Business partnerships have traditionally been agreements to drive more transactions than either company could do alone. The new paradigm, driven by disruptive technologies, cloud-served supercomputing, and the new generation of young adults with global empathy, is partnering and giving something now for a competitive advantage in the future.
An excellent example is the initiative by Elon Musk and Tesla Motors a few years ago to give away their battery patents, to infrastructure and competitive car providers, without transactional agreements. This will facilitate the expansion of battery charging and support facilities, and ultimately create more customers and growth for the whole industry, including Tesla.
Another partnering model example is the IBM Watson Group $1 billion investment to share cloud-based development and super-computing tools. A partnership was announced with the City of New York, to connect and grow NYC’s startup ecosystem. This facilitates technology growth and innovation for startups in Silicon Alley, as well as positioning IBM for growth down the road.
These initiatives are what Bob Johansen and Karl Ronn call “The Reciprocity Advantage” in their classic book on how partnerships must work in the future for innovation and growth. Johansen knows this space, as a distinguished fellow at the Institute for the Future in Silicon Valley, and Ronn is a serial entrepreneur and managing director of Innovation Portfolio Partners in Palo Alto.
Their recommendations are consistent with mine in working with startups, as well as more mature organizations, to start future-proofing their growth in today’s world of relationships and conscious capitalism. The basic steps to adopting this reciprocity advantage paradigm can be summarized as follows:
- Identify your assets that have complementary value to others. Johansen calls this uncovering your right-of-way. Ideally, this is an existing platform where you already have established the ability to innovate with authenticity, and can afford to give access to others, with the potential to yield greater value later, like the Tesla and IBM examples.
- Find partners who can do what you cannot do alone. Here you are looking for formal and informal relationships that can increase your innovation potential in the long run, and not be inclined to undermine your own efforts. Some of the more interesting partnerships may be asymmetrical: very big companies partnering with startups, or even individuals.
- Learn by experimenting in low-cost and iterative ways. This is the new world of do-it-yourself (DIY) prototyping. FabLabs is an example of a new class of facilities for entrepreneurs to start experimenting early. Success is when both you and your new partners learn how to make money while experiencing new growth from the initiative.
- Scale it once you figure out what works. When you are convinced that your new business offering is desirable, viable, and ownable, then you are ready to scale. Cloud-served services will be an amplifier for almost any opportunity, not only in the developed world, but in the developing world as well. Social media relationships fuel the scaling fire.
- Maintain the agility to quickly pivot or quit. Not everything will work. Too many companies and entrepreneurs find it hard to stop a bad project. Key success indicators to monitor are passion level, and the ability to meet regular short-term milestones. If a plan doesn’t work, the key is to fail fast, create a new plan, but don’t give up.
The authors and I predict that the new forces of social structuring and the so-called digital natives (Gen Y and younger) will soon disrupt the traditional transaction model for doing business, as well as the current partnering model. Partnering will begin to happen across great distances, include reciprocity thinking, and even intellectual property will shift from a closed to a more open system.
It’s time for every individual, startup, and mature company, to uncover their shareable value, find complementary partners, and capitalize on their scalable advantages. I’m certain you will find it to be more fun and more productive than plotting every day to kill your competitors for growth.