Building a network of partnerships can be a powerful differentiator—or chew up resources and introduce unanticipated risks. CEOs share strategies for forging alliances that add long-term value, not stress.
The post Doing Partnerships Right: 8 CEOs Share Tips appeared first on ChiefExecutive.net.
Like many of today’s chief executives, Ryan Hicke at SEI Investments relies on an ecosystem of partnering organizations to keep his publicly traded company’s growth on track. Crucial partners in this network include the large investment managers and banks that buy the firm’s asset management, investment processing and information delivery solutions and the third-party technology companies that supply a range of its internal client-focused solutions. “We’re in the middle of an ecosystem that’s a tale of two cities,” says Hicke.
Unlike yesteryear’s vertical integration, in which CEOs enjoyed complete control over the value chain of suppliers, today’s chiefs are more often managing a web of long-term partnerships that comprise their daily operating environment. Like an actual ecosystem, in which organisms link together in a complex biological network to survive, the partners in a business ecosystem interconnect to endure and thrive. Through joint planning and collaboration, the allied entities are better equipped to adapt to economic headwinds, unsettling market changes and ceaseless technological innovations.
Although the number and types of partners in an ecosystem vary, the concept is writ large across midsize and larger businesses. Chief Executive reached out to eight CEOs with extensive partnership experience and found surprising similarities in their methodologies—each business acting for the benefit of the group, and the group for the benefit of each business. Their chief executives are focused on how to construct better arrangements and become better allies.
A transaction to do business together is not the same thing as a business ecosystem, given the emphasis on shared goals, transparency, collaboration and mutual benefits. As Hicke puts it, “Our third-party technology partners are vendors, but we choose not to see them that way. Like our clients, they’re strategic to our growth and deserve to be treated the same way we expect our clients to treat us.”
Hicke elevates the critical importance of understanding each client partner’s growth strategy and the obstacles they are trying to solve and overcome. He also stresses the need for SEI’s third-party technology partners to understand the firm’s growth strategy and impediments. This approach helps position SEI, which manages, advises or administers $1.3 trillion in assets and whose customers include 49 of the top investment managers worldwide and 10 of the top U.S. banks, to deliver best-of-breed services. “We do what our clients have no interest in doing, believing their capital is more effectively deployed elsewhere. The same holds true for us, in reverse, with our technology partners,” he says.
Hicke shared more of his partnership strategy with Chief Executive.
Mutual Goals and Joint Planning. “If someone here says I found this great client, my first question is, ‘What is the client’s growth strategy and their appreciation for us as an enabler to achieve it?’ Otherwise, they’re likely to just see us as a vendor and a cost reduction play, as opposed to a true collaborator,” he says. “If I go into an executive meeting and someone says a potential client wants to reduce cost by 20 percent and is looking to find the lowest-cost provider to increase margins, I will leave. You’ll never get out of that spot; it will always be a price conversation and never about growth. If they don’t want to share their growth strategy, we’re not interested.”
Shared Values and Cultural Fit. “We need to sit on the same side of the table as the client. We get into some pretty intense relationships with our clients, which are often going through these big operational technology transformations. Times get tough and stressful,” Hicke says. “If you have to go back to the contract to settle a dispute, you didn’t have a good partnership to begin with. For us, a good partner is a client or a tech firm that shares our values and culture—meaning they’re good people to work with—and is aligned with our shared goals.”
Managing Ecosystem Risks. “The regulatory landscape does not get easier,” says Hicke. “Since our third-party suppliers are critical to our day-to-day delivery, we need to understand their business continuity plans in the case of a disaster. If one of them goes down, it can take down part of our service. Good partners are open partners.”
Measuring What You Manage. Hicke espouses the merits of a formal steering committee structure, composed of a single executive to manage the relationship with each partner in the ecosystem. “I expect them to have pretty regular interactions in person or online with the partner’s lead executive,” he says. “We have a dashboard approach to tracking the health of partner situations, which makes things easier for me as a CEO. If key value metrics are trending toward red as a predictive indicator, I know that immediately.”
