Automated Transcript
Wesley: Hello and welcome to the Partner Strategy Network Podcast. I'm Wesley Coelho and I'm here with Mark Sochan, Hey Mark!
Mark: Hey, Wesley, how's it going this week?
Wesley: Doing well, pretty excited about today's topic. Today we're going to talk about how to prioritize your strategic partnerships. You often want to pursue a number of these, probably more than you can handle at once.
And, looking forward to learning how we can prioritize the ones that are the most important. First of all, what do we mean by a strategic partnership?
Mark: Well, I define a strategic partnership as a partnership that can create an outcome that can 10X your business. And we're talking here about the partnerships with the big players. I call them the elephants of the industry, companies typically bigger than a billion dollars in annual revenues. These are the companies that have a big customer base and a big brand, which you can leverage.
That's where you get the big results. Focusing on just the smaller mid-sized, partners in companies, you just can't get that same 10X advantage.
Wesley: Got it. And are there any other reasons why you would want to pursue these strategic partners that are so large?
Mark: Well, there's three big reasons for going after these big elephant strategic partnerships. The first is customer base. These guys have a massive customer base and you want access to that customer base through a strategic partnership. The second is brand leverage for market credibility.
I mean, these guys have a big brand and you want to attach yourself to the gravity that they can create in the market for you. And the third is, if a strategic partnership goes well, it can also open up pathways to exit. In other words, creating opportunities for potential M & A. And there are side benefits, such as investor enthusiasm.
You can generate more interest in your next round of fundraising, as well as employee excitement. The team really feels the excitement. They like the feeling that things are happening in their company.
Wesley: Okay. So there's a lot of good reasons why you would want to do these. And I can only imagine it's a tremendous amount of effort and you're going to need to prioritize which of these strategic partnerships you want to pursue. How do you recommend people prioritize these partnerships?
Mark: Well, it is a big investment and typically it takes at least nine to 12 months to get these strategic partnership efforts to bear fruit. In my book, "The Art of Strategic Partnering: Dancing with Elephants", I talk about the use of the Top 10 Strategic Partner worksheet. It's an exercise that you can run in a workshop with your key stakeholders, management team members, board members, and advisers.
You get everybody in a room and you start by brainstorming on what I call the blue sky partnerships.
If you could have any partnership, who would they be and what would they look like? Next you start to add information about those partners to the worksheet that helps you rank and prioritize the strategic partnerships that are the highest value for you to pursue.
Wesley: Okay. So you've got everybody in a room and they're dreaming up the partnerships that they'd love to have. What are the most important bits of information that you want to capture on that worksheet?
Well, lots of information. I forgot to mention that you never just want to pursue one partner, instead you want to take a portfolio approach to maximizing your chances of success. But the key piece of information to capture is the annual revenue of the perspective of partner. As I mentioned, $1B plus annual revenue is typically the 10x kind of partnerships you want.
Those are going to be with the elephants in the industry. Those are the companies with annual revenues of at least a billion dollars, of company revenue. The second is the key competitors and competitive threats. You have to understand the landscape that they're dealing with. Understanding innovation gaps they might have or missing product features or missing services. And then finally you start to quantify it by giving a rating one to 10, what will be the value to your company? If you could nail this massive strategic partnership deal, won't be the value that you bring to that partner.
And then thirdly, on a scale of one to 10, how difficult would it be to execute the deal? And then the worksheet has weightings in it, to calculate and generate a priority ranking. I think one of the real benefits when you do this exercise as part of a management team, is it gets really exciting to get everybody on the same page of envisioning some really big opportunities.
Wesley: So you've got this priority ranking of these partnerships as a result of the workshop and the exercise. And then do you consider that to be a hard ranking? Pursue this one, and then pursue that one, or more of a directional indication, these are generally the higher value partnerships to pursue.
Mark: Well, it gives you a starting place. It helps you brainstorm on a set of assumptions and come up with, an assumption of who's number one, who's number two, who'd be number three that we'd like to do. Sure. And then you go and actually reach out to these partners on the list and try to get some meetings so that you can have smart conversations and test your assumptions.
And the thing that I've always seen is that with every meeting, you have with a prospective strategic partner is you learn things. You learn things about how they think they learn about what they like in your pitch and what they don't like. And so you get smarter for the next meeting.
Wesley: Okay. A couple more questions about the list. How many partners do you generally want to arrive at when you're doing this exercise?
Mark: I think you want to generate at least 10 and you can go bigger. You can go up to 20 or more, but the important part is you don't want to get stuck with just one partner or one or two partners. It's hard to know from a time perspective where the opportunity is going to be. And so you want to be able to reach out to multiple.
And the other thing I've seen from experiences, sometimes you have to get a deal with number three partner on your list to be able to catch the interest of partner number one on your list.
Wesley: Makes sense. And so let's say you're going to dedicate one person full-time to go pursue these partnerships. How many can they tackle at once?
Mark: they can try opening up many meetings at the same time. And then depending on the response, you can space out in time, your meetings as you have resources.
Wesley: Okay. So you might go after a whole list of say 10 partners at once and see who bites?
Mark: That's exactly it.
Wesley: Great. Well, thanks for sharing this helpful information about the workshop that you run as well as the Strategic Partner Top 10 Worksheet. This worksheet is available for download in the podcast show notes. Feel free to go get it there and come join the discussion at the Partner Strategy Network LinkedIn Group.