I talk a lot about leverage. People usually think about systems or automation as leverage but, have you thought about people or organisations?
Someone or an organisation that solely focuses on an area in your business is going to have significant knowledge and expertise that you can access and leverage. Framing up a successful strategic partnership can produce excellent results for your business.
My preferred approach when looking at Strategic Partnerships is looking at an arrangement that has a lower retainer/monthly fee with a success fee outcome payment. A partnership should be a shared risk/shared gain model for it to be equitable and this approach puts this into place. Many organisations I have dealt with over the years are totally focused on an hourly rate for payment and work they undertake rather than getting the results and outcomes. So this is all about what they do, the time they spend rather than the results from their activity. This has always been something that has frustrated me when working with suppliers.
What I have found is that it acts as a great filter as well.
In my experience when I suggest this approach – I always get 1 of 2 responses. They are either interested in exploring how this could work – or they say they do not work like that.
Those that are interested to explore indicate to me that they know how to get the outcomes you are looking for and are open to seeing how a better arrangement could be put together. This gives me more confidence about what they can achieve. There are businesses out there actively looking for these arrangements as they understand the concept of scaling through leverage and know it will be more lucrative for them if set up correctly.
The second group, even though they indicated they can get the desired outcomes, are not prepared to back their work and outcomes to prove it. This is always a red flag. I understand that this approach can not work in all parts of your businesses and with all suppliers but in some key areas, it is a valid approach to engaging people to work with. Ultimately we all make decisions about how we choose to operate our businesses and the arrangements we put into place.
As this is a risk/reward approach – it is important to understand that a supplier you work with must be able to make far more money on the outcomes due to the risk they are taking if it does not work. It puts everyone’s attention on outcomes rather than activity. You need to look closely at your business model, understand your costs and margins so you can offer an approach that works for everyone involved. See if you can brainstorm some areas where Strategic Partnerships work for you in your business.