The Top Challenges in Managing Complex Partnerships Ecosystems
Multiple independent organisations working together presents opportunities for costly missteps.
In the world of business, more and more organisations are expanding into new markets and transforming initiatives. These often rely on a network of partners, like technology vendors, strategic alliances and joint ventures. Why? Because these complex partnership ecosystems have become critical engines of growth.
83% of US business leaders are planning on expanding their partner ecosystems in the next three years to accelerate growth, and ¾ of companies now view these partnerships as pivotal to fuelling growth.
But managing an increasing number of partnerships isn’t easy. Multiple independent organisations working together presents opportunities for costly missteps. As many of 50–80% of business partnerships eventually fail, and 70% fall short of their intended potential.
I’ve put together the top challenges businesses face in managing complex partnership ecosystems and listed strategies to overcome them. This way, companies can realise the full value of their collaborations.
Misaligned Objectives
One of the most common issues when entering a new partnership is misaligned objectives. This is because each organisation might have its own vision of success. For example, one partner might be prioritising rapid market share growth, while the other focuses on short term profitability. If goals and expectations are aligned, the partnership can stall or even veer off course.
59% of senior executives struggle to bridge the strategy-implementation gap. With partners involved, this can only get worse.
Impact of Misaligned Objectives
Ultimately, what will happen here is diverging goals that will struggle to deliver results. One or both parties may feel as though they’re not getting the expected value, which then breeds resentment.
Resources can be wasted on activities that don’t serve a common purpose, so decision making becomes contentious if success metrics aren’t agreed upon. In the end, the alliance may dissolve early or significantly underperform.
Strategies to Align Objectives
45% of executives say the biggest challenge is keeping partnerships mutually rewarding. A little bit of upfront and ongoing alignment efforts can alleviate this problem.
Focus on joint planning. Before formalising the partnership, hold strategy workshops to define shared vision and objectives. This way, both parties can agree on what success looks like and these can be properly documented in the partnership agreement or charter.
Establish mutual KPIs. Each partner will need to commit to key performance indicators. Mutual targets for customer acquisitions or co-developed product milestones can make sure everyone is striving towards the same outcomes. These should also be reviewed regularly.
Communication Breakdowns
Effective communication is the lifeblood of any collaboration. When partnership ecosystems get too complex, a breakdown in communication is all too common. This can be for a number of reasons and based on different communication preferences.
Impact of Communication Breakdowns
It’s important to understand that when communication breaks down between partners, there’s a ripple effect. Decisions get delayed or made in error due to outdated or missing information. Even small misunderstandings can snowball into larger issues if they aren’t clarified quickly.
This can also erode trust, especially if one partner feels out of the loop. When you get to this point, partners then question the other’s reliability or commitment. What ends up happening if poor communication isn’t resolved is a struggle to coordinate efforts or a failure to meet goals.
Strategies to Improve Communication
Proactive communication management can prevent these issues. You should establish regular touchpoints between partners to go through weekly projects, monthly check-ins or quarterly meetings. This way, any concerns can be raised as early as possible and in an open way.
It’s also important to establish clear roles and who the main contacts are. Liaisons or dedicated partnership managers should be the ones to coordinate information exchange. Whether it’s for technical issues, marketing plans or otherwise, this prevents confusion about who to reach out to.
Prioritising open and frequent communication avoids misunderstandings that lead to bigger failures. Preventing mistakes can only happen with effective communication, which in turn boost collective productivity and innovation within the partnership.
Conflicting Interests
Objectives can be aligned on paper, but companies can still face conflicting interests in practice. At the end of the day, each partner has its own business to run and profit to maximise. This can sometimes create friction that leads to disputes over arrangements and responsibilities. You don’t want to be in a position where you’re breeding distrust and antagonism.
Impact of Conflicting Interests
Any disputes can lead to larger conflicts if they remain unresolved. Decision making and progress then stalls and partners can start to withhold information from each other. In the worst situations, a partner could directly undermine the success of the other, shifting the dynamic to a “win/lose” scenario.
