Strategic Partnerships for Early Stage Startups
By Mark Helfen
During his July 13 presentation to the SDForum Marketing SIG, Brad Reddersen played off the well known quote (and book title) that "it takes a village to raise a child," changing it to "it takes a valley to raise a company."
Reddersen is CEO of Stranova, a consulting firm that focuses on strategic planning through the use of Business Ecosystem models. In his experience, finding the right set of strategic partners is a key factor in the success of a startup business.
"These are people who are going to be with you for a very long time," said Reddersen. "A strategic community, not just partners."
The ideal place for a startup is to either create a new business ecosystem, or find an existing one where it can take a critical place, and this requires strategic partners.
Reddersen described a process or methodology to find a good match in strategic partners, first by carefully defining your business in the broader marketplace, and then evaluating potential partners. There are three steps or factors to consider.
I. The first step is to define your companies core essence. Reddersen lists three factors in your essence - the new field you are trying to create with your business, your core processes, and you're your core values.
The field is the environment, or ecosystem that the new business will either create, or fit into. This is the complex web of products, processes, services, and companies that provide value to customers.
The core processes are the way you supply value to your customers. Reddersen uses the example of the iTunes store, which while not a startup enterprise, was a startup business for Apple. The core process in this case was to supply single songs, at a fixed price, available for easy download, while preserving digital rights management. Since no on would pay to hear Steve Jobs sing, finding partners with content (record labels) was key to the iTunes store (and the iPods) success.
Core values define the positioning and competitive place of your business or products. For example, it could be where your products will be priced, how they will compete. Another example of values are attached to companies in the green space, and how they will effect the broader environment.
II. The second step it to understand at what level you want to compete in your ecosystem. He defines six levels of competition, from the lowest - your product meets minimum standards, to the highest - your company sets global standards, and your business is critical to the business ecosystem. Partners should want to live at the same level in Reddersen's model.
III. Third, decide on the type of strategic partner that is the best fit. There are three types - operational, product or service related, and blockers or enablers.
Operational partners help your company function more effectively by providing part of the product or service your offer.
"Don't do it all yourself, " said Reddersen, "[find] who can you go to, who can you partner with."
Product or service related partners provide a value added product or process, and depend on what type of value add your company and your potential product offer. Redderson has a six part model of different types of value adds.
Finally, blocker or enablers. These are partners that enable you to get into a space you couldn't on your own, or block a competitor from the market.
According to Reddersen, a good strategic partner will share five characteristics with your company:
1. Common business objectives.
2. Complementary strengths.
3. No obvious collision courses.
4. Common business practices.
5. Common competitive threats.
You can get more information, and a copy of his presentation materials, by contacting Reddersen directly at: email@example.com
Mark Helfen is a freelance writer, journalist, and marketing consultant. He can be reached at:
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