The Partnering Surge
When speed counts, partnering is definitely an effective strategy for bringing products and services to market faster. That competitive edge helped influence Michigan’s governor’s decision regarding competitive proposals for a high-tech proton beam cancer radiation facility in the state of Michigan. Beaumont Hospital, ProCure Treatment Centers, is contributing $13 million, will attract other investors to fund the project. The governor wanted to avoid delays in bringing the technology to market and decided Beaumont’s proposed approach would succeed faster than the approach in a competing proposal from a consortium of six health care institutions.

The global economy is causing a surge in partnering arrangements to accomplish organizations’ visions and goals. It’s a proven model for quickly and efficiently expanding into new territories, as it breaks through virtual and physical boundaries.

Striking out for success in a new territory—secure data sharing—data specialist Avox Limited and Xinhua Finance, China’s top financial information provider, have formed a strategic alliance. The partnership will enable Chinese financial institutions to enhance the quality and availability of their own data in order to effect timely compliance and risk control at the institutions, which is a requirement of Basel II and other global standards regulations. It’s a win/win alliance, as Xinhua will be a “bridge” for Avox to expand its market share into China and Taiwan.

Four US states are partnering with Canada’s British Colunbia on energy and climate challenges in the in their Pacific Coast region.

Being the first to come up with solutions for new problems is a highly competitive activity, and many organizations are banking on partnering approaches as the best way to  achieve their objectives.

Drilling to do testing on underground sites to prove feasibility for underground storage of carbon dioxide is the joint objective of three energy companies, the Kentucky Geological Survey, and several private partners investing in the project. The feasibility project is key to the state’s future, as Kentucky’s high production of coal for more than 90 percent of the state’s electricity is a major contributor to carbon dioxide and global warming.

25x25 is not a measurement. It’s an alliance of 700 U.S. grassroots agricultural, forestry, conservation and environmental organizations collaborating on renewable energy initiatives. What could enable 700 groups to work jointly? How about a return on their efforts to the tune of four to five million new jobs and $700 in new economic development annually?

A wind company in Minneapolis is partnering with land owners in two counties on a community-owned partnering project to generate electricity to power 75,000 homes in the community. The land owners will participate in the development process. 

The University of Washington has developed WebAnywhere, a tool that reads Internet text aloud to blind people without their having to purchase or install any software on their computers. Now it is forming an alliance with technology nonprofit group Benetech to make the group’s 30,000 electronic books accessible to blind users over the Internet. 

If you think partnering with other people is challenging, check out this unique partnering approach: collaborating flying robots managed to transport a load without human intervention. Just think what collaborative robots communicating about ways to do various tasks together might do next—maybe your job?

Doing What Failures Don’t Like to Do
Messy—that’s the word some people use to describe mergers of nonprofit agencies. In addition to the usual array of challenges in mergers, nonprofits suffer such problems as the loss of volunteers. In a nonprofit agency such as the Red Cross, the loss of volunteers could have drastic outcomes in capability to provide services to citizens and clients. Another drastic impact to operational capabilities is that organizations that have previously been funding both agencies often drop their total support for the merged agency. Studies reveal that nonprofit mergers are more successful with advisory services helping them develop a new vision, institutional pride, leadership, etc. for the merged group.

When it comes to partnering, the risk of failure is high. But there are proven strategies for building and sustaining great partnerships—even when nonprofits and government agencies are involved. There are also many good examples to use as models. A successful example of public-private partnering is the city of Hampton, Virginia’s Healthy Families Partnership. It proved over time that a community can reduce its social services costs per child by spending funds and efforts on the prevention side, eventually leading to lower spend on the treatment side. A coalition of public and private oranizations in the Green Bay area has just launched a five-year initiative to achieve similar goals early in a child’s life such as reducing child abuse and neglect, reducing teen pregnancies, and improving readiness for school.

Nine organizations within Scotland’s government are partnering as Sears (Scotland's Environment and Rural Services) to reduce duplication and bureaucracy and speed delivery of services to farmers and rural land managers. In part, they are following successful models of other governments’ improvements in services including providing access to information and advice through a 24/7 contact center and a Web portal.

Pharmaceutical giant Pfizer and the University of Pennsylvania School of Medicine are building a new model. They have launched a partnership to collaborate on research and clinical care addressing several therapeutic area, with an initial emphasis on neurosciences and oncology. Part of their collaborative efforts will be building and implementing a new model for interactions between industry and academic medical centers.

