An Introduction to the Business Partnership Life Cycle Scorecard (BPLCS) – LogiSYM October 2018
Business partnerships have become an essential element of the strategic initiatives undertaken by progressive organizations for ensuring their competitiveness and relevance in a world that does not pay heed to tradition, shuns conventional thinking, seeks seamless gratification, pledges loyalty to technological innovation and punishes complacency with extinction. However, the success of such endeavors is largely dependent upon the congruity of goals and objectives and the effective implementation of carefully mapped phases to ensure that each partner is able to gain the maximum benefit from such an investment.
Business Partnership Life Cycle Scorecard (BPLCS) is an invaluable tool for assisting in the timely and effective oversight of the health of such partnerships. It is essentially a proactive measure for buffering against and, if needed, overcoming any potential/actual challenges that might derail key objectives and core expectations of all the parties concerned. It is an exercise in calculated risk management that rewards the foresight of organizations with the humility and astuteness to learn well from their missteps to maximize their probability of success. It is designed in a user-friendly manner and requires minimal effort in being able to apply it proficiently by a senior executive/designated representative.
Let’s take a closer look at the key stages within the Business Partnership Life Cycle Scorecard (BPLCS), as follows:
This refers to all the due diligence activities that are necessary for initiating and safeguarding a partnership from a legal and corporate perspective. It is defined by the ‘Commencement’ phase that harbors questions on the strengths of the foundations, upon which; the business partnership is being built and balanced. Any problematic areas at this stage should be effectively dealt on priority basis since complacency at this level can have unpleasant and debilitating consequences while the partnership is in motion at the next stage.
Partnership in Motion
This refers to the elements that are critical for the successful running of the business partnership. It is defined by the following six phases:
Assessment at this stage is a periodic process that is carried out at defined intervals and a cumulative grade subsequently used as a guide to determine the:
- Robust corrective/preventive actions needed to sustain the Partnership
- Feasibility and effectiveness of Partnership continuance according to the defined agreement
- Strategy for countering/neutralizing the current/potential competitors
- Natural dissolution of Partnership according to the defined agreement
- Pre-mature termination of Partnership according to the defined agreement
- Legal measures needed to safeguard the business interests of each party according to the defined agreement
- Prospects for Partnership in future
This refers to all the due diligence activities that are necessary for ensuring that the business partnership can be concluded in an effective manner. It is defined by the ‘Culmination’ phase that is designed to harness the ‘lessons learnt’ aspect of the business partnership as a helpful guide for an overall review and in the formulation of future initiatives within the respective context. It is flexible enough to accommodate the ‘amicable’ approach to winding down the business partnership in the ‘normal’ course of ‘planned’ events, as well as, catering for the ‘crisis/unforeseen’ aspect of moving away from an undesirable situation as a way of ‘damage control’ and/or to preserve the professional reputation of the organization.
Grading the BPLCS
Assessment of the business partnership through the BPLCS is done in relation to an insightful question with a Yes/No response which is further reinforced by indicating the strength of the Yes/No response on a scale of 1-5 to reflect the confidence level of the professional carrying out the respective assessment. An overall grade reflects the performance at a particular stage by considering all the constituent elements. The whole exercise is not only for monitoring and review purposes, but also, serves as an invaluable guide for future business partnership endeavors. The results of the whole exercise can be reflected as follows:
BPLCS Utilization (An Example)
Suppose a prominent manufacturing concern wants to expand its supply chain capabilities without a physical presence in a big market of another country and is interested in partnering with a company, specializing in a seamless distribution network (e.g. specialty warehouses, suitable transportation fleet, real-time tracking software, provision of skilled shipping agents, on-ground customer support, strong local contacts, etc.) in that country to facilitate its commercial customers who are catering to consumers of the manufacturing concern’s products.
CEO of the manufacturing concern wants to ensure that such a profound step is taken after careful consideration and there is an effective mechanism for consistent monitoring and periodic review of such a venture that can avoid its derailment through appropriate and timely corrective/preventive actions, while, also serving as a guide for future initiatives. He/She asks the Head of Business Development/Strategic Initiatives/Business Partnering/Assigned Representative to conduct appropriate due-diligence in the respective context and devise an ongoing mechanism that ensures that he/she gets timely updates on the ‘health’ of the respective partnership in case it proceeds forward after completion of all the necessary formalities. Consequently, the Head of Business Development/Strategic Initiatives/Business Partnering/Assigned Representative proceeds to engage in the appropriate due-diligence by exploring the following questions:
- Who is the Senior/top Management of the prospective partner and what is their professional background?
