A Process Diagram for Partnership Design

Where do strategic partnerships come into play when working on an innovation? To get some bearings , I’ve worked on a Partnership Design diagram, with the talented Emma Heijerman of JAM Visual Thinking. (see the visual below, and download it from slideshare for free!).

This diagram breaks down the Partnership Design process into 9 different steps. The visual aims to help in positioning your own partnership projects, and getting an overview of what steps come before partnership enters the innovation discussion, and which steps will follow.

In this blog post, we’ll go through each of these steps, and provide some references to support material to help get you underway to design game-changing partnerships!

Step 1. Challenge
It all begins with understanding the current challenge to the business, by examining 3 facets of the innovation. One is the business model at hand. The second facet is the business environment. The third is the vision for the business. By understanding these three facets, you can analyse what the current challenges, and opportunities are for your business model.

You can apply the following tools in this step:

1. Use the Business Model Canvas to map the business model.
2. You can use Strategyzer’s business environment map, to create an overview of the context in which the business model operates.
3. For defining a practical vision you can use the 5 Bold Steps template.

By combining the business environment map , and the vision statement, you can now perform a SWOT (Strength, Weakness, Opportunities, Threats) analysis, linking specific insights from the environment, and the vision, to the business model building blocks. The output is a solid argumentation of why you would need to change your business model in the first place.

Step 2. Ideation
Once you understand why you need to change, the next steps is to figure out how you could set in a course for change. There are many tools available to stimulate creativity in solving business challenges. Amongst those most used there are:

a. Napkin sketching for generating, and explaining ideas
b. The Four Actions Framework for making full use of the innovation spectrum, from eliminating, to reducing, raising, and creating new business model elements.
c. Option cards for getting a sense of the big questions that underly each potential business model direction

Use these exercises to generate ideas, and come to a selection that you would want to pursue.

Step 3. Partnership Intent
After you’ve chosen to run with a particular idea, the next step is to determine whether a partnership could help you in realising it. For this you can use the Partnership Intent Puzzle. This tool scans your own organisation to determine if you are fully equipped to execute on realising the innovation, or whether you’re missing a component, for which you might need a partner. The Partnership Intent Puzzle helps you discover whether partnerships are an optional route to realising your innovation.

Step 4. Partnership Canvas
If partnering is an option to pursue, the question is then what the partnership needs to look like. The Partnership Canvas provides a framework for designing partnership options, by bringing together the essential partnership building blocks. Use this tool to define how you intend to turn partnerships into a strategic fit for your business model.

Step 5. Shortlisting Partners
Now that you have an idea for the partnership, you need to start looking for potential partners who can fulfil the role. The Desired Value building block turns into a filter for selecting partners to work with. Look for the particular qualities you want to leverage from a partner, and create a list of companies that match those qualities.

Step 6. Engaging with Partners
Once you have the list, you can reach out to partners, and share your journey with them: why you need to change, why partnering is an option for you, and why you think that they area an interesting candidate for you to partner with. Encourage that partner to go through the same process. Guide them if they’re not there yet. Use this dialogue to create mutual understanding of the context for partnering. Once you share this understanding, you are ready for the next step.

Step 7. Partnership Design
The main objective of Partnership Design is to see if you and the partner have a matching perspective on the partnership. Is your partner willing to offer what you would desire to obtain from them, and vice versa? Do you have the same idea on how value will be transferred in your collaboration? And will that create the new asset you need for your business model?

Step 8. Hypotheses
So far you have been able to create a joint narrative for the partnership. This now needs to be put to the test! By creating an overview of the partnership, with the business model, and partnership canvas combined, you can derive the critical assumptions for the collaboration that apply to both partners.

By making clear what needs to be tested for each partner, you both understand what needs to be true before you are able to actually implement the partnership. For example: will joint branding with our partner lead to a larger reach, and will our partner benefit from our contribution to their value proposition?

Step 9. Experimentation
Having readied the hypotheses, you can start experimenting! A great tool for creating experiments is the Strategyzer Test Card. It helps you to structure your experiments, and document your learnings. Doing this together with your partner provides transparency on both ends on what each is doing to demystify the luring potential of the collaboration.

And lastly…
It is important to continue testing your critical hypotheses, until both partners are certain they’ve covered the biggest risks. The Partnership Design process and visual business design tool set is designed to provide guidance to realise this as quickly, and effectively as possible.

Jointly the Business Model, and Partnership canvas support better communication, and getting to concrete execution. As the former head of hardware partnerships at Spotify said to me about his rule of thumb for avoiding over-investment in creating partnerships:

“If we can’t get going with the partnership within a month, it’s likely not to work at all” – Pascal de Mul, Head of Partnerships at Deezer., former head of Hardware Partnerships at Spotify


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!

