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Adopting global partnering as an effective customer strategy

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2nd Feb 2009
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The downturn is a time for change and innovation, argues Graham Jarvis, who looks at how businesses are adopting a global partnership approach to survive and thrive.

By Graham Jarvis

The recent number of redundancies reported and the demise of some leading brands show it is a time to think differently and resist following the crowd. Service and value differentiators other than cost will make the difference between being a leader or follower during the credit crunch, creating a strong business case for global partnerships.

With resources tight - and becoming ever more scarce - sharing resources with a global partner who adds value to your existing offerings and service levels makes sense and can employ the best combination of skills. "There is greater emphasis on the delivery of benefits and value," says Arun Aggarwal, EMEA vice president and head of consulting for TCS.

"Organisations need to use multiple strategies to satisfy customers and reduce cost through economies of scale."

Jasminder Gulati, director of international business, Microsoft Global Services

Mukul Gupta, associate vice president of Infosys, also thinks it's time to leverage the ideas you have developed to help your customers or prospects, and bring them to the market much faster. These ideas could become new products and services, developed with a global partner to give you a competitive advantage.

"As the world becomes more complex, customers demand a more diverse set of services," explains Jasminder Gulati, director of international business at Microsoft Global Services explains. "Organisations need to use multiple strategies to satisfy customers and reduce cost through economies of scale." The development of global partnerships can reduce operational and project-related expenses and you can add different kinds of value through working with partners with different skill sets.

Leading Global Key Account Management author and director of Insight MP, Peter Cheverton, believes it's too early to tell whether or not this strategy will enable companies to thrive in the current economic climate. You might just need to partner locally or change tack nationally, regionally or locally. Although you could gain access to new resources, developing new partnerships on any scale can initially be an expensive exercise.

Being truly global

But by adopting a more global approach, you could access a large, inexpensive talent pool. India, for example, has been the test bed for many companies over the last 10 years. The key driver used to be cost but the country now offers a lot more than this, including automation of data, data analysis and business process management outsourcing. Gulati believes India is moving up the value chain by offering more strategic partnerships and services.

Yet, Cheverton argues that there aren't many genuine global customers and suppliers. To be truly 'global', he believes there must be more uniformity than traditionally exists between partnering organisations. While global partners might build and design the 'product chassis' together to suit a global market environment, there is still a need to create localised packaging, flavours and twists. "If partnerships are wrapped around the purchasing department, they aren't strategic," he emphasises.

Coca Cola understands this prerequisite for localisation, and therefore it taps into the local knowledge and skills of companies that work within its particular markets to fulfil its strategic and operational requirements. It's an important lesson because even with globalisation, it's sometimes impossible to roll-out a globalised marketing strategy that will work in each international market.

CitiBank understood this too, and sold off its German retail arm before outsourcing the company's non-core activities like the management of their business processes.

Lloyds TSB did much the same with its UK-based retail businesses. It had a very large South American business and took the view that local expertise and the company's proximity to its customers is important. "I think CitiBank are taking the same view," says Aggarwal. By having a local partner with the appropriate expertise and knowledge of the South American markets, Lloyds TSB reportedly increased its ability to provide a higher level of customer service than it might otherwise be able to manage.

Top tips to creating effective global partnerships

  • Consider the global picture. "Entrepreneurs must consider the global picture in all aspects of planning, whether it is research and development, production or marketing," according to says Dr Muhammad Farmer of the British Institute of Technology and e-Commerce. He stresses that innovation is key to creating successful, effective global partnerships which could enable you to thrive during the downturn.

  • Use local Knowledge to gain an advantage. A local partner can help you with knowledge to improve your organisation's ability to adopt your global strategy to suit the local market and connect with your customers. Some products and services can be truly global, such as perfumes, but others, like food, can't.

  • Gain advocacy and support from the top. Given the strategic nature of local and global partnerships, the top management team has to control and cajole local entities into delivering and achieving whatever is required of them - not global key account managers.

  • Establish a global profit and loss account. "If you can't measure what's good for you, how can measure your performance?" says Cheverton. It's rare to have the right level of uniformity to create one global profit and loss account. This makes it harder to measure the rewards for establishing a global partnership.

  • Focus on your core competencies to find the right partners. Successful partnerships begin with knowing what your organisation is good at, seeking to complement your skill sets with others which enhance your ability to innovate, manage the supply chain, penetrate existing markets, develop new ones, offer new products and services and enhance existing customer relationships or help you to create new ones. Gulati says it's important to understand what a partner is bringing to the table, and how you leverage the partner's expertise to benefit all concerned.

  • Consider whether your partners are future-proofed. One company got into trouble as a result of partnering Lehman Brothers – one of the key casualties of the credit crunch. No one forecast the collapse of such major companies as this, proving the future-proofing of partners can be difficult to predict. How would you keep operating if one of your global partners collapsed?

  • Collaborate with partners and associates. There is a saying that 'a problem shared is a problem halved', and by working with others you can reduce the pressure and risk created by a certain strategy, project or activity. For example, collaborate on co-creation of intellectual property by combining the expense of research and development.

  • Create a business ecosystem. Collaboration should extend to customers, says Gupta, and involve the entire business ecosystem (e.g. competitors, academics, vendors, suppliers, etc.). Those suppliers closest to the customer are likely to gain the most from this model. An extension of this ecosystem might include the company and its partners working with society and the environment as a whole, instigating corporate social responsibility strategies through the partnership network.

  • Extend your reach with information communications technology (ICT). It's important to be able to track communications between partners, to know which tasks have been completed and what is yet to be done. Jason Nash, marketing manager for Microsoft CRM, also agrees that companies should consider using instant messaging, VoIP, video conferencing, mobile and other technologies to create a holistic partnership view. Consider extending your CRM system by creating an extranet with an xCRM system.

  • Consider the costs. Global partnerships require investment in time, money and travel. Even though technology can reduce the need to travel, face-to-face meetings help to keep the relationship alive. People like the human touch, which ICT can’t replace.

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