David and Goliath - A Quick Date or a Long-Term Relationship?

Much as these days many corporate Goliaths are actively looking for entrepreneurial partner Davids, it’s often the case that entrepreneurs have to make the first move in developing a strategic relationship.

The right kind of relationship with a Goliath and its customer base can be transformational for a David, providing the rapid growth at predictable margin that other early-stage companies can only hope to achieve by other means.

It’s worth the effort too because well-managed Goliath relationships provide the credibility and experience that assures organic business growth outside of the engagement. But like all relationships, they should be entered into with eyes wide open and that starts with understanding the nature and motivations of both parties.

The difference between customer and partner

Despite the deliberate conflation of the terms customer and partner in `marketing speak` there is a profound difference between `customer` and `partner` and this needs to be recognised. Essentially, it’s the difference between a quick date and a long-term commitment.

Certainly, the process of identifying and selecting potential customers or partners is pretty much the same: find out what it is that they need; identify how a product or service will meet it and target businesses accordingly.  It’s the context that makes the difference and that needs to be understood.
 
Common interests and goals

A successful tactical sale to a customer involves engaging an individual or team who are trying to address a particular challenge in their department or deliver on their responsibility in the business.

Creating a partner, however, requires the supplier to become part of the target company’s customer engagement and retention strategy. This means that opportunities to partner are usually much more difficult to find and require more resources to be successful, particularly given the significant differences that usually exist between corporate and entrepreneurial businesses.

To succeed, the two parties have to be aligned in many different ways.  Most particularly they must have common interests and goals or they will quickly diverge. The process requires Davids to deal with the existing and complex Goliath partnership structures, licensing and financial deals that are designed to execute successfully strategic decisions made at board level.

They involve many people of different disciplines because they go to the heart of the organisation’s purpose and, as such, have a greater impact of they fail.  As with most big deals, the level of risk increases with the level of opportunity.  And that means the bureaucracy around risk management also increases to a level that Davids may find tiresome and intimidating in equal measure.

The upside of this is that this process shines a light on what life will be like as Goliath’s partner and underlines the reality that Davids need to fully comprehend to ensure that there's both a cultural fit as well as a commercial one.  As ever, the devil is in the detail.

Proper preparation

Thus, when engaging with Goliath, proper preparation by Davids is vital.

A large organisation can absorb more failure that a small one, so, as a David, it’s more important to get things right up front. Davids should also remember that they may only be one of a number of strategic partnerships that a Goliath will be negotiating at any one time. So unless the partnership is going to save Goliath from oblivion it may be paying less attention to the deal than the David might be. 

Not being overwhelmed by the potential opportunity and knowing exactly how its product or service fits within the strategic plans of the target organisation is fundamental if any deal is going to succeed.

At a corporate level David and Goliath might share the same business goals and provide a perfect financial fit for each other. However, if the teams don’t get on, for whatever reason, or the David fails to get the right kind of buy-in around the deal champion then the relationship could be doomed and the benefits lost.

The human factor cannot be underestimated and the personal risk, imagined or otherwise, that the Goliath team may be taking needs to be appreciated.  Personal agendas vary. Doing a deal with a David might be viewed internally as an admission of failure to innovate from within.  At all times, Davids should seek to make Goliath look good and that requires a bit of ego control.

Play the long game

In all of this it’s important for Davids to realise when business growth planning, that working with Goliath partners is never going to be easy. Large corporates have established processes and structures that move slowly, are naturally very political and employ many people who are disconnected from other parts of the organisation, let alone the customer. And so Davids may have to get used to pitching their proposition over and over again.

For Davids, this can be frustrating as it clashes with their agility, quick decision processes and the need to maintain cash flow. But it’s vital that Davids have the confidence not to try and force the pace. In a strategic relationship the long game should be planned for and played from the start.