I hope everyone had a great week.
I had the opportunity to participate in a fireside chat with Jon Van Gorp last week at Mayer Brown on the topic of “leading a values-based life.” It was a really wonderful discussion with an executive who is a wonderful example of a values-based leader.
I also had the opportunity to attend and speak at the NACD national convention. Khwaja Shaik and I participated in a fireside chat on the topic of “The Self-Aware Board-Leading with Values in the Age of AI”.
Greg Hedges, our Chicago Chapter CEO, made sure the meeting was both informative and fun!
My latest article for Forbes Magazine focused on why leaders should be cautious when discussing “partnerships”.
To increase the probability of a partnership being successful, I summarized four important steps:
-Set clear expectations
-Build on complementary strengths
-Established clear, elevating goal
-Pursue a balanced perspective for decision-making
Here is a link to the article, and the entire article is shown below
Partner. It’s a commonly used word in business, often meant to convey collaboration and suggest alignment around a mutual goal. However, based on my four decades of values-based leadership, I consider it a word to use with caution. Two companies calling themselves partners do not make it so.
Typically, partnerships involve one party committing to do “X” and another pledging to do “Y,” with the result expected to be far more than X + Y. Yet it rarely works that way. As Harvard Business Review states, partnerships can result in “conflict and even acrimony,” with up to 80% of partnerships failing within the first few years. In the case of joint ventures, McKinsey research shows that fewer than 25% achieve their initial objectives.
Addressing the problem with partnerships is not merely semantics, as if substituting some other term or label could solve the problem. Rather, it’s a matter of setting realistic expectations, creating genuine alignment and identifying areas of potential conflict before they arise.
The Problem With Partnering
Partnerships come in many forms, such as joint ventures, manufacturing and distribution agreements and co-branding of products. In the best-case scenarios, there is clear alignment around the purpose of the partnership and well-defined roles and responsibilities. An example is a hospital system that forms an alliance with a home health company. Each party concentrates on what it does best: the hospital treats patients requiring surgery or other acute care, and the home health company provides follow-up care after discharge. Research shows such arrangements improve patient health and reduce healthcare costs.
Even with a well-designed partnership, McKinsey observed, challenges become inevitable with “changes in partners’ priorities, market dynamics or ongoing operations.” Unforeseen competitive pressures can unravel even what appeared at first to be a promising partnership.
An example is BlueOval SK, a partnership formed by Ford Motor Co. and South Korean battery manufacturer SK Group in 2021 to invest more than $11 billion in three battery plants in Kentucky and Tennessee. Five years later, the two companies ended their partnership, citing declining demand for electric vehicles in the U.S. This is a cautionary tale for partnerships in a fast-changing environment. The assumptions that make a partnership attractive at the outset can change as economic, political and competitive conditions evolve.
When obstacles become too difficult to overcome and a partnership dissolves, the post-mortem analysis is often clear: the unexpected happened and there was no clear path forward. What if partners had taken the time to engage in a pre-mortem? This would enable them to anticipate what might go wrong, where obstacles could arise and where conflicts could surface.
Four Proactive Steps For Better Partnerships
Leaders need to be circumspect about the purpose and goals of a partnership, as well as self-reflective about why they want to pursue an alliance, joint venture or other arrangement in the first place. Here are four proactive steps that could increase success.
1. Set Clear Expectations.
Although this may seem obvious, it’s shocking how many times companies enter into partnerships with more assumptions than concrete expectations. For example, two companies establish a joint venture, each contributing a portion of its operations to a third entity owned by both companies. What happens a few years later when the joint venture needs a significant infusion of capital? Or when profits are generated and one party wants to reinvest capital and the other wants to pay dividends? The more clearly the operating plan is spelled out, with variables and scenarios anticipated and addressed, the more likely the partners will be better aligned at the outset.
2. Build on Complementary Strengths.
In my experience, the best partnerships are established on the complementary strengths of each party. For example, a biopharma company with strong R&D but little or no manufacturing capacity aligns with a much larger drug manufacturer. Bristol Myers Squibb, for example, stated that 20 of its 23 leading medicines are derived from such collaborations. When two companies come together for a specific purpose, complementary strengths establish a foundation for future success.
3. Establish Clear, Elevating Goal.
At the heart of every partnership is a team composed of people from both parties. The goal is to bridge their differences and encourage the team to realize that they are part of something meaningful and significant. I learned this years ago from a senior human resources executive named Frank LaFasto, an expert in organizational behavior who studied teams from NASA to IBM. He and I worked together at Baxter International, a $12 billion healthcare company where I spent more than two decades of my career and became chair and CEO. As LaFasto found, teams are formed by people with different strengths, skills and perspectives. The challenge is when their talents and experiences are so vastly different they undermine cohesion. What helps a team coalesce is a clear, elevating goal, which increases motivation and engagement. By extension, as the team comes together, the partnership is strengthened.
4. Pursue a Balanced Perspective for Decision-Making.
Once again, a lesson from establishing and managing teams: Discussions should be framed as collaborations aimed at achieving the best possible solution. Where this breaks down is when partners (and their individual teams) differ on the best approach for solving a problem or pursuing an opportunity. That’s why a process must be put in place in advance to discuss the facts and share ideas. I call this pursuing a balanced perspective, listening to multiple, diverse viewpoints as part of the fact-finding and decision-making. This helps people feel they were heard and increases the chance they will buy into whatever decision is made.
Partnership is much more than a word. It’s a discipline: establishing mutual goals, creating alignment and, perhaps most important, knowing how disagreements will be addressed and resolved before they happen. Otherwise, what looks promising on paper may very well end up being another unfortunate entry in the long list of partnerships that fail.
A critical topic right now. The federal government is always a bit perplexing; but it is impacting municipal government, too.…