Strategic Intent and Creating Value in Partnerships

This last summer I was fortunate enough to sit by the Lausanne lakeside with Alexander Osterwalder, and Alan Smith, co-authors of Business Model Generation, and Value Proposition Design, to review my progress on the Partnership Canvas.

The Partnership Canvas has been gradually spreading throughout the world. I’ve been able to make countless observations on how business practitioners use the tool, how they interact, working in teams, and how the canvas helps to structure a process for collaborative innovation. So, it was high time for some reflection.

A question on Strategic Intent
The discussion with the Alex, and Alan was one that lies at the hart of the issue of creating value through partnerships, namely about its connection to strategic intent.

The experienced business tool makers quickly honed in on the Created Value building block of the Partnership Canvas. They pointed out the necessity of emphasising the relation between a defined strategic intent and the created value in a partnership. These need to be aligned for partnerships to contribute to the core strategic priority of the organisation.

Alex, and Alan’s question on the Partnership Canvas was whether strategic intent, and created value were actually the same thing, or if they were different. I could relate this question to behaviour I’ve seen in workshops with regards to the created value building block, where people tend to conflate intent statements with created value from the partnership.

This question made me realise that the distinction, and the relation between strategic intent, and created value in the Partnership Design process is not obvious, and needs to be addressed explicitly to make the Partnership Canvas more intuitive to apply.

Defining Strategic Intent
Strategic intent is defined by two assessments: Firstly there’s the business model SWOT assessment, which takes into account the interaction between the business environment, and the business model: what are the opportunities, and threats that the business model is facing?

Secondly, defining intent involves understanding the vision behind the business model, and assessing whether there is still a fit between that vision and how the business model is currently set up.

The statement of strategic intent flows from these two assessments. The intent statement explains why to change the business model, and in which direction to take that change.

What is the Created Value of a Partnership?
The created value building block of the Partnership Canvas constitutes the output of the collaboration. By combining value inputs from both partners in a collaboration activity, value is transferred between them. This collaboration enables the creation of a new form of value for each partner, which they can apply to their business model.

Putting Strategic Intent, the Partnership’s Created Value, and Business Model Innovation together
The value that a partnership needs to create is consequent to the definition of strategic intent. Whether the value created in the partnership actually succeeds in serving the strategic intent, is determined by the business model.

“Value is created in the partnership, but needs to captured in the business model”

The created value from the partnership could for instance be an expansion, or deepening of a value proposition, or building a channel together with your partner. But it isn’t until this created value is put to work, that you’ll find out whether you’ll actually meet the objectives you set out with.

So, rather than equating created value from a partnership to strategic intent, the created value is actually the bridge between the intent the business model innovation starts out with, and the outcome of that journey.

Intent-Outcome
Intent ——- Created Value ——- Outcome

An example visualising the link between strategic intent, and creating value in a partnership
To demonstrate the logic of linking strategic intent to the created value of a partnership, I’ll give a partnership example below.

This example concerns the partnership between IBM, and Apple, announced in 2014. For IBM, the strategic intent was to improve their users’ experience, by offering their enterprise-grade secured software on a more user-friendly, and better designed device.

IBM’s business clients’ employees were already carrying their own Apple devices into the office setting, because they preferred Apple’s technology over the non-Apple devices that their employer would equip them with. But there was no way to formally support these devices within the office setting, because IBM couldn’t access them. The partnership, however, enabled IBM to deepen their value proposition by getting access to Apple’s superiorly designed hardware, on which they could run their enterprise-grade secured software.

Apple_IBM
The created value from the IBM-Apple partnership design

For Apple, the intent of the partnership was to get a stronger positioning in the enterprise market for their devices. Essentially Apple is designed to serve a consumer market, which puts the company in a juxtaposition to serving an enterprise market.

Through the partnership with IBM, Apple created the channel they need to sell their computer devices to enterprise customers. This was a breakthrough channel for Apple to the enterprise market, something that might have cost them a decade to build themselves, if they were to achieve it at all.

