Hardware, software and system product companies routinely use partners for part or all of their new product development, and yet only a few companies are truly competent at managing those partners. The challenge of working with partners is multiplied if we want to take an Agile approach to product development. Using Agile methodologies such as Scrum, Kanban, Dynamic Systems Development Method (DSDM), or Feature Driven Development (FDD) requires an extremely closely knit and empowered team, so we cannot afford an “arm’s length” relationship with any partner working within the team. Before attempting a partnership for employing the principles of Agile development, a product development organization should have achieved excellence in partner relationship management basics.
In this blog Part 1, we discuss the Partner Relationship Lifecycle. In order to get the most out of a partner in developing innovative and profitable products, we first must recognize that a firm’s relationship with their partner follows a lifecycle of phases, similar to a product lifecycle. Several different people in any one organization deal with the partner, and the right person or role to lead the partner relationship changes, depending upon the phase of the lifecycle. For a successful relationship, people need to be trained for these roles – competency does not happen by osmosis.
In Part 2 to follow, we show how to decide on the roles of professionals in leading the partner relationship through these phases in order to optimize the collaboration and maximize the return on the investment in the partner. We present a tool called the Circle-Dot diagram to clarify which roles in the organization should lead at each phase. In any phase of the relationship lifecycle, there is a high risk of crossed communications leading to unclear expectations or scope creep due to multiple people in both organizations connecting. So in Part 2, we also present a tool called the Partner Communication Map to avoid this confusion.
In Part 3, we present the best ways to find the right potential partners, evaluate their strengths, weaknesses and match to the prime contractor’s needs, and then to qualify at least one of them. A good tool for evaluation and comparing potential partners is presented as the Partner Qualification or Performance Scoring chart. This tool can and should also be used for conducting periodic reviews of the partner’s overall performance.
Many companies would like to speed-up their product development process and make it more agile in order to meet changing customer expectations and unforeseen competitive threats. In Part 4, we advocate that the best way to streamline the process and allow for changing requirements is to use Agile development principles for both software and many kinds of hardware or system products (see John Carter’s blogs, for examples). These principles place even more demands on a tight, collaborative relationship with the partner, and we describe ways to achieve that kind of relationship.
Finally, in Part 5, we observe that this kind of collaboration usually requires a different approach to writing agreements or contracts with the partner, and we have some suggestions about how to formulate those agreements. We also point to some reference cases and summarize our findings and conclusions.
Lifecycles of Partner Management
The process of bringing on and managing a partner involves several lifecycle stages, including the search for potential partners, qualification, official engagement, achieving a symbiotic and optimum relationship, leveraging the partnership through the project and across the company, and then possible disengagement., as shown in Figure 1.
The pre-phase for any partner engagement is to Search for the best possible partner for the project. Modern internet and communication tools allow fruitful collaboration with partners that might be located anyplace in the world; so searches might be quite involved and extensive, and they are usually going on continuously among the functional engineering and procurement groups.
In Qualification, a potential partner is selected and then a process is executed to determine if that partner has the competencies, capabilities, capacity and match to the prime company for a specific job, or possibly for more general purposes. This phase might include a small development project to see how well the partner team works with the prime company’s team.
In the Engagement phase, contracts and/or service agreements are written, usually by someone from a procurement or contract management function with checks by the legal departments of both companies. People or teams are selected from both companies to interact with each other, and at least one Statement of Work (SOW) is generated for a project. Communication protocols are established, and the work is begun.
When the first engagement is well underway, the relationship enters the Symbiosis phase, in which the teams on both sides attempt to optimize the working relationship for maximum effectiveness and efficiency. This phase might be very fast if the people are chosen correctly, or may take some time and possibly changes of roles or personnel to get things working well.
Finding, qualifying, and achieving a symbiotic and productive relationship with a partner company is a big investment. The best companies follow-on with a Leverage phase to find additional areas in which they can use the same partner for other valued contributions or other projects. Note in the figure (dotted line) that the usage of a partner may be waxing and waning as projects start, end, or enter different phases. This variation is normal and healthy, providing the prime company with valuable flexibility.
Finally, there may be a Disengagement phase that can occur for a variety of reasons: Perhaps the next set of projects does not require the expertise of the partner, or the prime company decides to bring the capability in-house, or there is a business change or dispute, etc. In most cases, there is some kind of a wind-down period; although in a few cases it may be a very sharp cut-off. Or it may be that there is never a disengagement phase if it is truly a long-term symbiotic relationship. An example is the 20-year partnership between Hewlett-Packard and Canon to co-develop LaserJet printers.
In the next blog (Part 2), we will discuss which roles in the company are involved-in or lead the relationship with the partner in each phase of the lifecycle.