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Real Life Pitfalls establishing Partnerships

Partnerships in the business-to-business (B2B) context can be highly beneficial, but they also come with potential pitfalls that should be carefully considered and managed. I’ve been blessed to work with many outstanding partners in very different capacities during my tenure. To this day I still experience organizations not able to make partnerships work for a number of reasons. In advance of the post about how to set partnerships up for success, in this post I’m sharing some common pitfalls in B2B partnerships:

Misaligned Goals and Objectives: Partnerships will falter if the involved parties have different long-term goals or expectations, e.g., in the early days of customers adopting public cloud it was great to work with specialized boutique companies who delivered tons of value supporting customers with foundational work. However, it turned out that they were not the right partners when the customer decided to move 80% of their IT to the cloud. The reason was simply that they didn’t have 100+ employees who would have been able to migrate thousands of applications.

Business Model Mismatch: Similar to the previous point but different is when there is a mismatch with regards to the business model. This represents a significant blocker and companies must avoid spending time on it. E.g.: A cloud provider likes the fact that a traditional reseller has an existing business relationship and existing contracts with a targeted prospect of the cloud provider. The reseller sees the partnership as a way to provide modern cloud products to the customer. The mismatch is, that the reseller has a business model where they give away services for free and live from the margin they realize with hardware and software. Another, simple case is when a low code provider partners with a traditional software development company. It won’t work out because the software development company is successful when most of their staff is utilized. The utilization is harder to obtain when low code usage leads to less traditional coding effort.

Overestimating what hyper-scalers will do for you: Companies regularly overestimate what hyper-scalers will do for them when they sign a partnership agreement or get listed on their marketplace. These companies expect that the hyper-scalers will actively sell for them. They won’t, especially in the beginning. One reason is that GCP, MS and AWS each have over 100 services on their own. How can one expect that a sales person in one of these companies can spend time learning about 3rd party products and sell them effectively? The other reason is that each of the hyper scalers has thousands of partners and mostly cares about customer success rather than actively pushing one provider over the other in a technology area.

One size fits all: It is wrong to assume that one type of partner is enough to reach market leadership. There are different partners with their own strengths and weaknesses serving different segments of the market, e.g., a partner might be well established in one vertical but not in another one, a partner might be great to support the customer during the first steps using a new technology but not at operating a managed services, etc.

Lack of Trust and Poor Communication : Trust is the foundation of any successful partnership. If there is a lack of trust between the parties, it will hinder collaboration and prevent the sharing of crucial information. Building trust takes time and consistent effort. You get a similar effect when communication is inadequate. It will lead to misunderstandings, delays, and friction between partners. Establishing clear communication channels and maintaining regular updates are essential to the success of any B2B partnership.

Disruptor focused only on Competitors: For a Disruptor to successfully position its product or service it is not enough to only focus on their competitors. The entire value chain needs to be destroyed and built again. This also includes the disruption of the ecosystem. For example a Disruptor has a new Customer Relationship Management or Service Management product. When they want to win one of the leading Global System Integrators as a partner, they are confronted with hundreds or even thousands of employees already doing projects based on Salesforce or ServiceNow. Just pushing the partnership agreement will not be sufficient.

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