Partners are in, Vendors are passe

I was helping an organization to finalize an ad agency for a new product. The attitude of the CXO was of – ‘there are so many agencies I can get any one of them. 

The same brief went out to a few of them. At the pitch, the CXO realized what he was missing. The array of ideas stupefied him. To be fair, he accepted his mistake.

This is a stereotypical manager who thinks that all those who provide services and products are ‘vendors’ 

Ideas, products, and services are becoming more complex and sophisticated. With increasing complexity, organizations need to work together with external organizations to offer a seamless experience

So “suppliers/ vendors” are not just suppliers but “partners” and “collaborators”. It is more strategic & less transactional. You need partners who are in alignment with the values & culture. Scott McNealy, ex-CEO of Sun Microsystems, infamously tweeted -“Most overused phrase in business is ‘strategic partner.’ Favourite partnership for me is a purchase order. Defined charter, beginning, end.”

Move over Scott, we know why exactly your external relationships failed. True partnership is much more than a purchase order. Proper value is never got from such a relationship.

Unfortunately, a PO gives an artificial control to the issuer; a kind of a king servant relationship – a bane of a successful partnership.

A purchase order gives a tightly defined set of deliverables but in an open-ended collaboration, it is much more than that. In a complex market, it means working alongside each other and tackling uncertainties, in the environment, in technology, etc. 

Usually, it is large firms play the PO card to allow vendors to spar against each other. They want to hold the steering wheel. 

There are many examples of successful partnerships

• Wieden + Kennedy with Nike has been one of the most successful partnerships right from the time W+K created “Just Do It” to multiple campaigns
• Google for its Android smartphones licenses its technology with multiple partners and develop an ecosystem of user apps, OS, etc. Not surprising that Android is streets ahead of Apple.
• Mylan partners with Biocon for the development and manufacturing of multiple, high value generic biologic compounds for the global marketplace. Through this partnership, they bring together highly complementary capabilities that will significantly advance their efforts to secure a leading position in generic biologics
• GoPro & Red Bull was in a path-breaking partnership for Stratos (sponsored by Red Bull) in which Felix Baumgartner jumped from a space pod more than 24 miles above Earth’s surface with a GoPro strapped to his person. Baumgartner set 3 world records, and he also embodied the brand philosophy of GoPro and Red Bull. to inspire the world to live a bigger life!
• Starbucks enhanced its experience at the cafes using music through Spotify to create an ambience around its coffee. They created a “music ecosystem”, offering artists greater access to Starbucks consumers and giving Starbuck access to Spotify’s library of music. It enabled companies to reach the other’s audience without sacrificing their brand.
• Toyota works with most of its partners to develop, manufacture, and supply parts for each of its vehicles. Toyota understands that it does not have the resources to develop all the parts in-house. Needless to say, Toyota has been successful.

Last but not least – we know where Sun is…..In some corner of Oracle!