The Map of Innovation: Creating Something Out of Nothing by Kevin O'Connor & Paul B. Brown

Author:Kevin O'Connor & Paul B. Brown
Language: eng
Format: mobi
Publisher: The Crown Publishing Group
Published: 2003-08-11T14:00:00+00:00

Joint Ventures and Strategic Partnerships

To me, joint ventures are a lot like going global. I wouldn’t worry about it initially.

Joint ventures and strategic business partnerships seem to be very popular, but they rarely work. People think they will have a high degree of success with joint ventures because they seem to make sense. The company you team with brings their strengths to the deal, you bring yours, and armed with more firepower than either of you could come up with alone, you go after the market.

It makes for a great press release. The problem is that both sides usually contribute third-rate people to the venture, and nothing happens.

Joint ventures generally fail because they aren’t core to either company. If the idea is really core, you do it yourself. When something isn’t strategic, you tend not to focus on it.

Our experience has been decidedly mixed. Our joint venture for DoubleClick Japan is going very well and is now a public company there. Our joint ventures in Spain and Italy did not go so well because our joint-venture partners had a diverse opinion on how the company should be run and funded.

Do joint ventures for only two reasons: You have a potential partner in a territory that is not strategically critical for your company; or it’s the one way to penetrate a territory due to money or tradition (e.g., Japan).

Strategic partnerships are something else I would stay away from. I know they’re in vogue, especially among tech-based firms. It seems every company has someone in charge of business development, so their company can form partnerships that make them appear bigger and allow them to move faster than they could otherwise. But I find the whole strategic relationship thing kind of bogus.

I tend to look at business development differently than most people. I figure you already have a sales force selling in a well-structured manner. Given that, business-development people should go out and look for deals that are a bit more integrated. Maybe they sell multiple products together. Or private-label what you have.

The way it is typically done doesn’t make sense. Is there any money exchanging hands? If there were, that would strike me as a real strategic relationship.

Going global is one more task I wouldn’t spend my time on in the start-up mode. You should be doing everything you can to dominate your local market. When we first started DoubleClick, we had people coming to us and saying, “We want to joint-venture with you and help take you international.” We kept saying, “Let us make our mistakes on a small scale. Let us localize what we are doing wrong.”

Two other thoughts:

Determine early on if you want to sell direct—that is, through your own sales force. That could include inbound and outbound telemarketers selling exclusively through reps and/or distributors, or some combination of both. You know the advantages, so I won’t belabor them: If you use your own people, you control everything and have higher margins. The disadvantages are equally clear: You can grow only as fast as your ability to take on new people.

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