As Pliny the Younger, a senator and philosopher in the ancient Roman empire, wrote, example is the surest method of instruction.

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Partnering: The Word that Starts with a W
Partnering arrangements require a win-win approach and mutually beneficial objectives. As business takes on more of a global perspective and new competitive forces, success requires more innovation and information-sharing solve new problems. It's difficult for any organization to go it alone.

A good example of a win-win partnership is IBM and Tokyo Ohka Kogyo (TOK). IBM is contributing its expertise in producing power cells, and TOK is contributing its panel-coating technology in a collaborative alliance aimed at developing more efficient solar power technologies. Leveraging each other’s capabilities, they aim to create a process for producing the cells cheaply enough to be financial competitive with other forms of generating electricity.

Another example: 37 leading UK food, retail and consumer goods companies--who are competitors--have formed a logistics alliance under the Efficient Consumer response program. Participants include Heinz, Kellogg, Kraft, Mars, Nestle, PepsiCo, and Unilever. By sharing vehicles and establishing more efficient warehousing, they each conserve diesel, reduce environmental impacts, and cut costs involved in transporting their products to consumers.

Two competitor newspapers are partnering to leverage their mutual printing resources. The Idaho Press-Tribune will begin printing the Idaho Statesman, The Idaho Press-Tribune’s printing press needs some upgrades, but the Idaho Statesman’s press needs to be replaced (at a cost of $30 million). The $3 million cash from the Statesman to the Press-Tribune for printing the Statesman will accomplish both companies’ needs and enable both to operate more cost-effectively in a weak economy and in the competitive Internet environment.

Two Chinese companies, IBMC China and BBS, that have agreed to partner through a merger involving an equity stake arrangement. The mutual win aspects? IBMC, which is opening international fashion brand franchise stores wins through the merger because organic growth in China is difficult. With the 60 retail brands BBS owns, IBMC will have 88 stores in China in just four months. BBS benefits because IBMC’s foreign resources will help BBS grow its revenue faster.

Many organizations are now combining their expertise and resources in partnering to develop alternatives to the production of ethanol from corn or cars that don't use gasoline fuel. Harvard University’s Office of Technology Development and biofuel company SunEthanol are partnering to collaboratively convert high yields of cellulose into ethanol. Mitsubishi Corp. is partnering with applied Intellectual Capital Ltd’s RedOx Biofuels unit to jointly commercialize thanol produced from non-food feedstocks. Mitsubishi is also teaming up with Peugeot-Citroen to produce electric cars and will share its expertise on matters such as how to prevent overheating batteries.

From Opportunity to Gotcha
The global economy is sparking new revenue opportunities, new legislation, and new challenges to resolve; and it causes many organizations to seek an external partner to help achieve their objectives. But there's an interesting phenomenon in many of these partnerships. Look at the following deals and see if you recognize a potential "gotcha" they each share, which could be a pitfall for successful partnering.

Exchanging ideas and working around barriers is at the core of a partnership on two continents. The Rehabilitation Hospital of the Pacific, based in Honolulu, Hawaii, and the China Rehabilitation Research Center are partnering to share expertise, research and integrate practice elements. Both organizations will send two physicians or specialists to each other’s facilities. The research center in China is doing stem cell research, and the stem cell research at the hospital in Hawaii is constrained because of the Bush Administration’s funding restrictions.

Meeting new needs and regulations also trigger establishing new partnerships. Brazil and the EU, for instance have formed a strategic partnership to deepen their cooperation in areas such as technology, science, climate change, the environment and education. 

And Japan and Africa are cooperating via Japan's Cool Earth Partnership. Japan will have policy consultations wiht African countires so they can balance their efforts in environmental protection.

Making the best use of the planet’s resources in a global economy is the goal for the Blue-Green alliance between the United Steel Workers manufacturing trade union and the Sierra Club, in the United States. Together, they want to pursue a joint public policy agenda to ensure good jobs and a clean environment and jobs that help with developing renewable energy and energy efficiency.  

Market entry and market share strategies also trigger organizations to form partnerships. The USA’s Office Depot has a new partnership with bigboXX in Hong Kong to help Office Depot expand its Asia business for multinational customers.

Access to financial resources is also at the heart of partnerships. Helping the Pacific Grove Museum of Natural History, registered as a national historic site, survive is the focus of a partner search in Monterrey, California for a public-private partnership. Managing and operating the museum—and its lighthouse—has already become a financial burden on the city, and the museum and lighthouse also need restoration.

