In a rapidly changing business landscape characterised by exponential digital transformation, companies across various industries are faced with the challenge of expanding beyond their traditional offerings, devising new business models, and identifying fresh customer segments.
As many enterprises find themselves at the natural limits of growth within their primary domains, the imperative to diversify into different sectors has become essential for enhancing stability and profitability. To address these evolving dynamics, businesses are increasingly turning to strategic partnerships as a key driver of growth and innovation.
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According to Pierre Romagny, a partner in the financial services practice at Oliver Wyman in South Africa, partnerships are a “critical move” for businesses seeking to navigate this changing landscape. He underscores the pivotal role that partnerships play in future-proofing a business.
Based on a recent study conducted by Oliver Wyman, which involved interviews with over 30 experts and executives from banks and ecosystem organisations, Romagny reveals the critical importance of partnerships in the eyes of industry leaders. When asked to rate the importance of partnerships on a scale of 1 to 10, the average response was an emphatic 9.3, underscoring the significance of this strategic approach.
He says one of the respondents emphasised that “growth via partnership is probably the single biggest agenda for both our consumer and wholesale business.” Another respondent noted that “partners are the lifeblood” of the “platform organisation.” These sentiments underscore the widespread recognition that partnerships are not merely an option but a necessity for thriving in the digital age.
Expanding a business’s product or service portfolio to meet evolving customer demands and expectations can be a daunting task. Romagny points out that while companies could embark on the journey alone, building proprietary solutions can be “costly, time-consuming, susceptible to scope creep and ultimately failure.”
He suggests that collaborating with established partners who possess the requisite expertise, assets, market access, and reach can be a more effective and cost-efficient strategy in the long run.
Romagny emphasises that properly structured partnerships have the potential to drive innovation and foster sustainable growth. He states, “One thing that makes properly structured partnerships so powerful is the fact the partner stands to gain just as much as your business if the product succeeds and will also lose just as much if it fails. They’re invested.”
However, despite the evident benefits of partnerships, Romagny acknowledges that many ventures in this realm falter. Citing the 2020 World Fintech report, he states that only “six percent of partnerships between banks and their partners – whether fintechs or other members of the financial services industry – deliver the expected results.” He poses the question: can partnerships ever truly succeed?
Romagny believes that successful partnerships are achievable but only if certain essential elements are in place. He outlines eight crucial steps that can pave the way for fruitful collaborations:
- Move from vendor to partner: Transform partnerships from mere vendor-client relationships into genuine collaborations aimed at “co-creating solutions that will help you both grow.”
- Evaluate and intentionally plan: Articulate the purpose behind seeking partners, identify the right fit-for-purpose collaborators, and proactively seek out suitable partners.
- Formalise engagement models: Define how to manage relationships with different partner types, involving them in discussions about expectations and capabilities.
- Have a clear two-way value proposition: Clearly communicate the benefits partners bring to the table while also defining what they can expect to gain from the collaboration.
- Define a broad partner strategy: Treat partnerships as strategic enablers that contribute to generating shareholder value and establish a plan for tracking progress.
- Adopt a partner-ready organisational structure: Develop the necessary capabilities and dedicated teams to proactively manage partnerships.
- Embrace continuous learning: Seek regular feedback from partners to identify areas for improvement and foster open communication.
- Digitise parts of the process: Streamline partnership management by digitising key processes, from scouting and onboarding to contract management and performance tracking.
Romagny concludes that as we peer into the future, the most successful business models will undoubtedly be constructed on the foundations of successful partnerships. Waiting on the sidelines is not an option; companies that do not prioritise and cultivate strategic partnerships risk being left behind.
It is, therefore, imperative for businesses to invest in partnerships today, building the capabilities required to excel in tomorrow’s competitive landscape. In doing so, they can navigate the challenges of the digital age and future-proof their operations for sustainable growth and innovation.