Across time zones or down the street, businesses across the globe are working together to establish successful collaborations. Business partnerships are between people who establish a business together, whereas joint ventures are alliances between existing businesses that work together to further the interests of both companies.
There are many original, amazingly creative prototypes of joint ventures and collaborations limited only by the imagination, dedication, and vision of their owners. Some ventures are quite complex and involve large corporations, states, even countries, and both online and offline communities.
For example, the city of Tampa, Florida partners with Copa Airlines of Panama in order to build business between Panama and Tampa Bay. Other ventures happen between local small businesses collaborating. For instance, an art gallery in Los Angeles, California sends their clients to a restaurant down the street that offers a discount to gallery visitors, thus increasing the traffic to both.
Some joint ventures promote each other’s complementary services or products, adding value to their respective clientele, while expanding the market reach of each by building their client bases. Others may share a physical space or equipment. Some increase their technological, operational, or financial capabilities by affiliations. Each of these, although unique in attributes and implementation, is a joint venture.
The particulars of the venture itself, size, or location don’t matter. They are all joint ventures and the wave of the future. Unfortunately, considering the enormous potential of benefits, research on the success rate of joint ventures indicates that they fail as often as business partnerships do…at a rate of about 70%.
The reasons for joint venture and business partnership failures are the same. It always boils down to people, communication, and relationship issues. What is not taken into account and dealt with sufficiently up front will cause the breakdown. Challenges often arise as a result of having neglected or glossed over clarifying the vision of the partners, attitudes about decision making, conflict resolution, cultural differences, uneven expectations, inaccurate assumptions, unwillingness to be transparent, and differing values and beliefs. In larger organizations owners or upper management are often inclined to treat details as confidential, withholding important information from the employees and partners who will have to carry out some of the elements of the program. In doing so, they are preventing buy-in by those who are needed to actually carry out procedures and make the plan work.
Business owners and managers get carried away by the excitement of the idea and the impression that they are a good fit, without addressing the most vulnerable areas. To be successful, these issues must be discussed and resolved at the outset because the discrepancies in these areas can cause a breakdown in communication resulting in dysfunction and high-cost failures.
In order to create a successful joint venture, you must first know the people, culture, and business with which you are aligning your name. It only takes a second to compromise or ruin your reputation by working with someone who is willing to act dishonestly or renege on commitments to carry out their part of the venture.
It is essential for your joint venture to have a written agreement that describes details to ensure a solid foundation on which everyone can be held accountable. The purpose is to maintain clarity for all involved about the operations. It should be reviewed periodically for changes and modifications and be readily available in the event of a dispute. Discussing all aspects in depth, making decisions and writing them clearly into the agreement is the smartest thing you can do to ensure the success of your joint venture.
Joint ventures occur everywhere. Collaboration is replacing competition as the better way for businesses to maximize goods and services to clients and higher return investments to the partners.