Most of the time, I write for an audience that is very familiar, and -I hope so- convinced of the value that partnerships bring top the table, but in this occasion, I was invited for a “guest post” by my former professor and author, Dr. Art Weinstein. The article, in its original form, can be found on Dr. Weinstein’s blog HERE.
In today’s complex business environment, there is almost no product or service that is made, or delivered, end-to-end by one single company. There is almost always an intricate network of supply chain elements and partnerships involved.With the exception of the few of us who are deeply wading in the waters of partner ecosystems, these complexities tend to be ignored.
Not even in some partner-friendly company settings is everyone adequately acquainted with their own delivery models. More than a few times, I have found myself briefing an executive about the differences between their own Value Added Resellers and Agents.
Very often, these relationships are also simplified, mentally classifying them like a “supplier” or even worse, “the middle man”, as if for some inherited privilege they have earned the right to collect some type of tax that they don’t really deserve.
The truth is that many companies rely on partnerships to deliver their products to the market, and their partners are an integral part of their Go-To-Market strategy. In today’s world, it is a rare find a company that is capable to deliver their product or service all the way from the source, to the hands of the customer. Along this journey, several companies -or “partners”- may perform services, attach other products, etc. adding value to the final product that lands at the customer. It is from this journey and the several steps of value-add that the concept of the value chain stems from, and the product or service that is delivered to the customer is experienced through its Joint Value Proposition.
While these concepts are omnipresent in the tech industry, they are all over our economy as well. Two of the most noticeable ones are the Distribution Channel, and the Service Delivery Partners. As for the first one, we see it everywhere, from the grocery store, the car dealership, or our trusted IT guy. For example, it is impossible -and not cost-effective- for car manufacturers to set up dealerships in every town, so they rely on entrepreneurs who are willing to enter in this business. In a similar way, growers and other foodstuff manufacturers cannot afford to go to every town to sell their goods, so they engage in the distribution network (channel!) that brings those goods to your local grocery store.
It is very important to recognize the value that each of these partners offers for the consumer. Yes, they take a piece of the profits to pay for their services, but they also add value to the product or service. For example, the local dealership makes it easy to get there, they offer financing (they basically bring together the automobile, and a financial product, the loan), and they can also service your car. In the case of the grocery store, besides making it really convenient to buy, with extended business hours, refrigeration, and now even home delivery, they are also an “aggregator”, allowing us to buy apples, milk and honey, without having to visit the orchard, the dairy farmer, and the beekeeper.
A Service Delivery Partner can be a key player in the value chain, especially if the product or service requires installation, servicing, or any form of customization. They can be as simple as the independent contractor that may install the carpets that you bought at the big home-improvement store, or as complex as Microsoft’s partner network, where partners specialize in specific technologies. Think about the difference in value of the carpet just delivered to your house in a roll, vs. actually being able to step on it. How much more value does that have in terms of your ability to enjoy the product?
The way we experience a product or service is the result of all the value transactions that occur throughout the value chain, before they reach us. Some of these value transactions and the players involved, have evolved over time, filling a need. Others have been created intentionally, by design. This is where some companies have the opportunity to differentiate themselves from others by designing value chains that complement each other, delivering value to their customers.
In your journey, What would you build if you could do it all? What are you missing? What kind of partner do you need that complements the value that you create? What would be the differentiated joint value proposition?