Reassembling the Value Network for Business Model Innovation

A company never creates value in isolation. There are always other companies involved in some way to realising and delivering the final product for the customer. Such value chains of companies optimise connections on their complementary capabilities, which enables each to focus on what they’re good at.

The composition of a car is a good example here. Car manufacturers design, and assemble cars under their own brand. But all the parts required for assembly come from different suppliers (for pistons, suspension, braking technology, seat manufacturing, etc), and distribution & sales of the car to the final customer is done through networks of car dealers.

Value chain analysis is great for supporting business as usual. However, when you need to shift your business to a seemingly similar, adjacent customer segment (as is often case in today’s turbulent business environments), the value chain’s usefulness breaks down. The solution lies in framing partnership relations in a different way, as I’ll explain in this article.

The Functional Value Chain
Value chain analysis is a great way to understand production systems. You sketch out the value chain for the product from its origin to the end consumer. The value chain shows the companies involved in value creation, and the sequence in which value creation is achieved.

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The linkages in the value chain can be used to describe the relation between each company in that chain. The value chain is a great tool to examine how and where value is created, and where the risks in the production system reside.

The Disfunctional Value Chain
The value chain approach works well for analysing very formalised, industrial production systems with a clear hierarchy in the organisation of production. But the knowledge that comes from analysing the value chain gives an elusive sense of control about the ability to actually change a production system.

The instant you want to focus on a different customer segment, or change your value chain, because a partner role is not contributing value (or has become obsolete) you start sensing the illusion. Change takes more than replacing some of the mechanics in a sequential production system.

When changing your company, and changing the value chain with it, you see that in reality you are part of a complex, highly interdependent, nested production network, that is designed to drive value creation towards a very narrow purpose.

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Attempts to focus on a customer segment outside of the scope of that system flushes up restrictive dependencies, and the configuration’s immune system will have you ousted, rather than change with you. You’re on your own!

This is what Unilever experienced with the recent hostile take-over bid from competitor Kraft. Though Unilever, and its customers are on a change route to sustainable consumption, shareholders remain with their demand of maximising shareholder value. The Kraft bid showed how Unilever has set each foot in a different value network, and that this inconsistency can painfully split a company.

Changing Partner Relations
Professor Tim Kastelle said it well:

“not only do our end users have to prefer our idea, but we also have to get others within the value network to stop using [and supporting] our competitors”.

In order to change your business model to serve a different customer segment, you need to draw in partners involved in other value networks, and lure them to investing resources into yours.

To achieve this, the perspective on partnership relations needs to shift from that of value chain efficiency, and scale, to that of value network discovery, and growth. This entails that partnership relations shift from tweaking business model efficiency, to a joint search for creating, delivering, and capturing new value.

This shift can be seen in Amazon’s partnership with an air freighter. It’s not that existing value chain partners like UPS, and Fedex aren’t able to work to the particular requirements  of Amazon’s operations. It’s more so that Amazon’s B2C customer segment is adjacent to UPS, and Fedex’s existing core B2B customers. They have different demands regarding delivery rhythms, volumes, and shipping rates than Amazon’s customers.

The Business Model, and Partnership Canvas: Tools that change Perspective
The objective is to define the logic of tying 2 business models together in an exercise of joint value creation. Search is required to figure out how you can collaborate in such a way that both your, and your partner’s business benefit from this new value.

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Partnership Design, which is based on Alexander Osterwalder’s Business Model Canvas, and my  Partnership Canvas, provides a way for achieving this. Partnership Design frames partnering as a business model innovation challenge. It brings focus to value inputs that partners can respectively bring to the table to jointly create a new form of value for delighting customers.

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By focussing on the potential of synergy between value offered, and value desired from each partner, discussions on relationships are framed around the merit of their creative potential. It allows thinking to escape the trap of conventions of efficiency in partnership relations, and upfront disqualification of new linkages due to differences in company size, market power, and assumptions about where industry boundaries lie.

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By looking at your partners one-by-one, you can start to gradually reassemble your value network, around a new customer segment.

The Business Model, and Partnership Canvas help teams to quickly flesh out key hypotheses. These need to be tested to verify whether the new relationship will add value to both their partner’s, and their own business model at the same time.

Continue the exercise for all the partners that you’ll need to build the value network, and watch the ripple effects change an industry!


Interested to learn how you can reinvent your industry through partnerships?
Check out our upcoming Partnership Design Masterclasses

Join the Partnership Design Linkedin group for support

Or contact me for specific questions.