Building collaborative alliances.

Collaborative alliances and partnerships with other companies can often be used to build world-class capability and global reach, rapidly and cost-effectively. Developing strategic partnerships makes sense when what‘s needed is a highly-specialized capability in a fast-moving field, or when significant risk is present. Through these arrangements, companies can concentrate on learning their partner’s skills while at the same time building barriers that discourage competitors from entering their markets. Some companies don’t develop core products themselves anymore. However, they make sure they still know more about them than anyone else does (as an example, Sun Microsystems knows more about circuit-board technology than any of the specialized circuit-board companies that supply it with products).

Canon has been involved in simultaneous partnership agreements with Texas Instruments, Hewlett-Packard and Eastman Kodak, all competitors at that time. Canon used its patents as bargaining chips in cross-licensing technologies, believing that you can only enter into cooperative alliances when you’re able to bargain from a position of strength. Partnerships involving competitors provide access to new markets or technologies, or they allow the creation of products that neither partner can produce on its own. However, such alliances can raise sticky issues about what information to share and what to keep proprietary. In the world of collaborative competition, negotiating skills become as important as technical or operating skills. While collaboration between rivals often makes sense, the companies involved must make sure that cooperation makes their ability to compete stronger, not weaker. Questions that have to do with rethinking strategy and redeploying assets in response to a collaborative environment are: When is it wise to enter into relationships with competing companies? How can a company strengthen its individual identity at the same time?

For a partnership to bear fruit, it should offer both parties a win-win opportunity based on a common vision and strategy, where each partner clearly understands what it might gain or lose from the arrangement. It’s important that partners not only offer the best products or services available, but that their principles, policies and corporate cultures are compatible with yours. Successful alliances depend on shared values and cultural traits. Differences in structure, decisionmaking processes and measurement systems can cause communication gaps and operating tensions. For example, a joint venture involving managers from two companies who work under different bonus systems will quite likely suffer the ill effects of opposing priorities.

Partnership is a win-win relationship where both sides give a little to get something. You have to put yourself in the other guy’s shoes to get a win-win relationship - structuring deals that make sense both ways. Start by role playing how they’ll react to your offer. You need to have each side committed to the deal to make it work effectively. When partnering with a much bigger company, an important consideration had to do with how you relate to the key players there. Obviously, they should be people you feel you can trust. Their style (casual, formal) should match your own. They should have a non-bureaucratic approach to doing business so the deal gets done quickly, without a lot of nit-picking and haggling. Speed is crucial. “Let’s start working on it today and we’ll paper it over as we go forward.” Otherwise, working with a large company can take forever, slowing you down and killing the buzz.

Find someone in senior management who will prosper if this partnership or alliance works. He’ll then lead you up through the ranks to reach the CEO or whoever else you need to work with to get the deal done. Spell out issues like licensing and pricing first. But remember, alliances are nothing but alliances. If people’s needs change, then all the paperwork in the world means nothing. Don’t worry about the big guys stealing your ideas. Gaining time is what matters most.

Go to trade shows, wear a badge, be obvious and easy to find, and go after who you want. Approach other parties with, "Here's who we are. Here's what we do. Here's the kind of transaction we're looking for." Be very directed, focused, to-the-point in meetings. Make it clear what the price range is and that it’s not negotiable. When you partner with another company, make sure the deal enhances future career possibilities for everybody in your company.

Forming strategic partnerships.

Technical and Computer Graphics in Sydney, Australia developed a network of 24 small companies with hundreds of employees and revenues in excess of $50 million. Together, they made portable data terminals, computer graphics and bar coding systems. One of the paradoxes of today’s business world is that companies must lower the walls between them rather than building them up to make them safer. Large organizations with more resources are better able to support partnership experiments that open up new possibilities than small companies. As a result, lopsided partnerships are proliferating, matching smaller innovative companies with larger deeper-pocketed investors.

