When entering a collaborative venture, it isn’t just the investment of resources and money that is on the line, organizations are also adding exposure to their reputations and other assets. Partnerships can help to share risk, but they also create new risk.
Know Why You’re Partnering
In a brief, University of Pennsylvania business professor Harbir Singh suggests first approaching risk in partnerships by considering which one of three strategies the partnership should take: a window strategy, options strategy, or positioning strategy. “By clearly identifying what you want to achieve through the partnership, and choosing the appropriate strategy, you can stretch your innovation dollars, share in the costs of investments, better handle uncertainty, and access new resources, capabilities, and markets.”
Steps to determining which strategy to choose include looking at what goals you want to achieve with the partnership — whether that’s to gain access into insights about developing technology (window strategy), try out a more diverse set of potential solutions (options strategy), or gain an advantage by aligning capabilities (positioning).
Keys to Success
Whether a joint venture between two people or a large-scale project between multiple enterprises, expert advice usually centers on a similar set of principles for how to mitigate risk in entering and maintaining partnerships. Here are a few high-level tips for how to create and sustain mutually beneficial partner-ships, adapted from sources including contributors to the Harvard Business Review.
- Start by fully understanding your partner(s) – from what their specific expertise is to what they bring to the table and what they hope to take away from the partnership.
- Conduct a thorough risk assessment before entering into any new agreement with another party. This includes vetting any associated supply chain issues, cybersecurity vulnerabilities, or potential changes in the markets that could significantly change costs.
- Clearly delineate what role(s) each partner will play, including who is involved in making key decisions and who will be accountable for specific aspects of the work.
- Plan for contingencies. Think ahead to all the possible worst-case scenarios and spell out how such situations would be handled by creating contingency plans, which can include backup options for partners.
- Monitor and track performance. Bake in regular milestones and checkpoints to a project plan and agreements to continually check whether goals are being met or if adjustments are needed. These checkpoints could also be places where there are off ramps for a formal agreement if necessary.
- Foster trust and collaboration by being honest, transparent, and communicating regularly.
- Regularly reassess whether risks have changed and how the partnership needs to change accordingly.
Learn more about risk management in public power by joining the Risk Management Working Group. The group meets on a regular basis and discusses common challenges and concerns. Contact us for more information.