More than 900 women professionals and government leaders from 70 economies attended the 18th Global Summit of Women (GSW) recently in Vietnam. Various public-private partnerships in these countries are focused on advancing women’s economic opportunities around the world, especially in the dynamic Asia-Pacific region.

So what do all these partnering efforts have in common? The partners in each instance are of very different cultures--from various nations to unions, to public and nonprofit organizations, to large private corporations. Their decision-making approach, conflict resolution approach, proactive or reactive patterns of communication, ability to trust, and other aspects are naturally disparate. In several instances, these partnering entities also have to deal with third-parties that are funding the partnership efforts and have their own expectations. These partnerships are tackling new areas and thus will face an even greater number of decisions and challenges. This scenario can difficulties in ensuring their interests remain aligned. Cultural fit is not automatic; it requires a significant effort to build a partnering culture. Without making that effort up front and on a continual basis for the term of the agreement, opportunities can turn into failure. Beginning a partnership without building that culture first is a "gotcha."

And we'll be keeping our eye on a unique public-private partnership aimed at helping the government scale resources up and down to see how it progresses over the next few months. The Commonwealth of Virginia is expecting a record turnout for the U.S. election in November and estimates it needs at least 10,000 more people to help at the polls. The commonwealth is partnering with several companies throughout the state, who have agreed to give their employees a day off to help at the polls.

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The Chances of Failing
“We're always two years away from failure.” So stated Bill Gates of Microsoft years ago. Somewhere out there is a competitor that will render your business model obsolete, he warned (“Thriving in the age of revolution,” by Gary Hamel and J. Sampler, Fortune Magazine, December 7, 1998). Hamel and C. K. Prahalad wrote in Competing for the Future (Harvard Business School press, 1994) that companies in the same industry tend to benchmark against their competitors to ensure they are doing the same things as well or better, but the reality is that they can gain no lasting advange from marching in step. A Thinking Managers article advises a remedy: look for allies to help you outgrow your rivals—find a partner.

That’s exactly what five Washington, D.C. universities are doing to improve their innovation and competitiveness capabilities in the D.C., Maryland, and Virginia regional economy. They found they were not doing as well as their counterparts in other regions when it comes to getting ideas out of the lab and into the marketplace. Part of their objective in partnering is to collaborate on locating funding opportunities that could rival Silicon Valley’s venture capital arena.

There’s also a rumor that Netflix and Xbox 360, both market leaders in their fields, are partnering to gain a competitive advantage by streaming Netflix movies through Xbox 360s into televisions. They’ll jointly leverage their technologies to jump ahead of less-user-friendly technologies for streaming online content into TVs.

Turning to external allies to help a business is also sometimes about helping the bottom line. Partners aren’t always focused on collaborating for innovative new products and services. Indeed, tough economic times are ideal for collaborating with supply chain partners, especially those that can help where cost is critical, supply is low, or the company needs to avoid waste. Sharing information about a company’s needs is the starting point for deepening collaboration and partnering activities with a supplier. It’s uncomfortable for many companies to take the risk to do this, but self-disclosure is one of the attributes of smart partners and is a skill that can be learned.

Germany’s shoe company Puma and France’s PPR Group are now a year into their partnership and give it rave reviews. What makes it work? Both companies have the same approach to business; they share a culture of innovation and entrepreneurial spirit as well as the same vision. And they have “skin in the game” as PPR bought a 64.3 percent share in Puma.

But back to the possibility of business failure—as Bill Gates warns, perhaps sooner than two years from now for many companies. Forming and sustaining partnerships also has a high risk of failure—60 percent of them fail. The main cause of failure: not understanding up front how to deal with the relationship and the business the partnership will jointly handle. As in a marriage, differences in decision-making and differences in resolving challenges or acting on opportunities are pitfalls. The good news is, it’s not rocket science to learn how to form and sustain a highly effective and profitable partnership.

Flexibility and trust are critical to succesful partnering. But don’t make the mistake of thinking that foregoing a formal contractual agreement will increase flexibility and trust. Baird Textile Holdings Ltd and Marks & Spencer Plc did that in their 30-year partnership but ended up in court, where the judge handed them a surprising legal decision.