Try to form alliances with people who are richer, smarter, larger, and who need you. Give or sell them what you’ve got cheaply to create market share and product awareness. You want them to eventually become your friend and help make your market. Joint marketing arrangements for building brand-name recognition can involve finding someone who is willing to subsidize your distribution. But make sure you know how the other company’s sales force is compensated. Otherwise, the cash you get up front is likely to be all the cash you get. You risk ending up as a line-item in a catalog that no one reads. Get to the sales people and tell them how much money they’re going to make from selling your product. And you still have to sell, to represent, to advertise your product. Don’t assume it’s going to be in your partner’s best interests to help you - they’re more likely to concentrate on selling their own products. Joint venture companies don’t always believe that promoting the partner’s product is in their own strategic interest.

Two key objectives should drive any strategic partnership deal. First, it should be a very good financial transaction for the company and its principals - that’s the primary consideration. Second, it should create an association with a partner who adds value. That’s the secondary part of the transaction, but it’s crucial in choosing who you sign up with.

Start by getting clear on what the absolute requirements of the partnership are and how you want the transaction to work. For example, “We want a partnership because it’s a flexible and creative form of an alliance. However, it’s crucial that we keep control of our current business."

Startup advice from Leo Speigel.

Leo Spiegel is a managing partner with Mission Ventures, a hi-tech venture capital firm. He’s been president of Digital Island, and CEO of Sandpiper Networks. He’s also a member of Dean’s Advisory Council of the Rady School of Management at UCSD. Leo says that fast growth startup companies need to pay particular attention to the following top ten issues:

1. Hire great people fast and hire executive management early. Use every possible opportunity and media to find them and when you do, pull the trigger quickly. However, make sure they’ll mesh with the rest of the team and fit in with what you’re trying to accomplish.

2. Be well funded. It doesn’t matter what percentage of the company you own - what matters is how big the pile of money is. Object Design used strategic alliances and venture financing to build its market capitalization to $500 million. Spiegel says, "We figured we'd rather own 20% of $500 million than 80% of $50 million."

3. Purposefully create a company culture that values empowerment, delegation and self-direction.

4. Employees are carbon-based units, not machines. Make each one a star.

5. Understand your own personal weaknesses and have great advisers.

6. Buzz is king - there’s a direct correlation between creating buzz and creating shareholder value. To generate buzz, you need advocates who will validate what you’re saying. And you need to capitalize on news events - use them to get your message out to the right place at the right time. Train your managers to broadcast the right message. Have them look like leaders. Google is a brand and Google is buzz - together, they make the world believe.

7. Know your target market and watch all your competitors. Be really, really aware.

8. Find the boulders. On any given day, there are too many things to do - so prioritize. Push like hell to move the biggest boulders up the hill every single day.

9. Work hard, have a “can do” attitude and be passionate. Make sure that making the company successful is all you think about at work every day. You lead by example – your passion rubs off on others.

10. Focus on keeping a balance between your personal and your private life. Work should only be a part of your life.

Grow the business.

Within a year of its founding in 1982, Compaq Computer posted revenues of $111 million. In 1995, six years after its founding, Telegroup Inc., (now part of Primus) posted revenues of $129 million - nowhere near Compaq’s record, but in many ways a more spectacular performance. While Compaq's growth was executed by a start-up team of seasoned executives who followed a detailed plan and spent a lot of investment capital in the process, Telegroup's growth wasn't planned at all. "My intention was to do this business to support my family while I decided what to do with the rest of my life," according to Telegroup’s founder, Fred Gratzon. Besides starting without any sort of plan, Gratzon was also dead broke at the time. Gratzon was an accidental entrepreneur. Down and out after losing his job, he parlayed a way to make a toll call on the cheap into one of the largest long-distance telephone companies in the world. But it might never have existed if Gratzon hadn't tapped into package deals offered by AT&T as a way of reducing his own telephone bills.

