Sandy Jap, Professor of Marketing, Emory University Goizueta Business School, examined how marketers can evaluate a business partnership and take the necessary steps to prevent this relationship from deteriorating in her keynote presentation to Argyle's CMO membership at the 2016 Chief Marketing Officer Leadership Forum: Spotlight on B2B Marketing in Atlanta on Oct. 27. In her presentation, "Partnering with the Frenemy," Jap evaluated some of the key factors that can cause a business partnership to fall apart, along with how marketers can identify and address such issues quickly and efficiently.
According to Jap, most CMOs understand the importance of strategic partnerships. However, recent data indicates that about half of all strategic partnerships are more likely to fail than succeed.
Why do most strategic partnerships fail? Jap pointed out these partnerships frequently fall apart due to poor relationship management.
"Oftentimes, the reason why partnerships and alliances fail has nothing to do with the quantitative profit case," she noted. "It has a lot to do with the 'squishy factors' … [involving] relationship management."
"Frenemies" commonly exist in today's global marketplace, and Jap pointed out that Samsung and Google highlight one of today's successful "frenemy" partnership.
Samsung and Google together have dominated the smartphone landscape for years as part of a long-term pact. Google has begun to develop its own smartphones, while Samsung created its own operating system for its mobile devices.
"Trust is more like a liquid … it has to be done in incremental flows through regular outputs."
When Samsung and Google worked together, both companies benefited. Now, the companies operate as frenemies, which has caused their relationship to deteriorate.
"Google started to worry that Samsung might be getting too big," Jap said. "And when you're a little bigger, you probably want a little bigger share of the pie."
How marketers approach "frenemization" is key. If marketers understand that a successful partnership requires mutual dependence from both parties involved, this relationship may thrive.
On the other hand, if a partnership is built upon mistrust, all parties involved may struggle to maximize the value of the relationship.
"Good partnerships, when they work, mean that the two partners actually become more dependent on each other," Jap said. "We don't like to be dependent on our partners. … and we'll often try to counter-balance that dependence."
Furthermore, communication is essential for any partnership to succeed. If partners remain open with one another, they can resolve partnership issues before they escalate.
"As those suspicions build and they're not addressed, then all of the sudden a vilification process sets in," Jap pointed out. "What happens at that point between the partners is a natural downward spiral."
Marketers must understand what it means to create a "trusting" partnership to ensure a relationship can succeed both now and in the future.
"Once a relationship has gone bad, it's really hard to save it, and it's certainly very hard to improve upon it."
Jap stated that many marketers view trust like a bank account, i.e. trust is built accumulated over time. Conversely, she noted that trust is fluid, and as such, may wane on a day-to-day basis.
"Trust is more easily lost than built," Jap said. "Trust is more like a liquid … it has to be done in incremental flows through regular outputs."
Marketers must be able to address any potential partnership issues, as failure to do so could cause a relationship to sour instantly. Meanwhile, if a partnership goes awry, all parties involved may struggle to return the relationship to its previous state.
"Once a relationship has gone bad, it's really hard to save it, and it's certainly very hard to improve upon it," Jap said. "It's really hard to get rid of a bad history. Problems in the past will color and impact your performance today."
Although marketers may be tempted to perform a "grand gesture" to save a faltering partnership, doing so may cause additional suspicions to arise between those involved.
Jap said the recipient of a grand gesture may question why its partner is performing this act. As such, the gesture could raise concerns and questions that cause a partnership to fail.
Lastly, Jap pointed out that there is a natural assumption that partners will "cheat" in a relationship.
"Once you get into a relationship, the fact that you're in the context of the relationship … gives the managers and the firms a license to cheat each other. Not in big ways, just in small ways," she stated.
How partners communicate with one another may dictate whether a partnership can succeed. If partners maintain open lines of communication and are unafraid to raise concerns and questions as needed, both parties could reap the benefits of a successful relationship for years to come.
Sandy Jap is a Professor of Marketing at the Goizueta Business School at Emory University. She is a co-founder of the Emory Marketing Analytics Center (MAC) and an international expert in the management of partnering relationships and business-to-business issues. Her research centers on the development of organizational relationships, go-to-market strategies, and e-procurement.
Prior to joining Goizueta, Sandy served on the faculty at the Sloan School of Management at the Massachusetts Institute of Technology for six years and was a Visiting Associate Faculty member at the Wharton School at the University of Pennsylvania. She teaches channel strategy and retailing classes for MBA, executive, and undergraduate programs, and the marketing strategy seminar in the PhD program.