Value Creation

“The true mission of a business is to create value. Any business muddled enough to believe that its real purpose is producing profit is probably not long for this world. Profit is absolutely essential, to be sure, but it is a downstream outcome of creating value, and so it functions very poorly as an objective in itself.” Frederick F. Reichheld

Partnering is all about creating value. Organizations have begun to recognize the fact that by strategically partnering with companies who complement their core focus results in achieving greater sustainable competitive advantages and higher levels of productivity. For example Intel’s partnership with Microsoft shows how two very different firms strategically partnered together to push each other’s products and services more effectively.

When two companies make a conscious decision to adjust their strategies to complement the partnership that is when true value is created.Both companies must have the mindset when they go into this agreement it should be with a win-win attitude. If only one partner is adding most of the value the imbalance will result in a rapid deterioration in the relationship. When negotiating successful partnerships analyze how both companies can add substantial value to each other. You have to enter the agreement with an objective of increasing the overall market size that you are operating in. In this way both you and your partner will get a large piece of the pie.

Partnerships are all about focusing on your core competencies and leveraging off your partners competencies to make your product or service offering more attractive. We have to constantly strive to achieve a level of relationship where tasks will not be duplicated in either organization and the focus will be on creating new opportunities and value for your customers or clients.Next time you are looking at adding a strategic, start with a win-win point of view. Think a lot less traditionally and focus on the bigger picture to achieve maximum impact.

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