- What do their key customers say about the quality/reliability/good points/bad points of their services?
- What is the breakeven time frame for such a partnership and the projected ROI?
- Who are the bankers/creditors of the prospective partner and have they had any problems with them?
- Who are the major competitors of the prospective partner and how do their services rank against them?
- How often do they have to upgrade/maintain their equipment/machines/fleet?
- Can their equipment/machines be hacked? How are they protecting against hackers?
- Are they significantly susceptible to obsolescence by technology that uses Artificial Intelligence (AI)?
- What is their vision/mission/strategic objectives/expansion plans for the future and the projected/expected growth rate?
- Do they have any market surveys available to see how effective/user-friendly/delightful are their services?
- Can their equipment/machines still function without online connectivity? If not, what safeguards/redundancies have they undertaken to ensure uninterrupted availability of services?
- Is the investment in such a venture comprehensively protected from any lawsuits that a client and/or a consumer may instigate in case of any service failures by the prospective partner?
- Is there a Board structure in the organization of the prospective partner? If so, what influence does the board have on the executive functions of prospective partner?
- Has the prospective partner shared financial statements/records? What is the major drain on their resources? What are the key boosters? How good is their health as a ‘going concern’?
- What kind of freedoms/legal remedies are available to withdraw from the venture if things don’t go well according to expectations?
- Do they hold patents for their technology/services? If so, how much time is left on their patents before others can use the same technology and/or replicate their services?
- Have there been any HR/labor issues in their organization? If so, what kind and how effectively have they been handled?
- How good is their relationship with their suppliers/subcontractors? Have there been any issues? Are they overly dependent on any one/key supplier/subcontractor?
- Are they in total compliance with relevant regulatory guidelines/rules? Is there a monitoring frequency, e.g., monthly/quarterly/yearly visit from the relevant agency/agencies? What are the penalties for noncompliance?
- Do they have any partnership agreements with any other organizations, e.g., with respect to technology. hardware, systems support, research, etc.? If so, what are the key aspects of those agreements?
- Has due-diligence been done on them, e.g., by an independent audit firm? If so, what were their latest findings?
Upon completion of the due-diligence, the Head of Business Development/Strategic Initiatives/Business Partnering/Assigned Representative presents a report of the findings to the CEO and other relevant members of the senior management. If the decision is taken to proceed with the partnership then the Head of Business Development/Strategic Initiatives/Business Partnering/Assigned Representative activates the first stage, i.e., Partnership Formation, of the BPLCS.
Subsequently, the second stage is initiated at a suitable periodic interval, e.g., quarterly, by the Head of Business Development/Strategic Initiatives/Business Partnering/Assigned Representative, i.e., Partnership in Motion, as the relationship engages all the necessary/agreed elements of the respective partnership. A cumulative grade is assigned during this stage as multiple quarters of the partnership are assessed. The respective information is also provided to the CEO and other relevant members of the senior management for review and authorization of appropriate corrective/preventive actions. The effectiveness of such corrective/preventive actions is gauged in subsequent reviews and/or as directed by the CEO.
When the partnership is deemed to be no longer viable by the CEO and other relevant members of the senior management, e.g., in view of the availability of better options, rampant violations of agreed partnership parameters, and/or change in the strategic direction of the manufacturing concern, the third stage is initiated by the Head of Business Development/Strategic Initiatives/Business Partnering/Assigned Representative on the direction of the CEO and a report on the life cycle of the respective partnership is prepared that includes the ‘lessons learnt’ with BPLCS serving as an insightful attachment to facilitate astute decisions on how to increase effectiveness for future partnerships. Subsequently, the respective report with the attached BPLCS becomes part of the ‘knowledge bank’ within the manufacturing concern.
Food for Thought
Business partnerships are a ‘delicate dance’ between competing interests and it is becoming exceedingly rare to see remarkable success of such initiatives as organizations try to maintain a steady foothold within a progressively dynamic global market that is increasingly susceptible to disruption from innovative competitors. Business Partnership Life Cycle Scorecard (BPLCS) serves as a timely ‘wake-up call’ for enterprising organizations to avoid becoming victims of their own complacency on account of an assuring sense of past accomplishments. Raising a glass to your success!