Moving partnerships: from cutting costs to creating experiences

The first thing that comes to mind when partnerships are mentioned, are ideas of getting access to a partner’s scale of operations, or to some unique competence they have. Both could have implications for making your business run more efficiently.

You look at your production process, and figure out what parts of that process are lagging on your end, and can be taken over by a partner.

Pharma companies like Johnson & Johnson for instance, outsource parts of the process for clinical trial in this way. They leverage patient organisations for mobilising testing subjects, or universities to support and combine research and analysis.

Although it’s effective, this is still a conventional application of partnerships. These activities, make Johnson & Johnson run better, creating, and shipping products at a higher pace. But they don’t make the business run any different in a sector that is challenged by rising insurance costs to patients, and increasing dissatisfaction over the quality of medical care.

The other way
Things are changing in the world of business collaboration. It’s becoming easier to experiment with partnership linkages and coordinate them through new technology, even when crossing over industry boundaries. Companies forging partnerships like Spotify & Uber, or Yummly & Instacart are doing just that, hunting for new opportunities to bring their existing products into new customer experiences. These partnerships enhance existing products and services in new ways: Personalise your taxi experience with the music of your choice, or get within-the-hour home delivery of the ingredients you need for that recipe you found.

In order to enable partnerships to create value through new customer experiences, partnership design needs to shift away from conventional thinking in terms of the production process, its associated steps, and then determining who can do it more efficiently, and effectively.

The alternative is to look at the full customer journey: from how customers discover your product or service, to how and when they use it, to when they finish with it. From this overview the partnering question becomes different. It turns from “where can you make our company run more efficiently?”, to “where can you add to or deepen our customers’ experience?”. A decisive change in reasoning that can overhaul a business model.

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Link up with other partnership professionals? Advice or input on your partnership design? Join the Partnership Design Linkedin community!

How to prototype, and test your partnership, before launching it; Shopify-Uber

Brennan Loh of Shopify, talks about designing the prototype for their partnership with Uber.

This is the way that many successful and innovative partnerships come to be. It’s not about the big idea, and the big name involved, and then having all the rest fall in place.

It’s about performing experiments to find out if:
a) there is really a fit between partners,
b) and if the value created in a partnership will actually have enough impact to each of the partners’ business models for them to remain committed.

Brennan describes how to do it lean. Start with a small project that could reasonably generate a small win. Only after trying a couple of things, and creating a series of small (and growing) wins, a model for collaboration is revealed that has significant impact for both.

The Partnership Canvas is designed to guide you through this particular job of partnership design and experimentation. First, it challenges you to find out whether your partnership idea has a fit with your partner’s perspective. Then, you perform a Value Check, and a Cost Check on your business model to define testable hypotheses to find out whether the benefits outweigh the costs for both partners.

Find out more on the Partnership Design process here.

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Link up with other partnership professionals? Advice or input on your partnership design? Join the Partnership Design Linkedin community!