How Can Small Contractors Develop Successful Strategic Alliances with Larger Ones (Part 1)
6 Things to look for in a partner
By Vince Fudzie
This is the first part of a series that discusses what to consider in choosing a partner, what needs to be in your agreement and how the venture will operate.
Wikipedia defines a strategic alliance as an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. For our purposes, an alliance between a small company and a larger one can take many forms from a teaming agreement to a 50:50 joint venture.
A simple Google search reveals tons of information discussing the topic of strategic alliances. However, it is a challenge to find one cogent article on how to successfully develop alliances between small and large contractors. In practice, alliances are difficult to manage under the best of circumstances, let alone in a situation that may have been born solely out of socio-political influences.
Because choosing the wrong partner can have disastrous financial consequences for smaller contractors with limited resources, this decision is crucial. I am amazed by how many companies haphazardly form ventures without first thoroughly vetting one another’s cultures, ethics and business philosophies. Before entering into an agreement, as is the case with any relationship, it is wise to get to know your partner first.
If the following character traits sound like advice from a marriage counselor, then you’re absolutely correct. An alliance is very much like a marriage, so make sure that your partner has a good number of these traits:
- Commitment. Without both companies’ wholehearted commitment from the top to the lowest levels of their organizations, the venture is destined to fail. In general, this commitment needs to focus on the overall success of the joint venture which is the only way to assure an equitable relationship. If this commitment does not exist, you should seriously reconsider entering into an agreement.
- Respect. A lack of respect can stem from a number of reasons, but it is often due to the perception by one of the parties that the other is receiving unequal rewards for the level of risk they are incurring. When this perception and resulting lack of respect permeate throughout your partner’s organization, it makes for a very contentious relationship. You need to talk with your partner early on to address such issues. If your company offered no value, then there would probably be no need to discuss partnering.
- Humility. Sometimes the nature of large businesses can breed a level of egotism that flourishes throughout the organization, even for newer, inexperienced employees. Having this type of partner can be disastrous, especially if this characteristic extends to interaction with project owners. Once an owner catches wind of an egotistical contractor, your project success is prone to disaster.
- Trust. Any viable relationship begins with trust between the parties, and, prior to inking any agreement, you must begin to develop it. Just as in personal relationships, trust can be developed in many ways. Behaviors such as developing rapport outside the office, following through on commitments, being well-versed in what you bring to the venture, standing up and taking responsibility for missteps, and being considerate of others’ time – these are the types of actions that create trust in business and in life.
- Shared Values. Good partners should possess shared values. For example, both firms should have similar values of integrity, collaboration, service and excellence. Alignment of core values will be critical for successfully working together. If one of the partners is short sided in any core value, it may lead to disappointing results for the project and discord between the parties.
- Vision. Too often, companies form alliances in a “just in time” fashion – just in time to turn the proposal in. They may even spend time developing a rapport. And, if they don’t win the proposal, there is a likelihood they may not speak again unless another opportune project presents itself. This is not how committed partners act. Partners with vision are committed, not only to the project, but to the relationship being built. They find a partner with the right traits and build upon their mutual bond. Otherwise, you are playing the game alone and never really creating a team with the best possibility of winning.
Choosing the right partner is simply the beginning of a potentially fruitful relationship. However, a successful venture will require not only the right partners, but well-thought-out and well-implemented agreements with the right heart and spirit by those involved.
Vince Fudzie MBA, CPA, CIRA, is the Managing Member of Triune. Founded in 1997 with headquarters in Dallas, Triune is a leading, integrated, design-build general contractor in the Southwest region of the country.
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