The Partner Paradox: What Can We Learn from Big Businesses Who Got it Wrong?

Strategic partnerships; the sharing of resources in pursuit of a common goal, are on the rise in big businesses. Depending on the level of financial commitment and integration required, they can range from a simple supplier relationship to a full blown joint venture. In a world where capital is scarce, innovation is in constant demand, talent is in short supply and competitive boundaries are blurring, it’s no surprise that they are growing. Increasing numbers of large companies are investing in partnerships / alliances as a way to quickly secure growth in a continually unstable and complex environment. In fact, 48% of global CEOs plan to pursue a new strategic alliance or joint venture this year in order to drive growth.

The perceived benefits of partnerships, including additional revenue, customer acquisition and increased loyalty are tempting. However, are businesses forgetting something really important? The majority of partnerships and alliances fail to achieve their objectives. According to Forbes, the termination rate for alliances is close to 80%. Compare that to marriage, where 50% end in divorce and that seems staggering. More importantly, the majority are shown to have no positive impact on financial performance in the long-term.

This creates a unique and challenging paradox. On one hand, businesses are in a position in which they are being pressured to create more partnerships, but on the other hand, they are faced with a high failure rate. As a result, partnerships require a significant amount of attention and effort to manage. The most successful are those who recognise this paradox and are willing to learn from others. Here are three spectacular examples where big businesses got it wrong. After all, as Warren Buffet puts it “it’s good to learn from your mistakes but it’s better to learn from other people’s.”

Lesson 1: Don’t give your brand away, carve out provisions for adequate creative control

Strategic partnerships; the sharing of resources in pursuit of a common goal, are on the rise in big businesses. Depending on the level of financial commitment and integration required, they can range from a simple supplier relationship to a full blown joint venture. In a world where capital is scarce, innovation is in constant demand, talent is in short supply and competitive boundaries are blurring, it’s no surprise that they are growing. Increasing numbers of large companies are investing in partnerships / alliances as a way to quickly secure growth in a continually unstable and complex environment. In fact, 48% of global CEOs plan to pursue a new strategic alliance or joint venture this year in order to drive growth.

The perceived benefits of partnerships, including additional revenue, customer acquisition and increased loyalty are tempting. However, are businesses forgetting something really important? The majority of partnerships and alliances fail to achieve their objectives. According to Forbes, the termination rate for alliances is close to 80%. Compare that to marriage, where 50% end in divorce and that seems staggering. More importantly, the majority are shown to have no positive impact on financial performance in the long-term.

This creates a unique and challenging paradox. On one hand, businesses are in a position in which they are being pressured to create more partnerships, but on the other hand, they are faced with a high failure rate. As a result, partnerships require a significant amount of attention and effort to manage. The most successful are those who recognise this paradox and are willing to learn from others. Here are three spectacular examples where big businesses got it wrong. After all, as Warren Buffet puts it “it’s good to learn from your mistakes but it’s better to learn from other people’s.”

Lesson 2: Don’t underestimate the importance of compatibility from a core value perspective

Strategic partnerships; the sharing of resources in pursuit of a common goal, are on the rise in big businesses. Depending on the level of financial commitment and integration required, they can range from a simple supplier relationship to a full blown joint venture. In a world where capital is scarce, innovation is in constant demand, talent is in short supply and competitive boundaries are blurring, it’s no surprise that they are growing. Increasing numbers of large companies are investing in partnerships / alliances as a way to quickly secure growth in a continually unstable and complex environment. In fact, 48% of global CEOs plan to pursue a new strategic alliance or joint venture this year in order to drive growth.

The perceived benefits of partnerships, including additional revenue, customer acquisition and increased loyalty are tempting. However, are businesses forgetting something really important? The majority of partnerships and alliances fail to achieve their objectives. According to Forbes, the termination rate for alliances is close to 80%. Compare that to marriage, where 50% end in divorce and that seems staggering. More importantly, the majority are shown to have no positive impact on financial performance in the long-term.

This creates a unique and challenging paradox. On one hand, businesses are in a position in which they are being pressured to create more partnerships, but on the other hand, they are faced with a high failure rate. As a result, partnerships require a significant amount of attention and effort to manage. The most successful are those who recognise this paradox and are willing to learn from others. Here are three spectacular examples where big businesses got it wrong. After all, as Warren Buffet puts it “it’s good to learn from your mistakes but it’s better to learn from other people’s.”

Lesson 3: Make sure you establish and practice trust, be clear on what you plan to share, and then share it

Strategic partnerships; the sharing of resources in pursuit of a common goal, are on the rise in big businesses. Depending on the level of financial commitment and integration required, they can range from a simple supplier relationship to a full blown joint venture. In a world where capital is scarce, innovation is in constant demand, talent is in short supply and competitive boundaries are blurring, it’s no surprise that they are growing. Increasing numbers of large companies are investing in partnerships / alliances as a way to quickly secure growth in a continually unstable and complex environment. In fact, 48% of global CEOs plan to pursue a new strategic alliance or joint venture this year in order to drive growth.

The perceived benefits of partnerships, including additional revenue, customer acquisition and increased loyalty are tempting. However, are businesses forgetting something really important? The majority of partnerships and alliances fail to achieve their objectives. According to Forbes, the termination rate for alliances is close to 80%. Compare that to marriage, where 50% end in divorce and that seems staggering. More importantly, the majority are shown to have no positive impact on financial performance in the long-term.

This creates a unique and challenging paradox. On one hand, businesses are in a position in which they are being pressured to create more partnerships, but on the other hand, they are faced with a high failure rate. As a result, partnerships require a significant amount of attention and effort to manage. The most successful are those who recognise this paradox and are willing to learn from others. Here are three spectacular examples where big businesses got it wrong. After all, as Warren Buffet puts it “it’s good to learn from your mistakes but it’s better to learn from other people’s.”

Strategic partnerships; the sharing of resources in pursuit of a common goal, are on the rise in big businesses. Depending on the level of financial commitment and integration required, they can range from a simple supplier relationship to a full blown joint venture. In a world where capital is scarce, innovation is in constant demand, talent is in short supply and competitive boundaries are blurring, it’s no surprise that they are growing. Increasing numbers of large companies are investing in partnerships / alliances as a way to quickly secure growth in a continually unstable and complex environment. In fact, 48% of global CEOs plan to pursue a new strategic alliance or joint venture this year in order to drive growth.

The perceived benefits of partnerships, including additional revenue, customer acquisition and increased loyalty are tempting. However, are businesses forgetting something really important? The majority of partnerships and alliances fail to achieve their objectives. According to Forbes, the termination rate for alliances is close to 80%. Compare that to marriage, where 50% end in divorce and that seems staggering. More importantly, the majority are shown to have no positive impact on financial performance in the long-term.

This creates a unique and challenging paradox. On one hand, businesses are in a position in which they are being pressured to create more partnerships, but on the other hand, they are faced with a high failure rate. As a result, partnerships require a significant amount of attention and effort to manage. The most successful are those who recognise this paradox and are willing to learn from others. Here are three spectacular examples where big businesses got it wrong. After all, as Warren Buffet puts it “it’s good to learn from your mistakes but it’s better to learn from other people’s.”