An adage in business management is that the best lessons are learned from bad experiences. That´s why so many MBA case studies focus on what´s gone wrong, not right. I´ve seen and heard of so many bad business development and partner experiences I could have written an entire book on the lessons learned instead of writing about the best-of how to´s (like most publishers, McGraw-Hill chose to have me focus on the positive. Enough of that.
Lots of sites talk about successful and failed partnerships-and I´m going to skip the basic commitment/open-honest goal setting stuff. That´s great text book 101. You can see a complete list in The Partnerships Handbook. For entrepreneurs and Small Business owners I think the number one issue is bad decisions due to Unexpected Growth.
When you are so busy making bagels, payroll and suppliers, who has the time to deal with the unexpected win of landing the Marriott airline food service account. That´s what happened to a small business with awesome bagels. The partner dev person did what he was supposed to do-grow the business by winning large accounts. The first mistake was he didn´t check with the boss in terms of what the company could actually handle before creating a partnership.
This is Lesson Number ONE. Figure out the limits of the company BEFORE you make the first phone call. I will tell you from experience, this crosses all industries. The reason is as common as sand in the desert. "We´ll figure out how to supply (product/service) when you land the deal". How many times does a CEO, board member, VP of sales etc say this over and over? Along with the second line "it´s better to have a lot of irons in the fire." Please. Does anyone ever figure out what to do with all the hot irons if you have one cow to brand?
In the case of the bagel owner, he couldn´t hire, outsource or fulfill the Marriott account (yes, he was silly enough to take it on and give it a go) and lost it. Will he ever get another shot at the account? In the two years before Marriott got out of the food service business he wasn´t able to pitch the account again.
Another bad decision comes in the form of not Anticipating growth in the form of an actual contract. When an informal partnership makes money, greed sets in and then all good intentions go out the window. I had an experience with a great friend whom I´d known for years. We decided to create some products and we never created a formal partnership (yes, the irony abounds). The intent was to have a revenue sharing agreement, and in fact, for the few products that were sold, revenue was paid. The challenge was that the partner started selling big accounts (thousands of products) along with services, and we´d not anticipated this in the original revenue sharing business model. So when it came right down to it, the discussion was not pretty and I ended up walking away from the entire affair. The upside is that we are still friends (albeit more distant than before) and he went off and pursued his model-and I basically ate sand.
That was lesson number Two. Think out of the box-even at the highest-end-wildest-dreams-scenario. It could happen. It happened to Kirk Marley and Lynn Howlett, it happened to the two co-founders of MetroMamma. Did any one of the four expect phenomenal growth? Of course not. "It would have been presumptuous" as one of them said to me. But both teams are in successful partnerships that are addressing these very issues.
More on the subject later"?¦one last note. Lots of sources exist for on-line training. A good one is from DDI-management-training on the go-for individuals who need to figure it out. The only downside of this tool is that it’s tailored for people working within big companies, but a lot of the principles still apply.