Choose your strategic alliances carefully

If you want to be a bad product manager, jump into partnerships without considering all of your options. Maybe your customers are clamoring for a certain feature and a partner comes to you telling you they can help solve that need quickly. Sure, there may be other vendors who can solve it too, but then you would have to go out and spend time finding and evaluating other vendors. That would take too much time and you’re better off just going with whomever was first to your door. Or, what if there’s a company with cool technology that seems really impressive — you probably would want that in your product, wouldn’t you? True, you’re not sure how many customers really need it, but it would look great in a demo, and plus you’re afraid that if you pass them up, they’ll just go to one of your competitors.

If you want to be a good product manager, properly analyze and choose the right partners and strategic alliances. Product managers put so much thought into many important areas of their product, yet often the decision about whether a product or an aspect of it should be built, bought, or developed using a partner is given short shrift. This is problematic, as it often is one of the most crucial parts of the customer experience.

When a customer purchases or uses your product, their satisfaction and delight is not just tied to the product itself. The entire experience influences what they think of your product, including things like where they purchase the product, how it is packaged, the quality of the components, and other products with which yours interacts. However, product managers — and many others within an organization — narrowly define the “product” and do not take into account these other aspects. What could be otherwise a fantastic product could be ruined by making the wrong build / buy / partner decision.

While there are certainly companies which would be “bad” partners for any product, in most cases a “bad” partner is simply one where there is a misalignment of priorities between your organization and theirs. A quality-focused product will partner with a low-cost (and lower-quality) vendor; a company known for its customer service with align itself with an organization with a bad customer service reputation; a product designed for the value-conscious consumer will be sold through a full-service (and higher-cost) distribution channel.

These ill-conceived partner decisions may be made for a number of reasons, including everything from lack of proper knowledge about the potential partner to an executive who has a pre-existing relationship with the desired partner. Regardless, they stem from a lack of proper analysis of the situation.

To make sure you are aligning yourself with the right companies, make sure you understand why you are choosing to partner in the first place. (This Build, Buy, or Partner (PowerPoint presentation) from the NorCal PDMA provides a great overview of that decision process.) You must first make sure you are clear on why you are choosing to partner, not with whom you are choosing to partner. While an attractive suitor who approaches you may initially spark your interest in a partnership, you need to evaluate the overall potential for partnership first before considering this specific opportunity.

Once you understand why you are choosing to partner, you need to evaluate what you are looking for in a partner. There are a number of questions that you need to ask before committing to an agreement, including

  • What are your expectations for the partner?
  • Do you want a long-term strategic alliance or a quick integration?
  • Are their values aligned with yours?
  • How do their capiabilities fit with your distinctive competence?
  • Is one side benefiting more for the partnership than another?

These questions and others can help you objectively evaluate a partnership decision. Obviously, there are additional steps after evaluation — discussing monetary aspects, agreeing on terms and conditions, and negotiating other details of the alliance. However, a product manager should not jump into those details without first understanding the higher-level questions. Once the “big picture” is clear, negotiating the fine print of the agreement will be much more straightforward. While there is often a desire to rush into the decision — one main reason for choosing a partner is to improve speed to market, after all — a more regimented approach will ensure that any strategic alliance is a proper fit for your product and your market.

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3 thoughts on “Choose your strategic alliances carefully

  1. You make a good point Jeff – getting into bed with the wrong partner can have devestating concequences for your product and your company. However, I think that you’ve missed a key point here: all too rarely do alliance opportunites just “show up”. In my experience, the CEO, CIO, or a VP in Sales has a “friend” who now works at a company that makes a product that “…might be a good fit.” Congratulations Product Manager, the question is no longer “if” but “how” to partner.

    Ultimately this all boils down to makeing a good Product Mangement judgement call. As Jeff mentioned, speed to market is always a key factor in decision making; however, after you meet with the new potential partner, what is your gut telling you? If you don’t come away with a good feeling, then it’s time to put the breaks on this partnership. We all know the drill here: start by creating a joint benifit story, create some joint marketing material, determine how to do “screen level” integration, and basically drag your feet in order to see how things play out.

    You would be amazed at how quickly bad partnerships can fade away. Poorly run companies run into financial problems, internal supporters of bad partners move on or get fired, etc. As a Product Manager we don’t always control who we are asked to partner with. However, we can have some control over how the relationship rolls out and how quickly it develops. In the end, that may be all the power that we need to do a good job.

    – Dr. Jim Anderson
    Blue Elephant Consulting

  2. In the slides, there is a mention of post-sales support. Try reframing post-sales support as the pre-sales support for the next upgrade sale, or cross sell.

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