Iomega hasn’t produced a significant hit since it introduced the Zip Drive in 1995. This is usually the kiss of death for a technology company - things just move too fast for hot products to stay hot for very long. In 1995, hard discs rarely stored as much as one gigabyte of data. Today, a typical $100 hard drive can store several terrabytes. People no longer pass data on large products back and forth either - they just send the data by email. The Zip has devolved into a solution to a problem that no longer exists.

Despite its fame as an innovator, 3M hasn’t come up with another Post-it. Most unique selling points prove to be anything but, as they’re rapidly imitated by competitors. In a fast moving world, even blockbuster products have less and less time to reap the rewards. By regularly introducing new products, you give the consumer a reason to buy. You need to convince them that, “If the product you currently have is more than two years old, you’re really missing something.”

Be the first to create new products that put your existing products out of business. Develop new products fast, get to market first, that’s how you win. A McKinsey study showed that products that got to market on time and 50% over budget eventually earned only 4% less than those that were on time and on budget. Products that got to market six months late and on budget earned 33% less than those that were on time and on budget. A Stanford University study of 78 product development projects in 36 companies in Asia, Europe, and the United States, found that in negotiating a highly uncertain path through shifting markets and technologies, the key is to build on intuition and to include flexible options.

A fast product development cycle:
- Allows a company to reinforce its new brand positioning more frequently.
- Ensures the company is first to deliver new products and features through more rapid innovation.
- Reduces the impact when competitors copy the company’s innovations.
- Integrates consumer feedback into the product more frequently.
- Improves reaction time to competitive actions.
- Supports competitive advantage and price premiums.

If success arrives too big or too early, then you've got to have the passion and commitment to go beyond success - to build a durable, lasting enterprise. The best entrepreneurs don't focus on success; instead, they focus on building a company that can be a leader in the global economy. They know success will follow. If you focus on success, you won't get there. If you focus on contribution and customer value, then you can win.

To many entrepreneurs, the greatest satisfaction, owning a business, which often includes working closely with customers and employees, inevitably diminishes as the business grows and the owner’s role changes. Jack Ferner, a former dean at Wake Forest University says, “Many entrepreneurs would rather limit their company’s growth than give up those satisfactions. My experience has been that for every one who has dreams of grandeur and size and billions of dollars, there are probably five that prefer to remain small.” The other perspective is pointed out by John Thorne from Carnegie Mellon University: “I think there’s an argument in many industries that if you don’t grow, you can’t hold on to good people, you’re not going to stay in touch with the technology or the marketing trends, and you sort of slowly die.”

Song for Cracked Voices, a poem by Morris Bishop.

Morris Bishop (1893 - 1973) had a long and distinguished career as a scholar, linguist, teacher, and author of 30 books. He was also a master of light verse, and enjoyed a wide and appreciative readership in the 40-years he contributed to the Saturday Evening Post, The New Yorker, Life, and the Saturday Review.
He was a professor of Romance Literature at Cornell and held three degrees from that university. He was awarded many honorary degrees from other universities in the US, Canada, and France, where he was made a Chevalier de la Legion d'Honneur. He served for a time as president of the Modern Language Association.
His verses speak to our fads and foibles and his ingenious way with words makes us laugh at ourselves.

Song for Cracked Voices by Morris Bishop

There once was a man
With a burning desire:
"As soon as I can
I want to retire;
Retirement is what
I want to get on to,
And work I will not,
But do what I want to."

With energy vast,
He labored undaunted
In order at last
To do what he wanted.
But when, after all
His struggles were through,
He couldn't recall
What he wanted to do.

Oh, most of us can't
(And much we regret it)
Still want what we want
When able to get it.
But happy, I grant,
Are the fortunate few
Who do what they want
When they know what to do.

Keeping focused as you grow.

If you don't know where you're going, you probably won't get there. A very common problem in startup businesses is confusion of purpose and lack of focus. It's easy to fall into the trap of being scattered, unfocused, overwhelmed. Entrepreneurs are often high-achievers, but they waste time, money and energy having too many irons in the fire because they’re unable to let go of the details. It's tempting to be a jack-of-all-trades and master-of-none. But that won't work - you must focus, focus, focus.

