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Know Your Allies! The Dangers of Partnership

A colleague of mine recently wrote an article about the benefits of strategic partnerships. I enjoyed the piece, and I don’t disagree with his observations, but it got me thinking about a few counterexamples, none of which are particularly pleasant. Strong partnerships, after all, fail all the time—often in disastrous fashion.

Though he made a compelling case, he stated that “a strong alliance is the only thing that wins wars,” then he challenged readers to prove him wrong. But to my mind, the proof is right in front of him: war itself. Former allies go to war all the time, and very often peaceful countries that share a border with every reason to work together, end up in bloody conflict. In fact, we wouldn’t need alliances at all if not for all the many former friends going to war (but that’s history for you).

And it’s true elsewhere, too. Take literature. Former friends Robert Frost and Wallace Stevens, two prehistoric old white-haired poets, used to get into actual fistfights. Hemingway and Faulkner absolutely despised each other. You might say, “Yes, Chris, but they were rivals.” Well, sure—but why? They had everything to gain from aligning and helping each other—yet they refused. What causes that kind of spite?

The world is strewn with other ugly examples. Couples get divorced. Great bands break up (yes, I’m still upset about The Beatles). And companies devour each other. If you research this stuff online, you start thinking that unnecessary conflict is the rule rather than the exception.

With that said, just like a great marriage, a strong and positive business partnership has enormous benefits. It can accelerate an enterprise and expand its customer base. But the question remains, how do you avoid ending up in a Yoko Ono situation, or sinking into some ongoing battle with former buddies like what historians of Rome refer to as the War of Allies?

Here are my five big reasons why alliances fail, plus some ways to avoid falling into bitter conflict with an ally.

Go Easy on the Ego

When two companies work together to bring innovation to the market, and they find success with it, it can create an unhelpful situation of pride. One player might inflate his contribution, while diminishing the contribution of partners. As happened at Barker Apparel recently, teammates with every reason to cooperate can doom their own companies with unnecessary rivalries, replete with smack talk, email attacks, and tense public displays of affliction.

In productive partnerships, members always do three things (1) they give credit where credit is due (2) they share credit even when it’s not necessary to do so and (3) they are explicit with each other about such issues from the start. Tell your partner that you expect to share all gains, and all losses, and that ego conflicts need not enter into the picture. In most cases, just being open about this from the beginning will defuse flare-ups before they start.

Ownership Rights Don’t Just Belong to You, Buddy

When companies work together to create new products, it can create conflict over legal rights. Battles over rights are always ugly—but especially when things aren’t properly documented.

And that’s the straightforward answer here: document everything. If you haven’t hammered out who owns what patents, trademarks, and processes for production, you can virtually guarantee you’ll be spending time in court. Even file emails and meeting notes. And, again, be open from the start by telling your business partner that you will be meticulously documenting everything to ensure transparency, shared value, and good will.

Money Talks

In all relationships, money is a source of stress, and I’m not just talking about how profits are split. In every partnership, two different management teams and boards of directors are responsible for the viability of their own individual brands. If one company has a bad quarter, it can force decisions to be made that may put the partnership at risk. If one company just straight up goes south, as happened with AOL in its partnership with Time Warner, all Hell can break loose. Poor organizational alignment and communication between partners regarding the level of commitment puts tremendous pressure on the relationship.

What’s the solution here? Don’t go bankrupt, for one thing: maintaining the health of your own brand means that you’re also maintaining the health of the partnership. And in the event that it’s your partner who has a bad quarter (or bad year), make sure you’ve taken care of this already in the initial documentation, with clear clauses regarding how and under what circumstances partnerships can peacefully and legally part ways without enmity.

How’s Your Culture?

Imagine the first meeting in 2014 when Apple struck a deal to partner with IBM: the black turtlenecks of Apple working with the Brooks Brothers suits of IBM. When companies partner up and there are clear differences in culture, it can create clashes between the two that are sometimes more difficult to overcome than you’d think. You see this a lot when tech companies are being integrated into more established brand names.

But you wouldn’t marry someone who didn’t jive with your personality, would you? So don’t go into business with a company that doesn’t more or less share the major points of your outlook. Difference can be good and effective—creative tension is important in a productive relationship—but brands that are at perfect odds will end up in total war.

Keep Partners Close—And Staff Closer

When companies come together, there’s always a risk that your best employees will find in the partner the benefits, culture, and opportunities they prefer. By partnering, you could invite the loss of good staff just based on the sudden comparison and contrast. Some brands, it’s said, even use these alliances as a way to poach talent. Scary, but true!

The first way you avoid this is you pay your people well and treat them nice. The second way you avoid this is by not going into partnerships with predatory creeps. And above all the third way is that you ensure that there is, once again, in the documentation of the terms of your participation with your new partner a clear and proper non-compete that can obviate this possibility before it even happens.

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