Moving in Lockstep. “A good partnership is one in which people gather in a room and try to solve a business problem like adults,” he says. “The way to do that is to go to the endgame and ask, ‘Will what we are doing together create a better outcome for the consumer?’ The best partnerships are aligned to do that. It sounds utopian, but it’s the truth.”
Here’s what seven other CEOs say about their partnership strategies for 2024 and beyond:
VENTURE CAPITAL
‘Change-making Opportunities’
Justus Parmar, CEO, Fortuna Investments, Vancouver, British Columbia
“The strategic planning aspects of partnerships are really important to us. Once we identify entrepreneurs who may not have the financial resources or business acumen to take their innovations forward, we partner together. They can’t do it alone. Since what they’ve created has never been done before, we take on a lot of risk. These factors argue for an unusually close relationship, where loyalty, honesty, transparency and communication are fundamental tenets.
“Other key partners are individual and institutional investors and investment firms putting the next levels of money into the entrepreneurs to get them ready for prime time. Technical professions like lawyers, accountants and auditors helping a startup get their business and books in order fill out the ecosystem. Generally speaking, all the partners have a common goal in mind, which fosters a very symbiotic and harmonious relationship. As time goes by, the partners in the ecosystem make introductions to other entrepreneurs, creating a nice virtuous circle.”
WORKFORCE MANAGEMENT
‘Constantly Reevaluating’
Matt McConnell, CEO, Intradiem, Marietta, Georgia
“We have about 15 crucial partners in our ecosystem—systems integrators, independent software vendors and other tech providers that sell our workforce automation solutions like enterprise call centers to their end customer as a reseller or OEM partner. We’ve learned not to partner with every tech provider; we look back over our history at the successful partnerships and try to replicate them.
“A partnership must be mutually beneficial to succeed over the long term. I don’t want a bunch of logos on our website indicating a dozen partners that do nothing for us. We’re constantly reevaluating if a partner is still culturally aligned. Some systems integrators have two dozen products they sell, and it’s hard for our products to get mindshare. They make some fees when they sell our products, but what they really want is the delivery, services and support. We just built a program to train and certify partners to provide these services, which should increase [our] mindshare. We want partners willing to learn our products and how to support them.”
HEALTHCARE
‘Agree on Conflict Resolution’
Jaja Okigwe, CEO, First Choice Health, Seattle, Washington
“We’re a physician-owned health insurance company providing an alternative to traditional health insurance, processing about $5.1 billion in claims each year. One of our special powers is the partnerships we have with physicians and hospitals. It’s really good when both sides know exactly what they’re doing. In a couple cases, we parted company with a partner because their goals and objectives no longer aligned with our culture.
“Partnerships are forged in person. Despite what happened with Covid, this hasn’t changed. We have a statement here: ‘When in person, we win.’ When we find a new partner in our ecosystem, we put together a to-do list, what we both agree to do and be, our respective contributions. We also agree on conflict resolution—here’s how we will resolve a disagreement. There’s nothing worse than trying to figure out how to resolve something when everyone is emotional.… Sometimes the partnership is a prelude to other things. You get so close to each other and excited about your contributions, you might decide at some point to be in business together permanently, like a merger.”
SOCIAL MEDIA
‘An Art and a Science’
John Mazur, CEO, Chatmeter, San Diego, California
“We work very closely with technology companies and agency partners, which are a force multiplier for our AI-powered social media management solutions that make it easy for a multi-location brand to be found and connect with customers. Optimal partnership management is both an art and a science. I try to understand the partner’s business model first, and then make sure our customers would love to work with them. I want to know if they’re good people at a great firm with a similar culture. I make sure we have alignment on goals. Everything may look beautiful on paper, but if there’s a cultural mismatch it always goes down in flames.
“Transparency and open communications are how we deal with conflicts. To avoid a lot of icebergs, you need to have a deep understanding of each other’s business. What’s important is not who screwed up but how you’re going to mutually fix it. I got a call yesterday from the CEO of one of our biggest partners, to vent on each side. When we got off the call, I was invigorated. We’re both bullish on what we can do together.”
