Partnering: What Does It Mean?

Partnering is a commonly-used "buzz word" in today's Fast Business 2.0 world. But what does it mean, and after we know the meaning, what does partnering mean to business, Acme and others? Back to the dictionary.

Most online dictionaries only include the common, time-worn definition, that partnering is some form of forming a partnership, in business, sports or whatever. Not very helpful. So, on to the specialized sites. BusinessDictionary.com defines partnering as:

Establishing a long term win-win relationship based on mutual trust and teamwork, and on sharing of both risks and rewards. Partnering arrangement can be between labor and management, subordinates and the executive, suppliers and customers, and suppliers and suppliers. The objective is to focus on what each party does best, by sharing financial and other resources, and establishing specific roles for each participant. See also joint venture and strategic alliance.

Phew. I left in the links so you could peek at how other words you thought you knew, win-win, trust and objective say, were defined in modern business parlance.

What are the keys for Acme and the larger 'partnering' thread here? Win-Win certainly, sharing risks and rewards and establishing specific roles jump out. In time I will look at these, and more, but for now let's focus on the "specific roles" part.

Establishing specific roles implies a high level of mutual understanding and shared knowledge. Back when the ABC Co. made a traditional deal with a supplier there was little or no "mutual," it was all ABC wants to know this [about capacity, ability, track record etc.] and wants you to do this. Period. Basically the only information ABC sends is the exact specs of "this:" how many, what size, when delivered etc. The poor supplier knew nothing else about ABC.

Supplier relationships are thus different than partnering: not only is information flow one way, there is no shared risk for shared reward. The supplier will receive the contracted amount when the contract is completed (properly). It means nothing (or little anyway) to ABC if completing the contract bankrupts the supplier, and the supplier certainly will not accrue additional benefits if the products it supplies helps ABC make record profits.

(I could make the argument that traditional supplier relationships most resemble master-slave pairings, but adding sociology to the blog would bog the blog. And no one wants a boggy blog.)

Setting specific roles requires two-way knowledge transfer. Not the company secrets of course, the "11 herbs and spices" in Kentucky Fried Chicken or the secret formula for Coca-Cola, but at least the broad outines of objectives, capacities and requirements.

And thus the (first) 900 pound gorilla enters the room: measurement. How do you create a fair and transparent way to measure efforts and results, for without this how can you distribute costs, reveues and ... profits? For while it remains to be seen if partnering also requires each company to have its hand in the other's profit pocket, if it does entail mutual risk it then must require some sort of mutual reward.

To be continued ...