WI have earlier in this column discussed relationship management. But beyond relationship management, today, we will be discussing how to build and make business partnerships work. For our purposes here, partnership refers to the act of working together with other individuals and organizations for mutual benefit, and not the ‘legal’ form of business entities other than sole proprietorships and limited liability companies. We will use the term interchangeably with ‘collaboration’.
Just a century back into our history, most African societies were highly communal. From working together on farms to going on joint hunting expeditions, Africans have a history of working together for survival. Ironically, we haven’t seemed to have moved fully to the next level of ‘partnering’ in ways that will grow us as individuals, business organizations and modern nations.
The legal forms of business partnerships and limited liability companies were actually conceptualized to not only allow for but also encourage collaboration between individuals and organizations in creating business entities. But beyond the formality of partnering to create an appropriate business vehicle, collaborating with others is key to not only the success of a business but also its long-term success and growth.
We frequently see small scale as well as bigtime businessmen and women in other parts of the world working together to achieve certain business objectives. Bill Gates and the late Steve Jobs running Microsoft and Apple respectively were rivals that competed heavily against each other. Yet, in 1997, Bill Gates invested $150 million in a then struggling Apple, saving the company from bankruptcy. (In return for the investment, Apple also dropped a legal suit against Microsoft.) The point is, even ‘bitter’ competitors can work together for individual or common goals.
For me, a very important question is, therefore, how can Africans improve their capacity and willingness to partner together in business as a matter of routine rather than exceptions?
What is Partnering? Partnering together in our context here refers to individual businessmen and women and business entities working together, formally or informally, to achieve business goals. This includes two or more individuals coming together to start a business, or two competing businesses working with each other to promote some legitimate interests. It may be individual artisans forming a cooperative society or a lead agricultural firm working with scores of farmers or farming businesses to achieve individual and collective objectives. The spectrum of possibilities is truly wide and deep.
Benefits of Partnering: As mentioned above, collaboration offers a whole spectrum of possible working relationships that can be designed by individuals and organizations, and it has several benefits, such as:
Pooling resources together: Collaborating entities can pool all sorts of resources to achieve identified objectives. These resources could include, time, finances, expertise, rights, capital equipment, contacts, etc. The availability of the resources is what may help create or sixteen opportunities for the entities.
· Increase efficiency and effectiveness: Collaborating entities can jointly increase their mutual efficiency and effectiveness by working together.
· Risk management: Partnering entities can work together in ways that help them manage various risks.
· Other benefits include the optimum use of facilities, human capital development, etc.
Elements of Collaboration: There are just two elements of partnering together; Objectives and Resources. Individual collaborating entities must be clear of exactly what their objectives are in the relationship. Sometimes all the objectives are known to all the entities, but other times only individual partners might know the full details of the objectives from their perspective. The latter is as fine as the former as long as a partner does not in any way hurt the other entity or entities in pursuit of their latent objective(s).
The other element is resources. You go into collaboration knowing well what resources you are able to provide and also what resources that other entities or entities are also providing. You do not go collaborating with an entity that doesn’t offer any value.
A third factor which doesn’t warrant being a full element is legality. Most partnering agreements should be legally documented as we shall see later. But at least a few will be understandings that may not be legally enforceable. Where legality and enforcement are possible or appropriate, an agreement should be documented. Where it is not necessary or enforceable, however, other factors such as the character of individuals, track record or organizations, etc. should be checked to ensure that entities will respect understandings even if there is not any formal, legally enforceable agreements.
Partnership Philosophy: To develop and sustain successful partnerships, you and your organization must have the right partnership philosophy. These include:
· Mean well: You must mean well to your partners. This includes being fair, transparent, honest, and having their back.
· Think long term: You must think long term in developing relationships with your partners. You have to see the relationship beyond the vagaries of individual transactions.
· Create opportunities: Look out for and create opportunities for your partners beyond your agreement or transactions with them.
Circles of Partnership: As an individual or corporate entity, you can generally collaborate with other individual or corporate investors, suppliers, customers, etc. You could also form strategic partnerships with individuals and organizations even if you do not have any current business per se with them. The possible circles of relationships are a whole maze that must be developed, nurtured, and navigated deliberately.
We have today defined what partnering together is about, its benefits, philosophy, and elements. We have also introduced circles of partnerships, which we shall take up in greater details next week.