets.

‍

Technology sharing: For small businesses that may lack extensive R&D resources, technology sharing is a vital strategy. Partnering with another company to integrate complementary technologies can enhance the overall value of their offerings. For instance, a CRM software provider for small businesses might integrate with a larger e-commerce platform to provide enhanced data insights to its users. This not only improves product capabilities but also expands the market reach by associating with established platforms, making the product more attractive to potential customers who see a comprehensive solution in one package.

‍

For large enterprises

Joint ventures: Large enterprises often engage in joint ventures to pursue substantial projects that are too large or risky to handle alone. These ventures can involve entering new markets or developing new technologies. For example, an enterprise might partner with a local company in an emerging market to gain insights and access to that market, sharing resources and splitting the risks associated with the venture. The scale of resources and capital available to large enterprises allows them to undertake such significant projects, which can lead to substantial long-term payoffs.

‍

R&D collaborations: Large enterprises have the capital to invest in extensive R&D efforts but collaborating with another enterprise can accelerate the pace of innovation and spread the financial risk. Through R&D collaborations, companies can pool their technical expertise and resources to push the boundaries of what is possible within their industries. For example, a pharmaceutical giant might collaborate with a biotech firm to combine cutting-edge technology with extensive clinical trial networks to bring new drugs to market more rapidly. These partnerships not only enhance the capabilities of each participant but also help in staying competitive in fast-evolving industries.

‍

Comparison and strategic considerations

Small businesses benefit from strategies like joint co-marketing and technology sharing primarily because these initiatives are less resource-intensive and provide immediate enhancements to their market presence and product capabilities without significant investment. These strategies allow small businesses to navigate their constraints while still leveraging partnerships to scale effectively.

‍

Conversely, large enterprises opt for joint ventures and R&D collaborations as they can manage the higher stakes involved and are better positioned to absorb the longer-term nature of these investments. These strategies are designed to create substantial value through transformative projects and cutting-edge innovation, aligning with the strategic goals of large companies aiming for a significant impact and leadership in their industries.

‍

Creating your first strategic partnerships is no small feat, and this post has walked you through the nuts and bolts—from selecting the right type of partner to nailing down the go-to-market strategy that aligns with your business size and goals. Whether you're a nimble startup or a large enterprise, the right strategic partnership can be a game changer. 

Just remember, the success of these partnerships doesn't just depend on aligning with another company that has what you lack but also on a shared vision and deep commitment from both sides. 

So, take your time, choose wisely, and here’s to hoping your next strategic partnership propels your business to new heights!

‍