The question for this partnership does remain how it’s performing up till now. But a peak onto Apple’s website shows that they’ve started engaging with more enterprise partners, expanding the area of application of their devices; an indication that things are moving ahead.

Conclusion
Alex, and Alan’s question on strategic intent in partnerships touched on an issue that I implicitly address when I apply Partnership Design. But having the question on the link between intent, and created value pointed out explicitly, enlightened my thinking on building the strategic argument for partnering, and helping to drive the partnering process towards its intended innovation objective.

The importance of understanding that the created value of a partnership is the bridge between intent, and the business model innovation can’t be overstated. Because being able to get an agreement on a partnership doesn’t imply that you’re also able capture the value that you intended for.

It will always require (repeated) effort to test whether the value from a partnership can actually be captured. The conclusive pass of fail mark for the partnership can only be given after several stints of disciplined business experimentation.

(A great many thanks to Alex, and Alan for the discussion, and taking out the time to dig into the Partnership Canvas!)


Interested in a learn more about Partnership Design?
If you want to learn more about using the partnership canvas, then check out our Partnership Design training options, and other ways we could support you and your team.

You can also join the Partnership Design Linkedin group!

Direct contact? Send an email: info@partnershipcanvas.com

Partnerships with early stage ventures

“When is the right time to think about partnerships?” is a question often asked about early stage ventures. Often, in turn, the frequent advice is to first get your own shop in order, before thinking of collaboration.

Although there is some truth to this advice, demanding a fully validated business model before starting with partnership strategies is bullshit blanket advice. There are more nuanced ways to address early stage partnering risks!

My advice to early stage venture partnerships, or to established companies that want to work with early stage ventures is to sense-check the potential of a collaboration. Here’s some pointers for doing this, covering the biggest risks:

  1. Know your X-factor. You could have a technology, a hard to access user-group or community, and unique expertise that might be a resource for others to leverage. Scan for that something you have, which you can amplify, and which also has the potential to amplify someone else.
  2. Mingle with the right people to sculpt the collaboration. There are people with specific mindsets for exploration, and those with a mindset for exploitation. Either persona strongly impacts the type of conversation you’ll have about your partnering. The former might be blunt, and start with saying things like “it’s a joint venture or bust!”. The explorative mind is a better prospect for shaping the early stage venture collaboration. Seek out the people who are willing to invest the time with you in defining a joint hypothesis for the partnership, things to experiment on, and discover.
  3. Causality is king! Figure out a theory what the business value of the partnership could be. Define testable ways for how the partnership could change the customer experience in both partners’ business models! And remember, it’s never about the experience the partnership causes to you, making a splash in the media, standing besides a big name brand on a press release. It’s all about the experience the partnership causes to your customer.
  4. Keep money out of the equation. You don’t know what value the partnership creates yet. On top of that, a partnership works best for you when you can capture its value within your own business model. Build a narrative for an equitable business case, where both sides stand to gain from the partnership’s created value, and work from there. The money equation will reveal itself when you’re testing, and seeing how revenue from the partnership will actually distribute over both partners.
  5. Be prepared.  According to KPI, the law of partnership design says that for every 1 hour of making great ideas with your partner, you’ll need to spend 2 hours convincing your own team of their merit. Make sure you involve the right decision makers, and apply the partnership design process in a simulation before engaging with the partner. That way you anticipate many of the “yes buts” from your own team on design decisions. It shifts the process from a drudge of iterating on partnership meetings, to constructive creativity of iterating on partnership execution.

There is no clearly defined graduation moment for your business to start partnering. Play with partnering strategies as early as you think it makes sense to do so. Tools like the business model, and partnership canvas are made to explore such what if scenario’s. By applying them in a short strategy session with your partner, your team, or even just for yourself, the tools give you enough sense to determine whether you’re at the right time to partner, or to determine when you will be.


Keen to learn about innovating with early stage venture partnerships? Join us in the Partnership Design Masterclass on September 19th in Amsterdam.

You can also join the Partnership Design Linkedin group to interact with the Partnership Design Community.