Don't Go It Alone: How to Use Partnerships as a Growth Strategy Partnerships reduce costs and help companies operate more efficiently.
Opinions expressed by Entrepreneur contributors are their own.
One of the most important things I've learned as the founder of multiple businesses is how to find partners that can enable growth and support your company vision. Partnerships are more vital than ever -- the economy is changing at an unprecedented pace, and working collaboratively toward a common goal increases speed and better serves customers.
Partnerships cannot be transactional. Think of the difference between an ATM and a personal financial adviser -- the former gives you access to cash whenever you need it, but the latter helps you develop a long-term strategy for making investments and managing your money. Both are providing financial services, but one is a true partner while the other is a machine that spits out cash when you press a button.
Partnerships reduce costs by giving companies access to technology and other resources that would be far too expensive to develop on their own. They also help companies operate more efficiently by allowing them to focus on the things they do best. These are the reasons why partnerships will continue to give companies a robust competitive advantage in the coming years -- but only if those companies choose the right partners for their specific needs.
Understand your market and find partners that will help you tap into it.
Partnerships are particularly important in retail, which is undergoing a series of major changes -- from the relentless growth of mega online retailers to the digital transformation that's taking place more broadly. While brick-and-mortar stores are still the mainstay of the American retail world, ecommerce platforms are consuming more and more market share. And while Amazon goes it alone, becoming everything for everyone, all other retailers are adopting best of breed partners to help them not only compete but create a customer experience advantage. These partnerships can generate a huge boost in customers and meet their needs with improved experiences at every stage of the transaction.
There are plenty of examples of retailers working with digital platforms to extend their reach -- like the recent partnership between Macy's and Buzzfeed's Goodful. Macy's will offer 100 Goodful products (such as appliances, kitchenware and other home products) in its stores and online, providing the brand with a much larger distribution platform and increasing brand awareness. Meanwhile, the partnership gives Macy's access to the 45.2 million consumers Goodful reaches every month -- many of whom are millennials.
It's no surprise that one of the most iconic brick-and-mortar retailers in the world recognizes the importance of forging creative partnerships to expand its ecommerce operation. As the market continues to shift online, successful companies will need to search out dynamic partners to help them keep pace.
Partnerships help you overcome your technical limitations.
We're in an era of rapid digital transformation, and partnerships are often the only way for companies to keep up with the surging pace of change.
Whether you're searching for a better way to collect and analyze consumer data or trying to improve user experiences across devices and channels, there are plenty of potential partners that specialize in these areas. By forming relationships with them, your company will save money, tighten its focus on core business objectives, and bring its technology solutions into closer alignment with those objectives.
The largest tech companies are taking advantage of the unique capabilities offered by strategic partners. For example, the recent partnership between Google Cloud and Atos will provide both companies with access to technology solutions, shared facilities and human capital that will help them take full advantage of their respective digital platforms. Google Cloud will benefit from tightened security and new collaboration tools, while Atos will use Google's machine learning platform to develop "industry specific solutions across multiple verticals."
As industries become more fragmented (particularly in the technology space), companies are developing increasingly specialized expertise. This means partnerships are more pivotal than ever before -- they close gaps in your knowledge, provide technology that would be too expensive to develop internally, and give you access to a broader range of customers.
But, execution of partnerships is hard.
While strategic partnerships can accelerate a business -- and most startups would love to work closely with larger brands to help solve a shared problem -- the execution of this strategy is hard. Porch has had to make our partner capabilities a core part of our DNA, which impacts how we work (running cadences that align with key partners), develop products (to ensure high quality), improve the customer experience (as this represents not just us, but our partner), and assure customers that we stand behind our service (100 percent guarantee).
When companies form partnerships with one another, it's essential to make the experience as frictionless as possible. One of the best ways to ensure that a new relationship is healthy right from the start is to seek out companies that share your perspective and approach business in a similar way. This will make it easier to integrate your workforces, complement each other's products and services, and bring your technology assets into alignment.
Let's take another look at the Google Cloud-Atos partnership. Both companies are investing heavily in machine learning and artificial intelligence (AI) research, and they've both developed a wide range of cloud-based solutions for their clients. They recognize that the future of the digital transformation lies in AI and the cloud, and they have built their workforces and technical infrastructure around this fact. Now Atos is establishing new innovation labs in the U.S., Britain and France, and Google will provide machine learning experts from its Advanced Solutions Labs to assist in training efforts.
When companies have similar cultures, they can establish creative partnerships that add value for customers across the board.
In 2015, Starbucks joined forces with Spotify to provide what it described as a "first-of-its-kind music ecosystem." All Starbucks employees received subscriptions to Spotify Premium, which allowed them to come up with their own in-store playlists. Meanwhile, Spotify users were given access to more than two decades of Starbucks playlists and offered points in the My Starbucks Rewards program. Starbucks has made music a central part of its customer experience for decades -- from the promotion of new artists to its Artist Choice series (playlists chosen by the musicians themselves). This made its partnership with Spotify a natural fit.
Your company should always be on the lookout for potential partners that share your vision, understand your market and can help address any limitations you might have. With the constant diffusion of knowledge and technology -- as well as ever-increasing specialization and competition -- it has never been more crucial to find partners that will enable your business to grow. And if a partnership strategy is right for your business, go all in, as anything less just won't get it done.