“If you want to go fast, go alone. If you want to go far, go together.” This African proverb is the perfect backdrop for this week’s One Year, Thirty Minute Challenge. If you’re a solopreneur or the owner or CEO of a small company, you can pivot quickly. You don’t need anyone’s permission for a change in product, service, delivery, messaging or anything else. As the proverb says, “you can go fast”. But because you’re a solopreneur or small enterprise, you’re also constrained in the volume of things you can do. As a solopreneur, you can’t be a full-time marketer, a full-time financier, and a full-timer producer. As a small enterprise with a limited staff for each discipline, you eventually bump up against the limits of what your team can produce. To go farther, as the proverb says, “you must go together”.
One of the most effective ways an organization can “go farther” is to “go together” with another firm in a strategic alliance. Strategic alliances allow firms with complimentary product or service offerings to band together to offer their combined services to their respective clients. Strategic alliances are just that, alliances. Neither party takes a financial stake in the other entity. Strategic alliances allow participants to “put their toe in the water” with new offerings without investing in additional training or personnel.
In this week’s exercise, I want you to identify some potential strategic alliance partners. Before we jump in, I want to give you one important requirement for making a strategic alliance work. Strategic alliance partners must share core values. Core values are the measuring tool by which you should judge all associations – employees, customers, vendors, AND strategic alliance partners.
Do this week’s exercise on you own or get your leadership team together to answer these questions. Let’s jump in.
- What businesses share the same target audience? My company has done three strategic alliances – all with partners who serve small-medium sized businesses. I’ve partnered with other consultants who focus on other disciplines. My focus is strategy and operations. I’ve done strategic alliances with an HR consultant and a branding consultant. I’ve done a strategic alliance with a CPA. I’ve done strategic alliances with two software companies. In each case, customers need the services of both entities, but the service offerings don’t overlap. What other companies service the same customers that you service?
- What businesses are in adjacent spaces? If you’re a roofer, forge a strategic alliance with someone who does gutters. If you’re an exterminator, forge a strategic alliance with someone who does wildlife removal.
- What businesses are further up or further down the value creation chain? If you’re a restaurant, can you form a strategic alliance with a local farmer to create a special menu item featuring a locally raised or grown product? If you’re a restaurant, you might already have forged a strategic alliance with a delivery service like Doordash that can take your prepared meals from the restaurant to the patron’s home.
- If you’re in an industry that relies on consumer’s discretionary spending, what businesses compete for the same discretionary dollars? If you’re a restaurant, can you partner with a movie theater, axe throwing venue, mini-golf course or escape room for a complete “night out” package? If you’re a florist, can you partner with an event space or caterer to serve those planning a wedding?
- In a slightly different twist on the strategic alliance, what very similar business serves a different geography? If you’re a garage door repair company in Denver, can you form a strategic alliance with a garage door repair company in Nashville? You could share website development costs (only needing to change logos, contact info and testimonials). You could share marketing materials.
After you’ve created your list of potential strategic alliance partners, start making some phone calls. Set up an initial meeting. Start slow. In your initial conversations, you’re probing first for shared values. If the potential partner doesn’t share your commitment to fair pricing, customer service, employee development (these are just examples, swap in your non-negotiable core values), move on to the next potential partner. When you find a good candidate for a strategic alliance, tee up the idea and get a response.
To borrow from Stephen Covey, before you start any strategic alliance, “begin with the end in mind”. Define the criteria by which you will judge the success of the alliance. How will you dissolve the alliance if it doesn’t produce the results that you had hoped? What will be the disposition of any intellectual property that was created or has been shared during the alliance? What will be the disposition of any new customers gained during the alliance? Conversely, what will the course of action be if the strategic alliance produces stellar results? Will you be free to add that expertise to your own organization in the form of new team members? Will you acquire the other organization, or will your organization be acquired? If you decide to dissolve the alliance, what will be the disposition of new or shared intellectual property? What will be the disposition of any new customers added? The more of these questions you answer in advance, the greater the possibility the strategic alliance is a positive experience for both partners.
Consider not only the end of the alliance, but also the operational details during the alliance. How will revenue be split? Work hard to make the alliance a win-win for both partners. How will each entity promote the new offerings – under their own banner or as an additional offering from a trusted strategic partner? Who will pay for promotion? Again, the more of these questions that are answered up front, the greater the possibility the strategic alliance works well for both parties.