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It is not practical for your company to do everything itself. Other companies’ resources and expertise are needed to support your business. If you have the proper mindset going into the relationship, these firms, partners if you will, can be an off-balance sheet asset that grows in value as your firm’s value grows.

The dictionary defines a partner as “a person who takes part in an undertaking with another or others, especially in a business or company, with shared risks and profits.” This concise wording describes the concept of a partnership that can greatly improve your market position and bottom line.

Benefits of a Well Designed Partnership

In any venture (product, service, business…), a sound design and plan is required for success. Partnerships are no different. Both parties invest their expertise and capital into a project with the expectation of a sufficient return on that investment. The partners share in the profits and losses in proportion to their investment.

There are many benefits of a partnership, but the three most significant are increased productivity, reduced time-to-market, and improved innovation.

Increased Productivity

The most significant improvement in measurable results will be in productivity. The ability to combine your investment with a partner’s, compared to using 100% internal resources, and leveraging the (smaller) investment into a profitable outcome is what sets partnerships above most other activities in terms of payback.

The expertise and IP your firm possesses is a valuable off-balance sheet asset. Your employees create all of your firm’s intellectual property so the best way to increase the return on this asset is to fully employ it. The best method I’ve found for doing this is by combining your expertise with your partner’s technical, manufacturing, and management abilities. If you are truly trusting partners, then this help should be embraced by both parties.

Reduced Time-to-Market

Time-to-market is the single biggest contributor (after product cost) to profitability for any new product. The faster a product is brought to market, the sooner it begins paying back the investment. A solid partner can help decrease both development time and the level of investment by offering:

  • expertise not available within your organization
  • additional personnel required to meet schedules
  • supply chain expertise

The results of these benefits are difficult to measure in financial terms until after the product is launched. The methodology I’ve seen most effective is to create two complete business cases for the product development project: one with and one without partnerships. When good faith best estimates are used, my experience shows the partnership plan provides at least twice the ROI of the alternative, and occasionally much higher.

Increased Innovation

It is impossible for a firm to know everything, despite what they may think. A partner will augment your in-house expertise with a different expertise and set of viewpoints. This broader set of skills and experiences can improve the product performance while reducing development costs. The new expertise will manifest itself in an expanded knowledge base that provides better solutions faster and at a total lower cost.

Conclusion

A trusting partnership is one of the best methods for improving your firm’s productivity, time-to-market and bottom line profitability. Whether the partner is an individual expert consultant or an engineering and manufacturing conglomerate, the possibilities to improve your company’s performance through a mutually beneficial project are too great to ignore.

©2016 by Doug Ringer. All Rights Reserved.

Doug Ringer, the author of “The Profit Imperative” and “The Product Rocket,” works with leaders who want to think strategically, grow dramatically, compete successfully, and develop profitable habits within their organizations. He can be reached at 502-509-9746 and doug@dougringer.com. Follow his work at www.dougringer.com and on Twitter @doug_ringer.

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