The board's role in strategic partnerships and the long-term purpose of organisations
Terms like fluid, unpredictable and increasingly complex define today’s corporate world. No single institution can boast the totality of expertise required for maximum long-term value to its stakeholders (customers, employees, suppliers, communities they serve and shareholders) in this fast-paced world. Sustaining and increasing relevance in the marketplace, then, fundamentally demands strategic partnerships to enable organisations to compete and achieve the desired milestones.
As the board fulfils its role of strategy development and planning, conversations surrounding strategic partnerships and how these can help achieve the organisation’s purpose and long-term sustainable growth have become vital.
If the board identifies an opportunity warranting strategic partnership, its role would be important in selecting and settling on the collaborative partner(s). Board members typically have strong networks pillared on trusted past relationships and therefore would be well-positioned to suggest organisations that are worthy of consideration. They should accordingly be prepared to get more engaged over and above the regular board meetings since some partnerships may require their personal involvement in negotiations. They must be careful, though, and avoid getting too involved to avoid compromising their fiduciary duties of being independent and avoiding conflict of interest.
While evaluating options for strategic partnerships, the board should consider, but not be limited to:
The long-term purpose of the organisation
The partnership should help the organisation serve its core mission. A well-articulated alliance strategy that stems from the organisation’s business strategy should be in place to avoid falling into the partner’s strategy. A strategy gelling process should be undertaken to address the vision and objectives of the partnership. Objectives set should be measurable and monitored at agreed intervals.
Buy-in of senior executives
The alliance strategy should be developed jointly with senior executives to ensure their buy-in since they will be involved in the day-to-day management of the partnership, the absence of which puts the success of the partnership in jeopardy.
Considering the time taken in planning, implementing, monitoring and evaluating a strategic partnership arrangement, the board should ensure that the partnership addresses and/or solves a problem that has a material impact on the business in terms of cost saving, revenue generation, market expansion, product development or impact creation to name a few.
It is important to ensure that the selected partner’s values are aligned with those of the organisation and further ensure that there is compatibility in culture. Most importantly, there should be strategic alignment with the partner institution.
A popular wise African saying teaches that, “If you want to go fast, go alone; if you want to go far, go together.”
Strategic partnerships can help an organisation reduce research and development costs through the sharing of intellectual property, which in turn can lead to faster penetration and access to global markets. Gone are the days when organisations relied solely on organic growth to achieve the desired growth rate. The board needs to keep this in mind during strategy planning sessions to ensure the institutions they represent don’t miss out on partnership opportunities consequently crippling the long-term sustainable growth of the company.
This is a guest blog which contains the views of the author and does not necessarily represent the views of the IoD.