The importance of strategic partnerships

I talked in one of my previous blogs about the Free Zone Frontier, which is effectively where you have a product or service where there’s very little competition. For obvious reasons, this is a great place to do business, assuming there’s a demand for that service or product. What strategic partnerships do is multiply the effect of the Free Zone Frontier. 

In this blog, I’m going to explain two of the different kinds of strategic partnerships you can develop: company partnerships and supply partnerships.

Building company partnerships

At Cake, we began to form partnerships naturally, generally with the technology companies that we engaged with. For example, when we were predominantly a Java engineering organisation, we tried to get close to a company that’s now called Pivotal, although at that time it was called SpringSource. To a degree, we had a successful partnership, although it wasn’t as successful as I think it could have been. 

But at the time it was still a positive step for our organisation because it allowed us to name them as a partner on our website, which gave us a degree of credibility.  We also did a few events with them, which also improved our credibility. It was an important partnership, but as a company we became much better at working with partners further down the line.

At Cake, the pivotal moment came when we started to transition from Java technology to Scala technology. It was at this point that we started to form really deep relationships with  some of the technical companies that we dealt with on an almost daily basis. The reason this came about is because we believed that Scala and functional programming was the way that computing and software engineering was heading. It solved a lot of the issues we were facing around scaling systems. 

As I’ve mentioned before, we evangelised these technologies because we really believed in them. We talked about them at conferences and in user groups, we wrote blogs about them. These were all great things we were doing as a team. That obviously caught the eye of these companies. They knew what we were doing at Cake and saw the way we evangelised their technology as us doing them a big favour, because we were talking about the technology in such a positive light. 

What’s really important though is that they saw us as the purveyors of and experts in their technology. They also recognised that we added a degree of commercial expertise to the development of their technologies. 

As a result, we started to help them commercialise what they were doing. They were building frameworks and components that made engineering in the Scala world far easier and quicker, and therefore more commercial. Through our work with our clients, we were using that technology in the real world on some pretty big systems. This allowed the technology companies to use us and our clients as examples of businesses that were using their technologies commercially. It was a natural fit. 

Lightbend were the custodians of Scala and they built various frameworks and the tools and components that really helped. Then there were other companies like DataStax and even Amazon, with their cloud platforms and the other technologies they were using. At Cake, we believed in all of these technologies and they became part of our toolkit. 

This allowed us to form deep relationships with these companies, to the point that we would work really closely with them at conferences. We’d also sponsor them at conferences and in return would get lots of exposure and mentions. When their key people visited the UK, they would often come up to Manchester from London to give a talk to our team, or to deliver a talk to one of the groups that we were involved with.

We’d also produce joined up literature and would be mentioned in the various publications that they were writing. Likewise, we’d mention them in the publications that we were writing. We developed really healthy relationships with a number of the tech companies whose technologies we used.

How do company partnerships help?

The most important outcome of these partnerships was that they generated some really important leads for us. In fact, all of our big leads were referrals from partners. It was as simple as that. Our other source of leads was the work we did in the community, so the blogs, talks and those kinds of things. 

We did nothing in terms of being proactive and chasing opportunities in the way you might expect. But we had plenty of opportunities coming in off the back of a conference, a blog, an open-source project or from the relationships we’d developed with the tech companies that built the technologies that we used. 

In evangelising their technologies and proving that the technologies worked in the real world through our work with some major clients and big systems, we developed a healthy relationship with them. This gave us immediate credibility with new clients. Our expertise was never in doubt. That’s the importance of a strategic relationship. 

It’s important to state that I don’t ever recall exchanging money with any of our company partners. We didn’t use referral fees or anything like that. That wasn’t what it was about, it was all about the relationship. Equally, these companies never charged us for being their partner, which some did. It was purely relationship based, with huge benefits for both organisations. 

If you manage to find a product or service that sits in the Free Zone Frontier, which means you don’t have a huge amount of competition, if any at all, and you can develop some really important strategic partnerships, that will drive your growth better than you could hope for. 

Developing supply partnerships

Supply partnerships sit in a similar bracket to the strategic partnerships you’ll develop with companies. I’m a great believer in bringing key suppliers into my company’s ethos and culture. I know all the suppliers I dealt with while I was at Cake will testify to this, but we brought them all into the Cake family. We introduced them to our way of working, our culture and our ethos. 

There are a few partnerships that I’m going to call out in this blog and I’m sorry if you’re reading this and I haven’t mentioned you. I’ll start with Write Business Results, who I’ve worked with to produce books, as well as these blogs. Other supply partnerships I’d like to mention are the ones with Standby Productions for our videos, and The Realization Group for our marketing and branding. Then there’s HardSoft Computers who supplied our hardware in a way that worked for us. We were great for them, because as we grew at Cake they grew with us and they go more business out of us. We also paid all of our bills on time, so from that point of view we were a good partner.

But we also helped raise their profile, and equally they did exactly the same for us. They would recommend us just as we’d recommend them, and it was a really beneficial relationship. 

I refer people to all of my suppliers because I believe in what they’re doing, I know they’re doing a good job and consequently I’m more than happy to put my reputation on the line to recommend them. This should work both ways.

I don’t understand companies that treat suppliers like something they’ve stood on in the park. I just don’t get that at all, because you’ll never get anything other than the service they offer, but suppliers can offer so much more than that. It’s all about building that relationship, that trust, and working out where the benefits are for each other. 

Much like with the company partnerships, no money exchanged hands in relation to building supplier partnerships. Of course, we pay suppliers to do their job, but when you have a great relationship they’ll go over and above, just like we would for our partners. 

There are times when everybody’s cash flow is challenged for whatever reason. It could be that a big client has delayed paying you by four weeks, for instance. You know that the money is coming, but it’s coming a little late. In this kind of situation you can call your suppliers, explain what’s happened and ask if it’s ok if you pay them their money in four weeks. Ten times out of ten, those suppliers will say ‘yes, that’s fine’. When you have that kind of relationship with a supplier, trust is never an issue. They’ll appreciate the fact that you’ve spoken to them about it rather than simply ignoring it. 

Another partnership that I’d like to talk about from my time at Cake was with TRG Fitness that was located near our office. I joined that gym when it opened and I got to know the owners. Membership when I joined was £25 a month. At Cake, one of the perks we offered to all of our staff was that we’d pay for their gym membership there if they wanted to join. During the 16 years that I was a member of that gym, I think 30-40 of our team members joined the gym and the price they charged us for membership never went up from £25 a month. 

That wasn’t something I requested, but I think they appreciated the fact that we gave them sustained business over the years and we always spoke highly of them because it was a great gym. We had a great relationship. 

You don’t want to beat your suppliers down on price, but you want to trust them to always give you a fair price. If they want to take that a little bit further by offering you discounts or no price increases over the years then fantastic, but you have to let them decide to go the extra mile. 

Building a trusting relationship is important on both sides. I’ve got to trust that they’re always going to give me a fair quote. They’ve got to trust that I’m always going to pay them on time and treat them in the right way. You build that solid foundation and then see where that relationship can take you and how you can help each other. 


Guy is an experienced individual with over 20 years in the tech, software & consulting/advisory industries, as a founder, director, investor and advisor in a number of companies. 

 

Guy co-founded and is a non-exec of thestartupfactory.tech, which works with tech startups to turn their vision into a reality. thestartupfactory.tech is made up of experienced software engineers and commercial operators and works as a sweat equity investor with a shared risk philosophy at the heart of everything it does.

Read this…