PRODUCT PARTNERSHIPS (1)

How to create successful product partnerships when you say bye to ‘build’ & ‘buy’

9 min readFeb 4, 2023

I’ve had the privilege of leading some internal & strategic external partnerships in my product career. More recently, the partnership has been at company-level, where I drove OEM (read: smartphone mobile global vendor with the largest marketshare in the world) engagement with our cloud storage consumer product (read: an up-and-coming noob in photos sharing and storage w.r.t. other big-wigs in the industry). Given the affinity of PC & Android users, this market segment seemed to be untapped, and our primary goal was to find and drive synergy in this market sweet-spot by developing a holistic ecosystem for these users. And hence this OEM partnership has been crucial for the two companies involved, to help drive acquisition and broader engagement efforts for these customers.

On the internal front, I’m currently leading enablement & adoption of enterprise search efforts within my company as customer zero (read: we represent employees, before taking the experiences to an external audience). This entails partnering with cross-functional product teams through either co-development, co-design, product evangelization, product proposal definition and user experience integration efforts. All this is to say that we help our channel product teams prioritize the right sets of experiences /features in their product roadmaps, or co-develop solutions with these product teams, either for a short engagement or a longer-term continuous partnership.

These partnership efforts (along with some others prior to my current company) have allowed me to experiment with different strategies to create a “good partnership model” — mind you, my process has been strewn with dead bodies of tactics which have flailed and evaporated into thin air, but then other stratagems have struck gold which I’ve encapsulated in my “operating model”.

This article lists some of the tactics I abide by to create successful vision-led product partnerships, whilst either starting a new engagement or energizing an existing one. Every partnership process has three (or more) stages, but here’re the high-level ones —

Partnership Analysis, Validation & Go/No-Go Decision — decision to move forward with the partnership or not.
Design Operating Model — align on the working model of the partnership (if you do decide to move ahead).
Incubate Partnership — implement/incubate the partnership and measure success in the process.
Identify next new bets & enhance working model — take the partnership to the next level through new opportunities and/or enhancing the partnership dynamics.

PARTNERSHIP ANALYSIS, VALIDATION, GO/NO-GO DECISION

#1 Decide whether to build, buy or partner

First and foremost, when you identify a need in your org that your team/company doesn’t have the expertise to solve for, you’d need to decide whether building it yourself (creating an expertise from scratch more or less), buying an outfit/company (which can provide you the solution out of the box), partnering up with a company/team (which has similar synergies with you), or a combination of two or more of the above strategies is the right path forward for you.

This topic might require an entire article by itself, but in short, various factors might influence your decision-making criteria —

stage of the team/company (is it in the early product-market fit stage, growth or maturity stage)
the end outcome you want to achieve
long-term vision vs. short term goals
urgency for time-to-market to ride the industry trend/direction (eg. AI efforts/ GPT)
resourcing/budget needed to fund the decision

These are just some of the factors you can use to decide between build, buy or partner to solve a particular user pain-point, expand into a new market, or provide an innovative capability to existing customers. If you do decide to partner (especially with an external company), read on..

#2 Identify long term synergies (& scalability) for the potential partnership

Similar to building a new product from scratch, you’ll need to do a thorough market assessment, user job and pain-point identification of the “partnership” you’re trying to craft up. Questions such as -

what are the success metrics each entity in the partnership wants to move the needle on? i.e., what’s in it for me? & what’s in it for them?
what are your and your partner’s long-term goals? Do your partner’s goals align with yours, or at the very least, are in sync with yours? (it might decide if this is a short-term relationship or a long-term one)
what’s the total addressable market that your partnership can jointly conquer?
is the current TAM scalable in the long term i.e., are evolving user behaviours and industry/market trends favour the partnership in the long haul?
what do our partner/s care about the most? what is their way of working and engagement? (it might help you to understand how you set common goals, how aggressive can these goals be, what’s the level of volatility or risk your partner/s are willing to accept etc.)

#3 Forecast the LTV (ROI) of the partnership

If you’ve a potential partner who fits the bill of your (near & long term) plans, has synergies with your ecosystem and more importantly, you see a healthy potential in the relationship, you should start drafting up some multi-year financial projection models that can help you forecast the financial ROI of this potential partnership.