Fear of conflict can stop partners from fully committing. A large proportion of companies that struggle with ecosystem management worry about sharing assets or IP because they fear they’ll lose their competitive advantage. These hesitations prevent the partnership from reaching its full potential.
Strategies to Manage Conflicting Interests
Again, this all comes back to effective communication. Mutually beneficial partnerships work when boundaries and roles are clearly defined from the onset. This helps to avoid overlap and disputes over territories. But it’s more than that. Your incentives and shared values should also be aligned. Both parties should benefit from the success in a tangible way, encouraging collaboration instead of competition.
Perhaps the most important element to manage conflict is to implement a resolution mechanism. A process in place can help govern the framework for resolving issues and prevent escalation. Neutral alliance managers or third-party mediators can oversee these issues and broker solutions before relationships become damaged.
To build trust and transparency means sharing necessary information openly alongside any potential concerns. This way, you can effectively manage any areas of potential conflict and maintain a healthy balance of interests. This open dialogue can help even competitors-turned-partners to find new ways to succeed together that they couldn’t do alone.
Failing to Adapt to Market Changes
Agility is always key in business, and this extends to partnerships as well. One of the hardest aspects of managing a partnership ecosystem is ensuring that the relationships evolve with changing market conditions. Failing to adapt to emerging trends can jeopardise the partnership in becoming irrelevant for both parties.
76% of business leaders believe ecosystems will disrupt current business models and help partners keep up with industry disruption. As the world changes, these partnerships need to be ready to change course.
Impact of Failing to Adapt to Market Changes
Failure to adapt is likely a sign of stagnation or collapse. For example, if a large enterprise partners with a startup to sell a joint solution, they should look at keeping their offering relevant as the times change. If the technology landscape shifts and the partnership ignores the innovation, they’ll soon become outdated. Whereas, if more agile competitors form new alliances to address these market changes, they will leave old partnerships behind.
The price of being inflexible is also damaging during economic downturns or issues with supply chains. Alliances can break under such pressure as they’ll already be so fragile. Many companies fail to adapt as market conditions change. Having said that, some leading companies derive the vast majority of their revenue through evolving partner ecosystems. Microsoft generates 95% of its revenue via its partner network.
Strategies to Foster Adaptability
Keeping partnerships relevant requires some forward thinking. Regular strategic reviews go beyond day-to-day governance, helping to monitor changing market conditions and flag any potential opportunities. Big picture trends should be discussed and used as a way to reexamine the partnership’s direction. This proactive approach helps realign the partnership’s strategy or scope.
Flexibility should also be a staple of the partnership. Contracts should define commitments, but also include provisions for amending the partnership’s focus or terms as market conditions evolve. This way, expanding into new markets via mutual consent prevents you starting from scratch. Similarly, exit strategies or renewal clauses should be built in so both sides know they have the option to revisit or change the arrangement based on performance.
Being ready to respond to market changes ensures partnerships remain relevant and profitable year after year. Failure to do so can result in partnerships turning obsolete as the market moves on without them.
Navigating These Top Challenges
While managing a complex partnership ecosystem is undoubtedly a challenge, it’s increasingly essential in order for businesses to maintain a competitive advantage. As companies expand and digitise, success often hinges on how well they navigate a network of alliances. But the challenges discussed above aren’t impossible to overcome. Proactive relationship management can turn these obstacles into opportunities for improvement.
Getting it right though results in a massive payoff, driving innovation and opening new markets. Again, it’s no wonder than 94% of businesses believe their partner ecosystem will be a key enabler of future growth and competitive advantage. The more you’re willing to put into your partnerships, the more you stand to gain from them.
If anyone has concerns about building and managing their partnership ecosystem, do get in touch. I have years of experience in navigating these challenges and am always willing to listen.