Your thoughts, energies and ideas must all be single-mindedly concentrated on your primary objective and your strategic initiatives. You can’t pursue five goals at once. You must focus your energy until you become like a laser beam. Then, communicate, so everyone understands the vision, the plan. Talk about these every single day. Don’t ask employees to pursue vague intermediate objectives like “excellence.” If you can’t clearly state on paper what you expect from someone, you’re in trouble.

Keep people focused on bottom-line performance and long-term survival. Have really clear system-wide goals - reduce crime by 30% for example, rather than concentrating on intermediate objectives such as increasing arrests or improving the response time of police officers. Avoid goals such as launching a new advertising campaign by the end of May - focus instead on increasing market share by 20%. Don’t focus on narrow functional goals. When you do, everyone goes off in a different direction and even though the basic measures of the company’s performance may be slipping, no one feels responsible to do anything about it. Emphasize improvement in broad business performance instead. Sharon Ballard says, “You get what you inspect, so inspect the things that are key for your startup's success.”

You can't succeed without mastering the fundamentals of your business. People who are masters at anything are relentless about studying, practicing and polishing the fundamentals. There are no short-cuts to mastery. You must be doing the fundamentals right before you get to the advanced stuff. The fundamentals include: business, management and interpersonal skills, planning, financial controls, marketing strategies, superior products and services, effective sales efforts, unparalleled customer service, and effective tools and systems. And you must understand the financials. After all, it’s your money. You have to have the numbers down cold.

One of the problems that comes with success is that people don't want to change. So the person at the top has to be the champion for change. When complacency stalls growth, get people to think about redefining their markets. In the early 1980s, Robert Goizueta challenged Coca-Cola’s staff to stop thinking about their 35% share of the soft drinks market, but to remember instead that people drank 64 fluid ounces of liquid a day - and only two of these were Coke.

As your company grows, you no longer face the challenge of having to do everything yourself. Instead, surround yourself with people who are smarter than you are and get out of their way. Don’t be afraid to give up control. Include rather than exclude them in decisions about running the business. Delegate and you’ll be amazed by what people can do. However, the price of getting people’s commitment is working on their issues as well as your issues.

Entrepreneurial leadership.

The ideal personal profile of an entrepreneurial leader is someone who is strong on every level, physically, mentally, emotionally, spiritually:

- Physically strong - healthy, fit, and energetic.

- Mentally strong - tough, sharp, and disciplined. Can solve problems quickly and decisively. Comfortable handling conflict and adversity.

- Emotionally strong - in touch with his or her emotions. Human. Empathetic.

- Spiritually strong - is grounded, balanced. Has a rich inner life. Feels a deep connection and purpose. Has his or her life together.

Great leaders have high reserves in all areas of their life. This is the case when:

- They make sure their personal needs are met.
When you have unmet needs, you attract others in the same position.

- They tolerate nothing.
You are what you tolerate. When you put up with something, it costs you. Costs are expensive and thus unattractive. “The art of leadership is saying no, not yes. It’s very easy to say yes,” according to Tony Blair.

- They’re oriented exclusively around their values.
When you spend your days doing what fulfills you, you're attractive to others.

- They deliver twice what they promise.
When you consistently deliver more than was expected, people are drawn to you.

- They affect others profoundly.
The more you touch others, the more attractive you become. And optimism is a force multiplier.

Here’s a checklist of things to think about as you carry out your leadership roles:
- Are you really focused on results, or on your own needs?
- Are you open or closed to correction?
- Do you always try to learn, and teach others when you can?
- Do you hold yourself fully accountable in work, or shift responsibility when things go wrong?
- Do you move quickly to solutions or take perverse delight in problems?
- Can you earn people’s trust?
- Are you looking for progress, not perfection?

Finally, remember Pat Murray's observation; “No great leader is a scorekeeper – all the wealth happens on the way to somewhere else.”