The Economist on the Power of Partnerships


We’re definitely on to something…

We’ve been writing about the power of strategic partnerships, and the role they play in businesses’ growth, for a little while now. Lately, we’ve been seeing several articles popping up in major publications and research documents that support our thinking and what we are looking to help others to achieve.

One article in particular caught our eye, as it really brought home many of the relevant points we have described in previous posts. In the May 2015 print edition, The Economist highlighted a number of points about strategic alliances that we thought looked a bit familiar:

Uneasy alliances are becoming more common:

Partnering with a competitor is something we’ve touched on before. Even though businesses may publicly identify as competitors, often one has the technology, facilities and human capital that the other needs to complete a project or build a new product or technology. Often in situations such as this, the two competitors will silently partner, and news of the partnership will not be overt. In many cases, these alliances will not be made public at all, so as to not alienate brand aficionados and loyal customer bases.

An interesting and relatable example noted in The Economist article is the partnership between Apple and Samsung. Obviously identified as fierce market competitors, these two tech and mobile giants have partnered in an interesting way: Samsung produces the microchips that Apple requires for their iPhones. Each brand has a strong, loyal customer base and this type of partnership, while mutually beneficial, risks alienating the brands’ audiences. So rather than making huge public announcements about this particular arrangement, the partnership has gone on relatively quietly with many purchasers none the wiser.

The Economist on Different Industries Coming Together

…in some industries, the cost of new technologies is so crippling that even the largest companies cannot bear it alone. -The Economist

The easiest solution to this kind of dilemma according to The Economist, is to form an alliance, which allows both companies achieve their technological goals.

We are seeing the emergence of more and more business accelerators, startups and business unit spin-offs around the world, bringing incredible small business growth to industries and markets than ever before. These companies bring together visionaries and ideas that are breaking the traditional industry boundaries, as products and services demanded by modern consumers are moving further and further away from siloed abilities and productivity offerings.

For instance, we are seeing collaborations between financial institutions and mobile technology in the form of mobile payments. Similarly, as noted in The Economist, we are seeing companies such as IBM and Apple joining forces for IBM’s MobileFirst for iOS, as well as Wink’s movement to create a technologically connected home.

Cross-border ties are also on the rise.

“The world is global, but not everybody can service or supply globally.” -Denise Tormey, PlanNet21

Eastern and Western companies need each other in order to be globally competitive. Isolation in a single market can be detrimental to a growing business, whether or not their intention is to have global operations or subsidiaries.

International expansion is a goal of many firms, as access to a new market brings about a larger source of new customers. Additionally, The Economist notes that identifying and pursuing regions where products can be inexpensively produced has long been an interest of globally-focused businesses. While it is more common to think of Western businesses outsourcing for cheaper manufacturing in the East, it is becoming more and more common to see Eastern companies approaching Western companies for growth opportunities on a global scale.

While global operations can be very beneficial to business growth, there are some important factors to consider when servicing customers in new geographies, as described by Denise Tormey of PlanNet21:

  • Inter-market co-operations must exist prior to the start of any business activity in a new market
  • Is the product/service being produced in the new market of the same quality and excellence offered in the domestic market?
  • Is the new product/service culturally appropriate in the new market?

The new partnership consideration – your customers!

The fourth partnership-driving pressure among businesses stems from the consumer. As online shopping gains in popularity, owners of physical shops are having to find new ways to get customers to visit them.

According to The Economist, E-commerce is here to stay. So how do brick and mortar stores remain viable and successful? Store owners are by necessity having to become digitally savvy, in order to remain in business. Creative digital advertising, creation of a company website, and employing content and social media strategies are becoming more and more common ways to find and engage new customers.

Additionally, many companies are partnering with each other to balance out the skill sets and output capacities that each has. For instance, small retail shops may be partnering with a local cafe to offer their customers discounts and perks for shopping at each other’s stores. Many are even sharing retail space, with wine bars and coffee shops popping up inside the clothing stores, offering customers an enhanced shopping experience.

This is a simple example, but one that is fairly easy to implement. As e-commerce continues to grow in size and scope, small and medium shops will need to transition into the digitally-based way of doing business.

Knowing the challenges, why do it?

Companies are casting around for alliances that can complement their strengths, make up for their defects, hedge their bets, add to their store of knowledge or extend their reach. -The Economist

The wealth of benefits to be gained via strategic alliances and partnerships – no matter your company’s size or revenue – are many and varied. So why do businesses prefer to enter into partnerships even though they know they face an uphill battle? Easy – the rewards outweigh the risk – and they know that in order to continually grow their business, they need to partner to remain alive and relevant.


For more on partnership and alliance professional’s insights into sourcing and developing partnerships, be sure to check out our latest white paper, “The New Partner Search: How Digital Tools are Changing the Sourcing Process,” available as a free download.