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The P Word: More than a Word
Perot Systems and Harvard Pilgrim Health Care have won the “Best Partnership” award in the 2008 Outsourcing Excellence Awards. Both companies demonstrated a remarkable amount of flexibility as both companies' business environments and objectives changed through crises that occurred several times over the years. In addition, Perot Systems and National Life Group won the “Best First Steps” award. This is the third time in four years that a Perot Systems relationship has won the Best Partnership award.

Over the past few years, I’ve had the privilege of interviewing more than 650 executives in successful outsourcing relationships of leading companies worldwide, several of which were at Perot Systems and its client companies. Perot relationships truly stand out in partnering aspects and what the companies are able to achieve because of their partnering approach. What is partnering? I can honestly say that it’s what Perot Systems does. You can read more about the Perot Systems partnering culture, its four foundational core values, and associates’ corresponding behaviors in an article in the special supplement (Best Practices in Outsourcing Relationships) in the upcoming June 2 issue of Forbes.  

Is your company considering a strategy of growth through acquisitions? Beware M&A activity without first conducting thorough due diligence—you could end up like IBM, which acquired Cognos. Thanks to a whistleblower, Big Blue must repay $13 million to the state of Massachusetts for software that Cognos sold to the state through connections with the Massachusetts House Speaker.

What happens when one of two partners in a small business dips into the company finances without the other partner knowing? And what’s at the root cause of such sneaky behavior? A partnering advice column in a Canadian newspaper says it happened because the relationship soured and there was no trust. Effective communication and feedback could have prevented the situation, says the column advisor.

The senior vice president at Delta Air Lines also knows the value of communication and feedback. In a blog, she relates a decision shaped by an incident on her flight to Lagos, Nigeria, where she heard feedback regarding Delta’s commitment to the Lagos market, She says leaving the C-suite to get feedback and understand employees’ concerns and operational realities results in better decisions.

The chief executive of Coach, the leather and accessories company, wisely takes a partnering approach with the company’s customers. He refers to customer feedback as a “report card.” Recognizing that waiting for bad news is a risk, he observes first-hand day-to-day operations in stores and actively seeks feedback in several ways.

On an even grander scale of partnering, the President of China and his counterpart in the Republic of Korea announced they are upgrading their “comprehensive” cooperative partnership to a “strategic” cooperative partnership. China and Korea are deepening their partnership to enable free trade and also collaborate in the telecommunications, logistics, energy, and environmental protection segments.

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Help Wanted

What would you list as the top risk factors for your company? BDO Seidman's "2008 BDO Seidman Risk Factor Report for Technology Businesses" examined the risk factors listed in fiscal 2007 10-K SEC filings of the largest 100 publicly-traded US technology companies. The report states that the companies are stressing to shareholders that the 20 risk factors are high-priority issues requiring immediate attention. Five of the top risks often depend on partnering capabilities:

• Management of current and future mergers, acquisitions, or divestitures (86 percent)
• International operations (85 percent)
• Inability to develop or market new products and services (84 percent)
• Inability to attract or retain personnel, including management (72 percent)
• Failure to properly execute corporate growth strategy (52 percent)

In an interview about Procter & Gamble’s innovation strategy, CEO Lafley says the company had an external partner for 10-15 percent of the new products it brought to market in 1999-2000. In 2007, the number increased to several external partners for one-half of all the new products it brought to market. The strategy: partnering leads to more times at bat and, therefore, more hits.

The city of Charleston has created an alliance with the Community and Technical College System of West Virginia to provide a training program for entry-level employees. The goal: reducing turnover and giving employees skills they need to advance. The training will focus on such skills as communication, critical thinking, ethics and—notably—leadership and team-building skills.

Thermo Fisher Scientific has won the 2008 North American Frost & Sullivan Award for Market Leadership for its commitment to innovation and growth. Frost & Sullivan determined that thermo Fisher has an unrivaled ability to capture and grow its market share. It’s due in large part to its “unparalleled reputation for incorporating customer feedback in its products and services. 

No company can effectively go it alone these days, and some are wisely banking heavily on partnering strategies to achieve their objectives. Rio Tinto, the world’s second largest producer of iron ore has an objective to demonstrate its growth prospects in order to avoid a hostile takeover bid from rival BHP Billiton. It must also significantly expand its output because of anticipated Chinese demand over the next decade. Rio is seeking a Chinese construction group as its partner in developing a West African mine for which Rio will need to build a railway from scratch to transport the ore to the coast for export. The strategy is that the Chinese partner would facilitate building the project on schedule and on budget despite rising costs.

