Originally published in Independent Online.

From telecommunications to retail and banking, firms are under increasing pressure to expand above their core offerings, develop new business models, and find new customers.

This is, in part, because of our era of exponential digital change. It’s also due to the fact that many firms have reached natural growth limits in their primary field, meaning they need to spread opportunity and risk across multiple sectors to enhance stability and profitability.

How strategic partnerships drive business growth in the digital age

One key move is building real partnerships to bring in expertise at speed and scale. This is an area many businesses know is important: Oliver Wyman recently interviewed more than 30 experts and executives at banks and ecosystem organisations across the world, most of which were in Africa. We asked them, from 1 to 10, to rate the importance of partnership. The average answer was 9.3. It’s clearly a priority, then.

As one respondent put it, “growth via partnership is probably the single biggest agenda for both our consumer and wholesale business”. Another said “partners are the lifeblood” of the “platform organisation”.

Ignoring partnerships is too much of a risk in the Digital Age. Today, banks know they must offer customers products beyond the traditional options — whether that’s financial planning, insurance, consumer goods and services, content, or any of the myriad other options.

To do so, a bank could build out its own solution, sure but that can be costly, time-consuming, susceptible to scope creep and, ultimately, failure. It can be far more effective and cost efficient in the long run to partner with an organisation that has established expertise, assets, access and reach.

Implemented properly, partnerships can be rewarding, drive innovation and foster growth. One thing that makes properly structured partnerships so powerful is the fact the partner stands to gain just as much as your business if the product succeeds and will also lose just as much if it fails. They’re invested.

Unfortunately, far too many partnerships flounder. According to the 2020 World Fintech report, only 6% of partnerships between banks and their partners — whether fintechs or other members of the financial services industry — deliver the expected results. Given the fact there’s little evidence of success, can partnerships ever succeed? I believe so — but only if the right elements are in place.

Eight steps to successful partnerships

How can partnerships, as essential enablers of new business models, be allowed to thrive? Businesses must codify the demand for partners, formalise engagement models, have a clear partner value proposition, define a partner strategy, adopt a partner-ready organisational structure, embrace continuous learning, and digitise partner capabilities.

Drilling down even further, there are eight key action points that can have a big impact:

Move from vendor to partner: To be effective, partnerships must move beyond a vendor-client relationship. Vendors are invested in your success only to the extent that you keep giving them business. Genuine partners will work with you to co-create solutions that will help you both grow.Evaluate and intentionally plan: First articulate why you need partners, then work to understand which type of partners will meet your needs, and how you would meet theirs. Then you must proactively look for the fit-for-purpose partners rather than being opportunistic.

Evaluate and intentionally plan: First articulate why you need partners, then work to understand which type of partners will meet your needs, and how you would meet theirs. Then you must proactively look for the fit-for-purpose partners rather than being opportunistic.

Formalise engagement models: Define how to manage the relationship with different types of partners — and involve the partners in the discussions. You must also put the right capabilities in place, such as people, budgets, tech and expertise.

Have a clear — two-way — value proposition: By the time you’ve selected a partner, you should understand what they bring to the table, yes, but have you also made it clear what your partners will get out of the relationship.

Define a broad partner strategy: Don’t approach partnerships simply as an opportunistic way to solve specific challenges — treat them as a strategic enabler. For instance, articulate how they will contribute to generating shareholder value, and have a plan to track this.

Adopt a partner-ready organisational structure: Partnerships don’t work on cruise control; they need to be proactively managed, and your organisation needs to have the capabilities to do so — that often means dedicated teams.

Embrace continuous learning: When was the last time you asked for blunt feedback from partners on what you could be doing better? You do it with your customers, so you should also do it with your partners — and often.

Digitise parts of the process: There’s no sugar-coating it; managing partnerships is a lot of work. Digitise all processes that you can, from scouting to on-boarding, and from contracting to tracking outputs.

If you looked 10 years into the future, the most successful business models would be built off successful partnerships. If you adopt a wait-and-see approach, you’ll risk getting left. I recommend ensuring you get partnerships right now — and building the capabilities to do so — so that you’re ahead of the game tomorrow.

Read the full article, here.