Nearly all the 24 senior alliance leaders at the fifth Annual 2011 Alliance Executive Breakfast in January said they were engaging in what can be called non-traditional partnering models.
This takes many forms, with computer groups IBM and Cisco dedicating assets to creating new markets through cross-sector partnering. IBM’s Smarter Planet initiative to add intelligence to roadways, healthcare, power grids and food production for a better way of living and Cisco’s Smart+ Connected Communities – with its vision of the city using the network to connect people, services, community assets and information – are pioneering the application of information technologies (ITs) to customer challenges, partnering companies outside the traditional IT stack and often blurring the definition of customer and partner.
IBM’s website says: "A smarter planet will require a profound shift in management and governance toward far more collaborative approaches."
Or as Cisco put it: "These are big mega-deals that result in interesting partnerships. There is an effort to build out the partner ecosystem to support these emerging opportunities and we are looking for more non-traditional partners."
Google also has a non-traditional business model and a legacy of partnering outside their specific industry. It said: "Partnerships do not drive direct revenue; they bring users to the Google site. The commercial model is indirect; it is through advertising."
Other companies are reacting to the dynamics in the industry as a result of maturing technologies, industry consolidation, and economic challenges. During the past few years, the more forward-thinking organisations continued to invest in disruptive technologies and placed big bets on emerging markets in order to create new revenue streams in a challenging economy and to establish beachheads that would drive a leading position as the economy turned.
This environment has given rise to innovation in cross sector partnerships.The breakfast discussion comprised three main areas of exploration: customer challenges, non-traditional partner types and partnering challenges. The following emerged from the discussion.
1 Customer relevance is critical. All companies are facing the need to understand their customer needs better and how they can compete more effectively in this rapidly changing environment. "Relevance" was a frequently heard term.
2 Customers come first. Many participants expressed that, in the past, the focus was more on the alliance than the customer, but that has changed. There is also a blurring of partners and customers. Customers are frequently part of the alliance for cross-sector solutions.
3 Consumerisation of IT is a disruptive trend. Rapid adop-tion of mobile devices is creating both new challenges and opportunities. The impact on computing demands is changing and not altogether certain.
4 Companies are entering new spaces, facing new challenges and, of necessity, forming new partner ecosystems built around the customer.
5 Partner value is changing. The traditional labels – hard-ware, software, service and channel – do not describe the value they bring to the new ecosystems. New ways of evaluating partners by the role they play and the contributions they make are emerging. For partners in the cloud ecosystem, the traditional models of resale distribution may not be sufficient or compelling, driving the need to think out of the box in findingpartners who can extend your business.
6 Partnering competitors is not a new concept, but the amount of co-operation today is enormous.
7 Partnering business models are changing. These non-traditional alliances are long-range investments, thus challenging traditional assumptions and business practices.
8 "How patient is your capital?" was among the questions posed. In the business-as-usual model, alliances are pressed to deliver quarterly revenues. Non-traditional partnering models are calling for non-traditional ways to recognise return on the relationship.
9 Cultural differences may be a challenge greater than business process or practices when working with cross-industry partners.
10 Skill sets are not where they need to be. There is a need to move from a singular sales, marketing and alliance role to more of an aggregated systems integrator role that requires a combination of sales skills, technical prowess and business acuity.
Discussed at the fifth Annual 2011 Alliance Executive Breakfast hosted by Google and the Association of Strate-gic Alliance Professionals’ California Chapter’s Executive White Paper 2011.