Effective partnerships drive innovation and growth to the benefit of the entire industry and, most importantly, the customers.
In September 2016, life sciences company Bayer announced a merger with agricultural business Monsanto that amounted to a $66 billion deal. This merger of giants created one of the biggest agrochemical businesses in the world, and it could potentially lead to innovative creations and a wealth of success. It also serves as a high-profile example of a business partnership done right.
The partnership between Bayer and Monsanto promises to benefit the entire ag tech industry. If business leaders carefully consider a few important qualities before choosing another company with which to work, partnerships between businesses of any size stand to turn out similar industrywide benefits in their own sectors.
Working together to advance ag tech
To truly understand the possibilities offered by an optimal partnership, consider the details of the Bayer-Monsanto merger. Most people probably associate Bayer with aspirin, but the company offers various products that help protect crops, both chemically and biologically, from all manner of threats. Monsanto is primarily centered around seed and data science. In that way, the companies’ products and offerings complement one another.
Joining the companies could also represent a tactical move regarding product reach. Monsanto is based in St. Louis and has a strong North American market presence. Located in Leverkusen, Germany, Bayer is better positioned to cater to the European market. By sharing market penetration and customer bases, the businesses would be able to reach more farmers around the globe than either could alone.
And if that’s not enough, the new conglomerate will also be able to develop the next generation of ag tech innovations faster than ever. The combined assets of each original venture are already expected to increase the overall budget for research and development, and the two working in collaboration will also drastically accelerate the pace at which new products are created.
These benefits are clearly important to the future of both companies, but the list of partnership pros doesn’t end there.
The specialization solution
Since humans first began trading goods and services with one another, it’s been clear that one individual or entity can’t be the best at everything. Partnerships are valuable because they allow each company involved to focus on what it does best. Each business can continue its specialty work and rely on its partner for work outside its realm of experience.
Partnerships can also be particularly effective when they combine established companies with emerging startups. Even the most progressive corporation can be encumbered by size and have a hard time changing direction because of its complex structure. They do have resources, however, and while changing and pivoting are some of the few things startups can count on, even well-funded startups can benefit from the capital and credibility of a bigger company.
One such collaboration was recently established between Visa and Swedish startup Klarna. The latter enables ecommerce websites to take payments and provide flexible financing options, and now it will help develop new products for the credit card giant. Visa took a similar route with financial startups Stripe and Square, illustrating the importance of smaller innovators to the company.
Another partnership that will benefit more than just the companies involved is the joining of two business incubators in Missouri: Digital Sandbox and Innovation Stockyard. The groups aim to reach more entrepreneurs in the state and broaden their influence. The partnership promises to promote the growth of companies in more areas outside of Kansas City and St. Joseph.
Choosing the right partner
While the partnerships between Bayer and Monsanto, Visa and Klarna, and Digital Sandbox and Innovation Stockyard seem to be matches made in heaven, not all businesses are this compatible. It’s important for business leaders considering a new partnership to evaluate each prospective partner carefully. If a cooperative effort sounds promising for your company, look for these qualities in your candidates:
- Innovative approaches and customer commitment. A prospective partner should be a forward-looking company that brings as much to the table as you do. It should have a history of innovating in its industry, or at least embracing innovative changes as they present themselves. It should also employ customer-focused solutions on a regular basis and demonstrate a commitment to the people it aims to serve. A focus on consumers shows a company is in business for the right reasons.
- Technology that stands out. One of the key findings from Deloitte’s mergers and acquisition trends report was that respondents considered improved technology a top driver of such deals. As you look for a partner, especially if your company is a larger one, look for technological innovations that have the capacity to change your industry. Even if these solutions aren’t quite market-ready, the key is the potential they represent. Once you’re working together, you can share the burden of additional troubleshooting and development.
- New market opportunities. The company you partner with should be well-established in its market, and you should be able to leverage its marketing and distribution as you introduce yourself to its market. Of course, ideal partnerships are mutually beneficial, so your company should be able to provide the same advantages to your partner. Both companies should be able to rely on each other to further their goals.
- History of collaboration. While it’s true that there’s a first time for everything, it takes dedication and work for a partnership to be beneficial. If a potential partner has a history of working successfully with other businesses, you’ll know its team has the skills and experience to ensure your joint venture will also see a positive outcome. If a business has never been in a partnership before, that shouldn’t be an instant deal breaker, but decision-makers should value those prospects that have.
- Stable, committed leadership. You might recognize the phrase “attitude reflects leadership” from the great movie “Remember the Titans.” It was relevant then, and it’s relevant here. While you might not be working with your partner company’s senior leadership daily, watching how they function will provide valuable insight into the future of your relationship. If leaders regularly demonstrate a commitment to their employees and their business, they’re more likely to stay committed to the long-term success of your partnership and your company as well.
The right partnerships are, or should be, mutually beneficial, allowing each company to accomplish more together than they could on their own. Effective partnerships often can and do drive innovation and growth to the benefit of the entire industry and, most importantly, the customers. Finding the right partner is worth the effort it takes.
With more than 30 years of experience leading economic development efforts, Steve Johnson, CEO of Missouri Partnership, works with companies as they evaluate Missouri for expansion and investment.