Obviously a lot of assumptions would go into this forecast (as with any other projections), hence getting as much of detailed information from your potential partners would be key — potential userbase for this partnership (let’s say a product) and current userbase (of that product), usage behaviour datapoints, breakdown of that userbase w.r.t. geographic markets, personas, demographics etc., pricing models in each of the markets, distribution models, costs associated with the product/potential feature (both for you & the partner) and more. This list is endless and contextual to what your partnership looks like.

Best to also have a range of estimates/forecasts i.e. worst (loss), moderate (break even) & best case (profit) scenarios. That way you can also correlate the risks and dependencies for each scenario, and a potential mitigation plan for the worst case if required.

End goal is to identify the financial synergies that come along with the “market” synergies on paper. If the LTV range (worst- & best-case scenarios) is something you can work with, you can move the conversation forward.

#4 Technical Analysis (code-sharing for sample project)

As the business teams (product, finance, legal, marketing et al.) are focused on vetting the business proposal, the engineering team can practically validate some of your initial hypotheses and identify technical costs and dependencies that your product mind might not have thought about. Usually in software products, technical feasibility and analysis is a mandatory check during initial partnership discussions, and it’d serve you well to bring in your engineering leads from the first instance you start interacting with a potential partner.

There’re ways to develop a POC (proof of concept) in a shared testing environment during the initial phase (eg. by leveraging open sourced or access controlled APIs, setting up a staging dev environment etc.) and then testing the POC in-house within a certain user group to validate the solution within a short time period. Your technical partners can identify any legacy infrastructure conundrums, edge-cases, compliance and privacy risks and foresee integration challenges; and thus come up with a more accurate cost-estimate which can feed into your financial forecasting, and recommend the best way to phase out the implementation of the proposed solution.

I’d say technical feasibility & vetting would be the most critical step of ideation i.e. for a go/no-go decision.

DESIGN OPERATING MODEL

ALIGNING ON WORKING MODEL OF THE PARTNERSHIP

#1 Create a common vision

Once you’ve a fundamental understanding of what your partner cares about, and that there are common synergies for both of you to tap into, you can start articulating a common vision for this engagement. Eg. Create a cross-functional platform ecosystem between PCs and Android devices that leverage the best of enterprise sales and AI capabilities of <partner 1> & <partner 2>.

The common vision can be short term, if the engagement indeed has an end date in sight (eg. completing a systems integration/migration project for a limited time OR if the userbase is not scalable beyond a certain point OR if the main objective is for domain knowledge transfer etc.).

Creating a common vision also helps the partnership fall back on the basics (the why!) when things reach stalemate with your partner deep into the engagement, or when your partnership is ruminating over a challenging dilemma to solve.

#2 Align on shared goals — short & long term

The most logical next step is to go one level deeper, and craft out some shared actionable, measurable goals that can help both the parties track near, medium and long-term success and understand the health of the partnership on a continuous basis.

#3 Draft agreement —partnership terms, backing out, an out option?

Between all of this, you’d need to have a formal contract agreement in place that will go to and fro from your lawyers to theirs, with checks and balances applied by risk, compliance, privacy partners, along with business planning, marketing and product teams.

Would this be a multi-year deal, with deliverables every year?
Or would this be a one-time deal with an option to extend depending on the success of the initial phase of the partnership?
Is there a back-out option that will enable either partner to renege out of the partnership given certain conditions are met?

The legal and finance team would have more intricate nuances for you to consider, so pay close attention!

#4 Agreeing on revenue-share (or any other business metric as applicable)

At the base of any business partnership is the fundamental token — revenue (or some other metric to that effect — MAU or LTV etc.) Especially if it’s a partnership on equal grounds where both parties are investing and expecting something valuable in return. So, if one party is sending their users towards the other partner, and the other partner is benefiting out of it monetarily, then maybe a revenue-share agreement might be drawn.

#5 Align on an Implementation plan or logistics of the partnership

Start drafting an incubation working plan for the partnership as more legos fall together in place. More like a project plan, this collateral will detail out how both the partners will start working with each other, at least for the first ‘phase/project’ of the partnership.

Who’d be the vTeam or squad from both sides? How frequently will you meet? What’d be your milestones? Is there a workback plan? What’d be the success criteria for each phase/milestone? How will we share updates? When will we share updates? What’d be the rollout, marketing & sales enablement plan? These and many more questions will come to front when you dive into the details and get ready for the incubation phase!