Sustaining growth in a weak, unstable economic climate is no small challenge, which has led many organizations to reflect on their strategies and look for new sources of growth. The most recent IBM CEO study, which includes over 1,700 CEOs in 64 countries, provides a glimpse into the result of these reflections. The 2012 edition of Leading Through Connections reveals that there are three business imperatives: empowering employees through values, engaging customers as individuals and amplifying innovation through partnerships. In particular, the study shows that partnering is on the rise with nearly 70% of CEOs aiming to partner extensively, a 14% increase since 2008. Further, 53% of CEOs are making extensive changes to enable their organizations to partner with other organizations.Such a strong focus suggests that CEOs believe tangible, substantial benefits will come from partnering activities, but what, exactly, are they expecting?
An engine of growth
To get a better understanding of what is prompting so many organizations to pursue partnering, check out this video:
Through partnering, the scope of what organizations can achieve is expanded through their increased access to new technology, new capabilities and new customers. Additionally, organizations that partner strategically benefit from reduced R&D risk, optimized expenditures and decreased product development time. Given the faster pace of today’s markets, the improved agility and shorter response time that partnering brings with it is invaluable. Ultimately, these benefits all lead up to the key point made in the video, that partnering is an engine of growth and important source of sustained economic value.
There are innumerable examples of organizations partnering for growth, such as NASCAR partnering with Walmart to better serve their shared customers or Essilor partnering with local leaders in Columbia, Turkey and China to expand its international reach. However, as seen in the next section, if partnering is geared towards innovation, growth is greatly multiplied.
Partnering + innovation = turbocharged growth
While partnering activities themselves serve as an engine of growth, when partnering is for innovation, the growth is turbocharged:
This fact has also been reflected in an IBM study on collaborative innovation in the life sciences, which reveals that the most popular partners, those that can get access to the best external sources of innovation, perform better financially. Similarly, as mentioned in our Partnering for Innovation webinar, 66% of the top 50 bestselling drugs are the result of partnerships or M&A.
Outside of the life sciences there is, for example, Procter & Gamble, renowned for their commitment to sourcing innovations externally through their Connect + Develop program. Although C+D is often discussed in terms of open innovation, it might be more appropriate to discuss it in terms of partnering for innovation. Without partnering, P&G would not be able to access or leverage many innovations. According to their website, “P&G wants to be the business partner of choice because we believe more value can be created in effective collaboration with the right partners than we could achieve alone.”
SAP, the enterprise application software giant, appears to be following suit, moving towards more openness and more partnering, not only in sales but also in innovation and product development. So far, this commitment to partnering is paying off, with SAP expecting double digit growth in 2013 after a record 2012. Although partnering, innovation and growth may all go together, failure to implement and optimize key processes and practices will merely land organizations in the underperformers category, without realizing any of the promised growth that partnering for innovation offers.
Getting more out of partnering
Partnering, and partnering for innovation in particular, is a powerful, sustainable source of growth, value and competitive advantage. The IBM report provides several important suggestions regarding how CEOs can help their organizations connect with partners in new ways that accelerate innovation. For example, the report recommends tackling shared governance issues, exploring unconventional partnerships and making it easier to interact, among other things. Attacking these goals requires implementing secure, effective processes.
By deploying a unified platform for business development and partnering, entire organizations (and even their trusted partners) can collaborate on opportunities and proposals. Ideally, this platform should function as an asset-centric CRM, enabling the organization to not only track contacts and companies, but also technologies, molecules, opportunities, etc. To help partnering opportunities mature sufficiently before the go/no-go decision, evaluation and due diligence processes should be standardized, ensuring that they are as efficient and thorough as possible. Finally, once partnerships are underway, organizations must carefully implement alliance management procedures that include governance, relationship health checks, milestone/obligation tracking and team coordination. In today’s competitive markets, more and more organizations are turning to partnering as a source of sustainable growth, but it’s not enough. By partnering for innovation, however, organizations can maximize its opportunities and benefits, outperforming the rest of the market.