A Risk or a Gamble? Partners, Providers, and Promises

A Risk or a Gamble?

Organizations many times seek to expand their business beyond what they can achieve with their organic resources by entering into partnerships with providers that deliver the promise of access to new technologies, new markets, and new customers. However, as promising as partner relationships may be, they may also have an unfortunate downside as they may leave an organization in a worse business position if the promise of the potential partnership is unrealized.

A risk is a chance you take that if it does not work out, you can recover. A gamble is a chance you take that if it does not work out, you cannot recover. Field Marshal Erwin Rommel1

Want to avoid gambling the success of your business on a partnership? Then ask these questions before any agreement or renewal of an agreement and let the answers inform your decision to partner or not to partner.

Four Subjective Questions

  • Have you considered the motivation of the partner regarding why they would consider doing business with you?
  • What is the main priority of the potential partner and how much of a priority will your business receive given the potential partner’s priority?
  • Have you interviewed business partners of the potential partner to determine how their working relationships progressed after they formally signed partner agreements?
  • Does the potential partner have a history of putting partner agreement requirements in front of their immediate business need if there is a conflict between the two?

If you cannot answer yes and feel comfortable with the actual answer to each of these subjective questions, you may want to investigate the responses further as they may indicate the potential for problems at some point in a partnership.

Four Objective Questions

  • Has the potential partner had a change in executive management or reporting structures after you began your discussions or partnership with them?
  • Has the partner been under litigation in the past for any partner-related matter?
  • Is any member of the potential partner’s organization prevented from engaging with any particular company by a contractual agreement, temporary restraining order, or legal judgment?
  • Has the partner previously signed exclusivity agreements with any of your competitors operating in the same space as your organization?

If you answered yes to any of these objective questions, it is probably a good idea to investigate the reason for the yes answer further as a yes answer may indicate potential partnership issues.

These subjective and objective questions are certainly not the only ones2 that should be asked of potential providers before you consider partnership agreements. However, if these questions are asked up front, they may serve to uncover areas of concern that are better addressed before instead of after agreements have been signed.

The Bottom Line

If at any point before, during, or after an agreement you begin to have doubt about a partnership, it is probably prudent to address the reason for that doubt directly and immediately with the partner. If you still have doubt after that conversation with the potential or current partner, it is probably prudent to ensure you have a plan to continue to operate successfully if the relationship does not work out as planned or previously agreed. By taking this ‘control your own destiny’ approach and having partnership replacement or augmentation alternatives, you can ensure that the inherent business risk of a partnership does not become an unsuccessful organizational gamble. You may be able to recover from an unsuccessful risk, but you may not be able to recover from an unsuccessful gamble.

Desmond Young, Rommel: The Desert Fox (New York: William Morrow & Co., Inc., 1987), 230.

ComplexDiscovery. (2015, October 23). Six Uncomfortable Questions to Ask Your Technology Provider Immediately.