September 28, 2022

In the digital world,

asset deployment rather than asset ownership is the new source of competitive advantage

Historically, companies had the belief that owning and controlling their assets was the key to creating sustainable competitive advantage and building high barriers to entry into their markets and industries. However, in the new world of ever constant digital disruption, companies no longer have the capital, resources, and capacity to own and operate all the assets they need to successfully compete against well-constructed and well-orchestrated business partner ecosystems.

This new competitive environment now puts a premium on asset deployment rather than asset ownership to create sustainable competitive advantage and market leading financial results as shown in the results below:

  • Twenty years ago, business partner alliances accounted for less that 3% of a company’s total revenue.  Today that number has risen to nearly 30% for companies with well developed partner ecosystems.

  • For every $1 of Microsoft revenue, their partner ecosystem generates $9.
  • Partner alliance revenues generate 19% higher margins than the next closest competitors.

Business Partner Ecosystems represent $100 trillion market opportunity

A major new research study conducted in 2018 by Accenture Strategy surveyed 1,252 C-level global executives to understand how their companies are creating competitive advantage by building business partner ecosystems.

The survey results documented that by aligning all business partner interests against mutually agreed upon outcomes exponentially increased their combined value proposition and distributed market risk equally across all partners. The results also forecast that when enabled by digital platforms, ecosystems could unlock $100 trillion in value for business and society over the next 10 years.

As the survey statistics on the chart above highlight, only 25% of senior business leaders feel confident that their companies will achieve their growth targets. 46% are actively looking to build business partner ecosystems to extend their company’s business growth potential.

Building a mutually successful business partner ecosystem is a step-by-step process

Successful business partner ecosystems don’t start fully constructed but rather are put together over time with the continual addition of new partners and resources driven by market demand and competitive differentiation.

As the chart below highlights, it also requires a different approach and different mindset from the traditional partner model.

Using the 4 Zones Model as a strategic framework for constructing business partner alliances

Constructing and orchestrating a well-designed, multi-faceted business partner ecosystem necessitates companies acquire the critical skills, tools, and resources necessary to make them successful.  The 4 Zones Model provides a framework to help you identify and assemble a portfolio of partner alliances designed to deliver market leading customer experiences as shown on the slide below:

Successful business partner ecosystems share common principles and critical success factors including:

  • A shared vision for a mutually beneficial business outcome
  • Clear accountability and decision-making responsibility
  • Total go-to-market alignment across the entire partner ecosystem
  • Real time alliance performance metrics and reporting
  • Willingness to share proprietary data and information
  • Mutual trust to protect against cyber security threats

Besides expanding your product and service offers, business partner alliances are also a potential source to onboard new skills and capabilities that your company may lack.

By example, Apple & Cisco have teamed up with insurer Allianz SE to offer discounts on cyber insurance to businesses that primarily use equipment from both technology companies. The alliance also includes insurance broker Aon Plc, who provides customers with more favorable terms on cyber coverage such as lower deductibles, as well as support services in the event of an attack.

Like a business investment portfolio where risk and return are spread across multiple investment options, the 4 Zones business partner alliance portfolio is designed to create and deliver new value in four different categories.

The 4 Zones value creation portfolio approach provides a framework, vocabulary, and decision-making process that enables senior leadership teams to discuss, segment, and prioritize multiple business partner alliances. It also enables them to successfully deploy digital technologies as a primary source of value creation that generate market differentiating results.

As always, I am interested in your comments, feedback and perspectives on the ideas put forth in this blog. Please e-mail them to me on linkedin. And, if this content could be useful to someone you know please share it here: