Different isn't Necessarily Better

At least not when it comes to business partnerships.

As a general rule, I've never come across a completely ideal partner for joint ventures, licenses, or any form of shared production and/or marketing deal.  Each partner brings their unique view of the world to the partnership, including their take on governance, priorities, expectations, ethics, and the like.

My ideal partner would be completely transparent and ethical, flexible on their needs so that I can meet mine, and nearly like me in most ways.

That pretty much explains why the ideal is never attained.

But where do you draw the line, recognizing that your potential partner is simply too "different" for you to bridge the gap?  Where are their differences in strategy, culture, and norms a mere inconvenience that can be overcome?

That's a question only you can answer.  But I can at least describe a few deals where the differences were so large, that the gap either couldn't be bridged, or where I would have been well advised to not attempt to do so.  None of these ended prettily.

I once inherited an Indian joint venture that, despite the initial expectations, eventually became a complete mess.  When I made my first trip to visit the JV's operations, I was quite impressed with the partner.  They were large, having multiple JV's with a variety of western companies, as well as several wholly owned businesses of their own.  The owner's son, the primary person I interacted with, was educated in Europe and appeared to be both affable and sensible.  After the trip, which was undertaken to figure out why the joint venture's results were so poor, I learned that our partner was sucking all the profits out of the venture.  This was accomplished by charging outrageous prices for the components they were manufacturing and supplying to the business with one of their other companies.  In that instance, the partner's sense of honesty and fair play was so radically different from ours, that it never even occurred to me that they might be stealing from us.

An inherited license agreement with a company in Saudi Arabia provided a similar lesson.  Although our contract clearly stated that we owned the technology, and the partner retained no rights to it at the termination of the license, they had no problem stealing our drawings, specifications, and marketing materials by superficially altering them.  They relied on the legal venue -- in Saudi -- as their trump card in their attempt to escape the intent of the deal.  Of course, I already knew there would be problems when I earlier realized that everything the partner told me needed to be independently verified to be believed.  While having a partner like this was manageable during the agreement -- although very time and effort consuming -- when it came time for the deal to end, their behavior was predictable and the results, disastrous.

I was smarter when contemplating a joint venture with a department of the Chinese government.  Discussions were friendly, but when I insisted the partner accomplish some simple market research prior to completing the deal, it became obvious that they would provide nothing of value to the proposed project.  Thankfully, we never launched it.

A similar experience occurred with a proposed venture with an Israeli Kibbutz.  In that case, however, I was eager to press forward with a deal, and it was my boss that pulled the plug on it.  I'm not positive that the project would have been unmanageable, but there is no doubt it would have had some major challenges.

All of the above examples were from proposed International deals.  Extra caution should be taken when considering these ventures.  While the tenets of business that are more or less common around the world ease some of the differences between cultures, there are often still major differences that may make a long term business relationship a huge challenge.  Know the country, know local business practices, get to know the key leaders in the partner organization.  If you are seeing major differences between your needs/beliefs and those of the proposed partner -- particularly when it comes to ethical behavior -- stay away.

Similar problems can also happen in relationships within the same country.  In one instance, I became involved in a joint venture with a partner in the U.S. where the partner had absolutely no interest in pursuing any of my firm's priorities.  What the partner wanted was cash to fund an ill-considered expansion.  Within a short time of signing our agreement the partner began to balk at everything action we proposed or suggested.  I received a further wake-up call when I observed the partner have a contentious meeting with a supplier, one where he misrepresented the facts surrounding a warranty problem in order to get concessions (primarily warranty dollars).  Doing that would have resulted in discipline, even termination, at our firm.  Needless to say, that relationship didn't end well.

While difference can sometimes create complimentary strengths and weaknesses in a business partnership, it more often will create problems that make the ongoing management of the relationship difficult, if not impossible.  If you're contemplating a partnership, study those differences intently, and try to be realistic about the potential challenges of working together down the road.  If you've inherited a problematic relationship, you may as well come to grips with the challenges and study your options right away.  Hoping things will get better on their own is unrealistic and foolish.  In some cases, you may even need to unwind the deal.  20.4

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If you are intrigued by the ideas presented in my blog posts, check out some of my other writing.

Novels: LEVERAGEINCENTIVIZEDELIVERABLES and HEIR APPARENT.  Coming soon -- PURSUING OTHER OPPORTUNITIES

Non-Fiction:  NAVIGATING CORPORATE POLITICS

 When you're worth hundreds of millions of dollars, the remote wilderness can be anything but safe.

When you're worth hundreds of millions of dollars, the remote wilderness can be anything but safe.

This is the cover of my new, and soon to be released novel, PURSUING OTHER OPPORTUNITIES.  This story marks the return of LEVERAGE characters Mark Carson and Cathy Chin, now going by the name of Matt and Sandy Lively and on the run from the FBI.  The pair are working for a remote British Columbia lodge specializing in Corporate adventure/retreats for senior executives.  When the Redhouse Consulting retreat goes horribly wrong, Matt finds himself pursuing kidnappers through the wilderness, while Sandy simultaneously tries to fend off an inquisitive police detective and an aggressive lodge owner.

My novels are based on extensions of my 27 years of personal experience as a senior manager in public corporations.  Most were inspired by real events.