GiantSteps/Media Technology strategies has a philosophy of strategic technology and service partnerships that derives from various sources. The most important is the idea of a value network, as espoused in books like Information Rules, by Carl Shapiro and Hal Varian. A value network is a group of businesses with interdependent products and services that, taken together, form a market. Another important concept is the difference between a piece of pure technology and a total solution to a customer's problem, as Geoffrey Moore emphasized in his Crossing the Chasm and Inside the Tornado. Technology-driven businesses must either offer complete solutions to customers' problems or choose to be part of someone else's solution. It's either one or the other.

If you are building a technology-based product or service, you must ask yourself these questions:

  1. How does my offering help a customer solve a problem?
  2. What is the difference between my offering and a complete solution to the problem?
  3. What other vendors are there who can fill in the gaps between my offering and a total solution?
  4. What are the pros and cons of building out the complete solution myself vs. partnering for the missing components?

Many technology-based organizations make two mistakes: confusing a piece of technology with a total solution, and rejecting the idea of partnerships through "not invented here" attitudes.

The market for content management systems has exhibited both of these symptoms, although the same can be said about markets that involve various other technologies. Content management is technology infrastructure that supports content muiltipurposing and digital publishing. However, it is not a multipurposing or digital publishing solution by itself. It is difficult to attach an ROI to content management per se. In the early days of content management (roughly 1994-97), vendors tried selling content management as if it were a complete solution, and they failed. In fact, one early vendor of content management systems, Documentum, explicitly decided to choose vertical markets based on their ability to define and build a total solution for that market that would achieve major ROI for customers. Documentum succeeded where many others failed.

The "not invented here" symptom also applies to the content management market. Various solution companies (system integrators, service providers, etc.) have been successful in building total solutions around content management platforms. Yet many of these firms felt the need to build their own content management functionality instead of integrating with existing solutions. This is also a mistake. They chose to build something that met near-term requirements and was easy to integrate with because it was familiar. But later on, they found that their home-grown offering didn't keep pace with the market (which grew in features and began to commoditize) and was a drain on resources to support and maintain. These firms ended up with monkeys on their backs, and they suffered for it.

The statements above apply to many different technology markets, not just content management. In earlier days, they applied to things like email systems, network file management, and groupware. The key for any technology-driven business is to figure out what its core value to the customer is, concentrate internal resources on that, and partner for the rest.

Some people argue against that statement: they say that if you go to market with partners, you lose the exclusivity of the customer relationship. That is a false argument that dates back to the old days of vertical solution providers like IBM and DEC. You can maintain long-term relationships with customers through a combination of strong brand identity, superior products, and a top-notch network of partners with which to go to market.

Sun Microsystems was the ultimate example of this in its heyday in the late 1990s through the bursting of the Internet bubble. Sun does not produce solutions for customers; it produces server hardware, workstations, storage devices, and related products. (It has a professional services division, but that exists mainly to provide implementation expertise that is specific to Sun products.) Sun had developed strong brand identity and was known as a key technology provider. Sun salespeople often pitched solutions, instead of products, to their customers. Yet they offered them through software vendors, system integrators, and other partners; Sun almost never took a "prime contractor" role. Sun's partners liked working with the company because it had a powerful presence in the marketplace but did not compete with them.

In other words, Sun worked to optimize its position as a key player in various value networks.  Unfortunately, Sun was not able to sustain its strong brand identity after the Internet bubble burst, so its ability to maintain a strong partner network eroded.

In today's information businesses, one of the most important executive positions is the VP of Business Development -- or, as it should more properly be called, Chief Partnership Officer. It has become obvious that websites cannot function without partnerships for distribution and marketing as well as back end functions like e-commerce and customer service. Similarly, content and technology organizations must understand their place in their value networks and build partnerships to strengthen it.

Expending precious internal resources on activities that are better handled by partners is wasteful; the benefits of partnering far outweigh the disadvantages. There are many key factors in choosing the right partners; some are fairly obvious, but they are worth stating. The most important is that the non-core function for which you want to partner is the other company's core business. Another is that the two companies should be strategically aligned, meaning that the companies should be after the same target markets and have similar strategic goals. There should be minimal danger that the two companies will compete or an understanding in advance of how competitive situations will be resolved. Finally, there should be good personal chemistry between the principals of the two companies. The best way to find this out is to actually start working together. Work on one or two projects with the other company before launching a full-scale partnership, merger, or acquisition.

Doing these things will result in a stronger business over the long term, one that is part of a value network and offers total solutions to customers.

GiantSteps Media Technology Strategies offers experienced guidance to technology vendors in strategic partnerships and other areas. Click here for more information.


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