Good commercial partnerships are key to creating companies that grow and succeed. Partners can provide access to scale, both on the supply and sales side that companies simply don’t have on their own. Partnerships can help companies share access to customers and suppliers and leverage sales channels to the benefit of both parties. In addition close integration of partner products or services often helps to reduce purchasing risk for customers. It can really create a win-win for everyone. Given these benefits why then do so many companies fail to build good commercial partnerships?
When I work with companies one of the first issues is that they struggle to identify potential partners. If you ask them to name some partners, many struggle to come up with even one; two is definitely a stretch. We need then a way to help companies think about and identify potential partners as a first step. The “Whole Product Ecosystem” is an effective way to do this.
Whole Product Ecosystem
The rationale here is that no product or service exists in isolation. The complete solution the customer desires will be made up of a combination of your product or service with those of other companies. The Whole Product Ecosystem provides a framework to think about and evaluate all the elements that go to make up the complete solution and who provides them. These other companies then are our potential partners.
The Whole Product Ecosystem considers the elements required to build out a solution around a core or Generic product through stages of Expected, Augmented and Potential product. I’ll use the example of a coffee shop to explain how this works.
Coffee Shop Example
Generic Product: This is the core functionality; it’s what you actually purchase. In the case of the Coffee Shop, well Coffee! That’s the core product.
Expected Product: This is a minimum configuration; it’s what you would reasonably expect from the solution. In the case of the Coffee Shop, well probably something to eat, cakes, pastries etc. but these are likely to be provided by somebody else. They represent our first tier of potential partners.
Augmented Product: This is an expanded configuration of the solution, it maximises the chance of meeting the buying objective. In the case of the Coffee Shop it could be something to enable you to enjoy the Café experience at home. Perhaps bagged coffee or branded mugs, again these are likely to be provided by somebody else.
Potential Product: This is our room for growth; it’s what we could add to grow the business. In the case of the Coffee Shop that could be loyalty or gift cards that encourage repeat business or potential new customers, again likely provided by somebody else.
The idea here is to list what we need, what products or services, at each stage of the ecosystem to create a solution that meets the customers requirements and then identify who will provide them. Products or services that are not provided by us but someone else creates a potential partnership opportunity with them.
In part 2 of this article, next month, I will introduce another tool to make sense of this and how to qualify and work with actual partners.