or partner - you decide
January 31, 2000
BY MICHAEL KRAUSS
is deeply ingrained in the American psyche, yet in interactive
marketing, it can be a losing strategy.
of the frontiersman, the cowboy, the explorer, the inventor-the
rugged individualist-is very much part of our culture.
Even in the
technology world, we celebrate a pantheon of heroic individual
achievements in Bill Gates, Carly Fiorina, Jeff Bezos, Marc Andreessen,
Jim Clark, Steve Jobs or John Chambers.
success on the Internet depends on collaboration and community-building,
not only among users or customers but among service providers
and business developers. Partnering, building alliances and collaborating
is the order of the day-the way to get your product or service
offering built and out the door fast, providing top quality and
offering the lowest risk.
In fact, a
whole science of partnerships is emerging today. Ask John Henderson,
a professor at Boston University: "The concept of alliances
is an essential element of business and technology strategy today,"
says Henderson, coauthor of a landmark paper entitled "Strategic
Alignment: Leveraging Information Technology for Transforming
Organizations" which was published in IBM Systems Journal
'80s, we saw (that) technology would enable organizations that
crossed the boundaries of a single firm. You could see a new organizational
form emerging that was network-centric, not firm-centric,"
And that new
organizational form is here today. It's not Alfred Sloan's General
Motors; it's Tim Koogle's and Jerry Yang's Yahoo!.
the brand that gets you to the best sites, best content and best
services; that's what the brand means to its customers. That's
the core value proposition, but how does Yahoo! deliver? How does
it manage to be the one site to stop at on the Web?
invent every new business. Rather, it cuts a partner-relationship
deal, bringing millions of eyeballs to the table and taking a
piece of the action. Effective partnering, perhaps even more than
brand-building, is Yahoo!'s most critical success factor. It's
a veritable partnership-making machine. Do you want to…
content to Yahoo!? There's a Content Partnerships form.
Yahoo! services or content? Distribution Partnership form.
a strategic e-commerce partnership? E-commerce Partnerships
communications products with the Yahoo! brand? Communication
Product Partnerships form.
- offer same
nifty new technology to Yahoo!? Technology Partnerships form.
- have Yahoo!
as your portal for your corporate intranet? Corporate Partnerships
Of course, the online forms are just the tip of the partnership
iceberg, which Yahoo! has down to a science. Yahoo! spends no
more than a few hours hammering out each agreement. Its executives
are young and motivated to try new approaches. They're willing
to take risks-and willing to do an about-face if they make a mistake,
like reversing their direction with Visa after that partnership
didn't work out.
is Quicken.com, which built an online financial services supermarket
in 24 months, featuring insurance, stock trading, mortgages, estate
planning and personal financial services. Yet Quicken didn't acquire
a single provider and didn't build any new competencies. There
were no real investments in assets made by Quicken.
Speed is one
reason that partnering has become essential. A new Internet entrepreneur
or a large organization moving online can't afford to take the
time to build all the competencies needed before launching the
new business. Falling transaction costs are another driver: The
Web keeps reducing the costs of doing business, and partnering
often is a solid way to lower costs and keep up with the competition.
To stay competitive when building new products and services, you
need to line up the most efficient partners.
can be a slippery slope unless you have a solid set of business
principles. Martin Nisenholtz, CEO of Times Company Digital, The
New York Times' online venture, establishes clear criteria for
partnering. Speaking at a recent industry conference on the subject,
Nisenholtz articulated several of the Times' criteria for partnering:
- The partner
must be a high-quality brand.
- It has
to fit and be relevant to The New York Times' target audience.
- It has
to deliver high traffic levels.
- There should
be an opportunity to build a community.
- Its content
structure can't jeopardize the Times' online editorial integrity.
are some very important strategic issues that spin out of partnering,"
Henderson adds. "The old Michael Porter Five Forces model
is a firm-centric model. Today, we need a network-centric view.
We must look at capabilities, products and customers not from
a bilateral transactional approach but from a network approach,"
point: How do you go about marketing to your customers when your
customers are a community? Today, there may be as much going on
amongst your customers as there is between you and your customers.
You need processes and approaches that enable you to capture value
from these relationships.
not all relationships are alike. Ask yourself what are the risk
and return profiles you want to manage, and how do you adjust
the governance approaches you need to undertake," he says.
I guess it
all comes down to choosing your partners wisely; in the world
of the Internet, you can't succeed without them.
is a partner with Diamond Technology Partners in Chicago.
He can be reached at firstname.lastname@example.org.