3 Key Decisions in Launching and Growing a Strategic Partnerships Team
Understand the trade-offs you'll face as you grow
A brief conversation in class on the first day of middle school leads to a life-long friendship. A question to a stranger while in line at a coffee shop turns into a marriage. Small decisions can have big consequences, particularly when it comes to relationships. But organizations often follow a more predictable path. This post is about how to organize your strategic partnerships team - the group tasked with cultivating key external relationships and negotiating big agreements - and how decisions during the formative stages of a company impact outcomes down the road.
Three key decisions that tech companies must make in launching and growing a strategic partnerships team:
(1) Organizational structure & partnerships - should the partnerships team be embedded within each product area/business unit? Or should they be centralized as a functional team independent from our business units? This decision is larger than the partnership team but it is valuable to understand how org structure can shape partnerships.
(2) Team structure - should the partnerships team be organized by partner type (e.g. payment providers, content providers, cloud platforms, etc.) or by internal business units? This is a perennial question for external-facing teams but the consequences for partnerships are unique given the cross-functional work required to secure strategic partnerships.
(3) Geographic coverage - should our partnerships team operate out of headquarters or should we hire partnerships leads in regional markets to be closer to partners? This is often not a question of “if” but “when.” But what signals indicate that “when” has become “now”?
Each of these decisions warrant their own post but here is a summary in three parts:
1. Organizational structure & partnerships: embedded or centralized?
Organizational structure is like the skeletal structure of a company. Just as skeletal structure allows giraffes to reach high and cheetahs to run fast, organizational structure enables companies to expand and move quickly. The organizational structure choices you make will impact every function, from design to product and sales. And for many technology companies where functional teams must work closely together, organizational design has two common options: matrix or siloed. A matrixed organization has a collection of functional teams that allocate resources to different initiatives, business units, etc. A siloed organization, on the other hand, has independent business units that operate (and are staffed) in parallel. As you evaluate the trade-offs between these options, it is worth understanding the impact on the partnerships your company pursues.
To evaluate those trade-offs, let’s consider Amazon. Now I realize your company is likely much, much smaller than Amazon. Even still, examining partnerships through the lens of a larger organization is useful for highlighting how the organizational decisions made early on can impact outcomes downstream. For the purpose of this example, let’s pretend Amazon has three product groups (aka business units): Amazon.com, AWS and Alexa.
Without question, the Alexa business unit will be best served by a partnerships team embedded within (aka dedicated to) the Alexa team that has a deep understanding of the business unit’s product vision and roadmap. Without question, a partnerships team embedded within the Alexa team will produce the best partnership deals for Alexa. But what is best for Amazon?
A partnerships team that is embedded in multiple business units simultaneously creates several negative consequences for Amazon overall. First, these three Amazon partnerships teams are competing with each other for attention and focus from, say, Visa. This tends to undermine the relationships with Visa that Amazon is trying to cultivate (not to mention the relationships within Amazon). Second, rather than aligning internally on what objectives are most important, Amazon is now effectively outsourcing prioritization of deals to Visa. Since Visa is being pitched by three different Amazon teams simultaneously, they have leverage over Amazon. Lastly, in negotiating with Amazon, Disney can use its leverage and play different Amazon teams against each other to secure deal terms favorable to Visa.
Every company is unique and there is no correct answer but I recommend embedding partnerships when the company has a single product line and centralizing the partnerships team when there are multiple product areas competing for resources.
2. Team structure: product or partner?
Beyond organizational structure, technology companies also must decide whether to organize the partnerships team by product area or partnership type. To understand this decision and the trade-offs, let’s continue the Amazon scenario. Let’s assume Amazon (and nearly all of its business units) have a collection of high-priority, strategic partners in a few different areas:
payment providers (Visa, Mastercard),
content providers (Disney, NFL)
consumer products (Procter & Gamble, Coca-Cola).
Partnering creatively with these companies can unlock multi-million dollar deals for both Amazon and these partners. But what is the best way for Amazon to organize itself as it pursues new collaborations with these partners?
Orienting partnerships by product ensures the team is closely aligned with the product and engineering leadership. With deep product expertise, the partnerships team can engage partners with the level of product knowledge that a transformative deal requires.
But the counter argument is that Amazon already has product experts - the product managers and engineers that build its products. What Amazon needs most from its partnerships team is deep knowledge of and relationships with its partners, like Visa or the NFL. Under this view, Amazon should organize its partnerships team by partner type (e.g. payment providers, content providers, etc).
Partnerships leaders must possess both deep product knowledge and deep partner knowledge. But companies must choose which of these two is more important as they structure the partnerships team. This is a difficult issue and many companies struggle with, and over time shift back and forth on. One way to mitigate the downside of either path is through talent acquisition: hiring internally (to beef up on product knowledge) for partner-oriented teams or hiring externally (to add industry expertise) for product-oriented teams.
Every company must find the best answer for them but in my experience, orienting partnerships teams by partner-type is a luxury that larger companies can afford and is desirable because it leads to deeper relationships with partners. Earlier stage companies need partnership generalists who have deep product knowledge and can quickly build strong relationships with partners and think strategically while navigating across a diverse portfolio of partners in a single week.
3. Geographic coverage: headquarters or regional?
On the road to becoming the Amazon we know today, the company grew from a Seattle-only team to a global workforce with offices across many markets. As that expansion unfolded for Amazon - like it is today for high-growth companies like Stripe, Airtable and Hopin - they faced the question of whether to build strategic relationships and structure deals from headquarters or hire in-market for talent with local knowledge and key relationships.
It is difficult to keep partnership leads based in foreign markets fully-informed of strategic initiatives and ever-changing product roadmaps. But a partnerships team operating out of headquarters that is seeking to negotiate with a large partner in India, for example, is at a clear disadvantage. They lack the relationships and the cultural and business context that is generally required to get a big deal done in a foreign market. Handling all partnerships out of headquarters gives competitive advantage to local and regional competitors who are closer to the partners you are looking to cultivate. The question is not if a global presence makes sense but when do you know it is time? Two common paths to hiring partnerships leads in a market:
Tops-down partnership expansion - your team at headquarters cultivates a deal in a new market that represents a big enough opportunity to staff up a team. You’ll need a partnerships lead in market to close the deal and grow the relationship.
Bottoms-up partnership expansion - as organic demand grows in a market (e.g. usage metrics, inbound leads, etc), staff up a team to localize the product to customer needs in market. Once the product team is in place, add fuel to growth in the market by hiring a partnerships lead to crack open larger deals.
For most technology companies facing these three questions the answer will be heavily informed by their size and stage of development. The argument here is not that an early stage company should be matrixed. Many are too small. Or that hiring globally is better than operating the partnerships team out of headquarters. The point is that as you launch and build a strategic partnerships team it is important to understand and anticipate the trade-offs when you decide how your organizational structure, team orientation and team location because these decisions will shape the quality of the partnerships and the impact of the deals.