Notable: 

• "Being able to cause business alignment is the ultimate leadership competency -- getting people to be able to feel free to take risks and say things openly, to be empowered, have a common purpose, be interdependent and share a sense of ownership and excitement," says Pontish Yeramyan, Founder and CEO, Gap International, Inc. "This competency is definitely acquirable and can be improved. People can be specially trained to make alignment happen and the results can be extraordinary." (Source: PR Newswire press release, July 7, 2003) 

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What's Wrong with This Picture?

An Ipsos Reid study of 151 North American executives at companies with more than 1,000 employees revealed that 74 percent of the respondents rated their overall performance as a leader to be better than that of other executives in their industry and 65 percent consider their commitment to their own leadership development to be better than other executives. That’s quite a lot of horn-tooting. Just do the math—they can’t all be performing as well as they think they are. Regarding their participation in leadership development activities during the prior 12 months, the study found 19 percent had only read books and magazines; only 14 percent had gone through mentoring or coaching, and only 5 percent participated in a 360-degree assessment (which would have provided a realistic view of their leadership capabilities from employees' perspectives).

Equation Research conducted a survey of 2,556 senior HR and training executives on behalf of consulting firm Novations Group in December 2007. The survey found that the top five most common components of leadership development programs focus on tactical operational activities such as coaching a performance problem and communicating performance standards. Most leadership development programs were found lacking in focus on strategic activities including handling conflict situations, communicating vision and strategy, gaining commitment to goals, change management, acting on feedback, delegating responsibility, and managing a virtual team.

But at least one company has leaders who are doing better than others. The San Francisco Business Times has recognized Perforce Software as one of the “Best Places to Work in the Bay Area 2008.” The award program ranks companies based on employee satisfaction regarding their company’s team effectiveness, trust with coworkers, trust in senior leaders, individual contribution, manager effectiveness, and feeling valued.

This week brought news of another survey report—this one with a double whammy when it comes to organizational effectiveness. More than a quarter of U.S. executives responding to an i4cp and HR.com survey in March 2008 stated their companies undertook more than five major changes in the last year. Alarmingly, almost 50 percent of them stated the pace of change in their businesses is becoming hard or difficult to predict, and nearly 20 percent indicated they are poor or very poor at handling change initiatives.

A survey conducted by Gilleard Market Research, commissioned by technology firm Logicalis, reveals a huge gap in internal partnering and communication between CIOs and CFOs. The study found that 67 percent of CFOs receive IT budget requests lacking enough information for the CFO to intelligently respond, and one in four CFOs receive such requests on a weekly basis.

There was a spark of innovation in the past few days, resulting from partnering success. Oklahoma-headquartered Weather Decision Technologies and Texas-based Weathertop Consulting partnered to develop innovation in mobile phone experiences. Together they produced an award-winning “follow-me” mobile weather application. The product provides location-based severe weather feeds accessed from mobile phones with real-time Doppler Radar data overlaid onto Google Maps for any US location. 

And two mayoral leaders are partnering in an effort to tame their separate challenges. Innovation Exchange Programme, a transatlantic partnership between London and New York, is focusing on how both cities’ mayors can work together to explore lessons learned by both to overcome implementation challenges in key initiatives. The program will exchange personnel to ensure the cities develop ideas and policy proposals in partnership.

Notable:

• A study from 2002 – 2008 by the Center for Women’s Business Research and Babson College released at a recent national symposium (Research to Roadmap: Accelerating the Growth of Businesses Owned by Women of Color) reveals that African-American, Asian, Latina, and women of other ethnicities are starting businesses at rates three to five times faster than all other businesses. However, once in business, their companies grow slower than all other firms. The study found that top operations challenges include access to potential strategic partners, marketing competencies, and access to capital.

• More than 50 percent of mergers and acquisitions fail because of not understanding the requirements of integrating businesses and information technology, according to a survey conducted by the National Computing Centre in the UK in December 2007.  

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At the Top
In case you’re on the fence about whether to partner to achieve your strategic objectives, this week’s headlines definitely promote the advantages of this business model.

The second recognition-winner is the Cincinnati USA Partnership, which has been named one of the top 10 US Economic Development Groups of 2007. Its VP stated that the partnership’s strong performance over the past several years helped win the recognition.

Time, Inc. was presented with the Publishing Executive’s Publishing Innovator of the Year award. Understanding where there is a need and