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Expect the unexpected. Partnerships designed for growth

M&As and business partnerships are nothing new for ambitious companies, but growth doesn't simply arise at the handshake. These partnerships are increasingly about bringing together different kinds of organizations that complement and complete one another’s mission. Portfolios now must be at once fluid and focused, designed so organizations can operationally flex with changing demands, assembled to quickly and deftly craft the experiences their audiences seek, and agile enough to embrace and adapt to new and emerging platforms.

Striking the perfect balance

When businesses become too diversified, disconnected silos and teams emerge, posing one of the greatest threats to true market responsiveness. Lack of integration leads to misused budgets, duplicated efforts, unfocused R&D, and fragmented customer experiences: Shareholder value is trapped within unfocused business portfolios.

Real focus takes ruthless introspection and clarity of vision. Microsoft’s recent undertaking of such efforts is showing success by aligning engineering teams with the company’s core strategy, shifting leadership responsibilities to span multiple units so they work in greater harmony, and consolidating marketing efforts. By merging with LinkedIn, they’ve hedged disruption risk, fostered a shared and relevant purpose, and synthesized a better value proposition. Embedding the rich functionality of Microsoft tools, like Office or Cortana, within an intuitive and personal LinkedIn UX has the potential to step-change the value of the LinkedIn platform, while introducing users to the power of Microsoft applications in new and unexpected contexts.

Internal cleanup and integration requires a high degree of discipline, challenging the way things have been done. Without it, the risk is a slow and heavy organization that struggles to keep up with more agile competitors and changing market demands.

Unexpected partnerships

Then there are times when broadening a brand’s positioning or capability is not possible through M&A alone—when expansion or market response is simply too time, infrastructure, or cost prohibitive. Unwieldy operational shifts cost an organization more than it could gain—moving too slowly to respond to what audiences need, and pulling focus away from what the organization does best. This is when a partnership model is ideal.

Far from a mere marketing initiative, partnerships can help rapidly expand associations and expose brands to new audiences. However, risk lies where the equity flow between partnerships is not equal or where the partnership confuses audiences and what they expect from a brand. This needs to be managed carefully from the outset.

GE has pursued a vast array of different partnerships for different reasons. Its partnership with The Economist, a content play, led to Look Ahead—which was designed to surface high-quality and high-value insights for global business decisionmakers. And with AT&T, GE is creating the next generation of smart energy solutions—combining its innovative smart meters and wireless products, including jointly developed communications hardware, with AT&T’s secure cellular technology.

Partnerships can also borrow from different sources and talents to create impact. CVS and IBM Watson teamed to limit medical emergencies for chronic disease patients. The pharmacy will use Watson, IBM’s cognitive computing technology, to predict chronic-disease patients in danger based on red-flag behaviors. By borrowing much-needed expertise, each company can quickly advance without reinventing their entire operations.

By aligning with complementary partners, each organization can strengthen its core offering, extend its positioning, accelerate innovation, and create new experiences for customers. Selecting these partners takes great care, but the value creation can be exponential.

Migration: Bringing the best together

For larger organizations, restructuring and importing can offer a chance to act more like start-ups. For smaller, innovative businesses, backing gives them access to greater resources in order to expand on what they do best. Regardless of the objective, one thing remains critical: the way any changes are communicated, integrated, and hardwired into the organization. This must be managed with the utmost care.

A migration or transition strategy is not just about what name an acquisition will take, but the impact on culture, people, processes, systems—and ultimately the customer experience.

In every case, people are key. While acquisitions bring in assets, technology, and innovation, they are powered by the people who built them. For both talent that is imported and talent that exists, there’s one fundamental question: What does this mean for me? Here’s where purpose continues to play a critical role—and where clarity is vital. Every move is a new chance to reinforce a vision, and to give everyone in the organization a role and reason to help the organization get there. That’s how the market will understand it too.

And then it’s how brands, products, and systems are integrated so they each play the right role. Every brand’s portfolio structure has to be uniquely engineered for the organization it serves—it’s not about matching logos, but about complementary offerings, coordinated and choreographed in such a way that, together, they create amazing experiences. They don’t pull equity from where it should reside; instead, they constantly reinforce it.

So what does the brand architecture of the future look like? Much like the brands they reflect, they must be dynamic in order to keep pace, placing different bets, borrowing from unexpected places, and restructuring in unique ways. Whether portfolios are realigned, expanded, or streamlined, the ultimate result is still growth—but they must be designed for unprecedented flexibility.


Managing Director, Interbrand Economics
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