FINANCIAL INSTITUTION
‘Honest with Feedback’
Dennis Devine, CEO, Alliant Credit Union, Chicago, Illinois
“We’re a national credit union, one of the largest in the country, with $19 billion in assets and more than 600,000 members. We serve all of them digitally. Since we build our banking services around our technology partners’ solutions, they are essential. It’s important they view us as a win-win, and vice versa. I have a pattern of having a casual dinner with a partner on Tuesday night. No business. Wednesday morning, we discuss the agreements we made the last time we were together and celebrate the wins. That afternoon, we set the shared objectives and planned outcomes for the next time we meet.
“Sometimes your partner gets to a place where they are no longer at the front edge of capabilities. When they fail to deliver against the shared commitments, I’m already ahead of it. We have a scorecard on the dashboard that rates them red, yellow or green. If it’s green, it’s a great foundation to recognize excellent work. If it’s red, we have time to look at alternatives. We’re honest with feedback and expect the same back from our partners. In the spirit of our customers, we’re always taking exploratory calls from innovative companies.”
TRANSFORMATIONAL CONSULTING
‘Deep Functional Understanding’
Kate W. Duchene, CEO, RGP, Irvine, California
“We used to be tech-agnostic, a strategy that worked years ago but no longer does. Today, every one of our clients is getting more digitized and technology oriented. To assist their business transformations, we forged critical partnerships with both big and small technology companies, from large ERP system providers to 10 niche cloud players that help clients automate their workflows and financial close.
“Our consulting work is focused on business transformation, finance and accounting, risk and compliance, supply chain, digital, and manufacturing. The partners provide their technology solutions and functional expertise to our client engagements. What adds value and is different from a decade ago is their deep functional understanding of the categories of work we support and deliver.
“Each of our 15 strategic partners was carefully chosen based on evolving client needs. For example, when RPA [robotic process automation] surfaced a few years ago and seized the attention of the client base, we didn’t just look for a product and say, ‘Will you be our partner?’ We listened first to clients about their needs. Only then did we invest in research and education to find the right RPA partner, giving them what they wanted, in conjunction with the talent we have here to deliver long-term success.
“Partnerships don’t work without having a dedicated executive at each company collaborating and held accountable for the partnership’s success. When you put insiders and outsiders who don’t know each other on equal footing, the work becomes personal and not transactional. A one-culture team develops. You build trust, morale strengthens, and project leaders feel empowered to make key changes that keep things on track.
“It is not uncommon for a partner’s talent to join RGP, and vice versa. Cross-pollination is a great practice, increasing the depth of learning for both partners, to the benefit of our client-focused projects.”
CYBER RISK MANAGEMENT
‘Trust and Transparency’
Vishaal Hariprasad, CEO, Resilience, San Francisco, California
“Trust and transparency are the hallmarks of our partnership ecosystem. When your adversaries are the best-trained and most ruthless ‘threat actors,’ you need a full arsenal to defend your company against them.
“We flipped the traditional insurance model by ensuring that clients withstand cyberattacks, encouraging the most cost-effective cyber insurance. We combine advanced technical risk engineering, cyber risk analytics, modeling, tabletop exercises simulating a cyberattack, and network and system remediation services, along with an insurance policy absorbing a company’s data breach and business interruption losses.
“Our partnership ecosystem includes 35 large and smaller insurance brokers that deliver clients for cyber insurance, which is underwritten and priced by another key partner, Intact Insurance Specialty Solutions. Intact and its reinsurers must have confidence in the quality of our client-focused loss prevention services, like monitoring of critical exposures and vulnerabilities. Otherwise, they may experience higher than projected insured losses.
“By ensuring the end client can actually withstand a cyberattack, we see things that other insurance providers don’t see. We’re able to share in a very transparent and intellectually honest way how we arrived at the cost of the cyber insurance product. What we do is more than a transaction; it’s a ‘we’re in this all together’ approach.”
The post Doing Partnerships Right: 8 CEOs Share Tips appeared first on ChiefExecutive.net.
