CyberStakes: The Eight Best Practices Of ePartnering

Over the past two years, the explosion of the Internet has caused two new issues to rise to the forefront of the corporate agenda: First, corporations must develop an effective e-business strategy. Secondly, they must implement it quickly and effectively.

However, two tremendous barriers accompany these two issues. Conventional wisdom is that the real returns from e-business will not surface for another two years. Also, few if any companies have all the capabilities they need to implement and execute their strategy.

How can companies deal with these two obstacles? The answer is a revolutionary new concept called CyberStaking.

What is it? CyberStaking is the act of forming strategic alliances that enable you not only to execute an e-business strategy, but also to stake out future market share and shut out the competition.

Consider the following:
* There are more than 650 book e-tailers on the Internet. Yet Amazon and Barnes & Noble own the category. How did they do it? By successfully cyberstaking their territory and grabbing market awareness early.
* Companies like i2 and CommerceOne saw their stock prices escalate from a few dollars to more than $300 a share in a relatively short time. How? By forming the alliances they needed to become recognized leaders in a key business category almost overnight.
* Cisco has been lauded as one of the most successful companies of the decade--yet they sell very few of their products directly. They've CyberStaked themselves as a permanent fixture in the Internet by building a strong network of allies who actively sell their product.

In much the same fashion that the early colonizing countries staked out their territories in the New World and waited for the returns to roll in, a handful of aggressive and savvy firms currently are staking out their territory in the future e-business marketplace, effectively shutting competitors out before they have a chance to get into the game.

CyberStakes not only identifies and gives a name to this revolutionary new business strategy; it also isolates companies that are doing it, and gives a detailed description of their key best practices.

In the course of preparing this whitepaper, the research team conducted in-depth interviews with CEOs, senior executives, alliance experts and thought leaders from 28 leading and start-up applications developers, hardware manufacturers, infrastructure providers, portal companies, industry research firms, consultants, magazine editors, venture capitalists management consultancies and infomediaries. CyberStakes combines their insights and paints a picture of how the Internet not only has changed the nature of business alliances, but also has necessitated the adoption of new tactics for success. The basis for an upcoming book, CyberStakes offers a bold concept that is totally new to the marketplace--and provides clear direction on how to implement it.

Key Points Uncovered

The fact that alliances are being given a higher priority on the corporate agenda came as no surprise. However, the degree of emphasis that is being placed upon them was indeed enlightening. Among the key findings that surfaced from the research are:
The tremendous impact of alliances on ensuring future growth. In a recent paper entitled, "Dispelling the Myths of Alliances," Andersen Consulting found that 82 percent of executives believe that alliances will be the primary vehicle for future growth. Our research indicates that 100 percent of executives see alliances as a mandatory prerequisite for success in the Internet economy. In a separate survey conducted by Forbes in search of a new value creation index on the value of "intangible assets," alliances were rated as the #3 asset for manufacturers, and the #1 intangible asset for e-commerce firms--surpassing other assets such as technology, customer satisfaction and brand investment.
Alliance strategies and growth strategies are inseparable.
One hundred percent of participants indicated that their company's alliances strategy directly was intertwined with their company's overall growth strategy.
* Customer demand is a key force driving the formation of alliances. Nearly all interviewees clearly stated that customer demand and expectations had a direct impact on their company's overall partnering activities.
* Sales forces are becoming more open to and adept at working within alliances. Most survey participants said their direct sales teams were becoming more willing to interact with partners than before. Whereas initially the interaction between partners may have been somewhat reluctant or not entirely understood, there is a growing comfort level of alliances as a crucial element in a multi-channel strategy. But the reasons for acceptance may go beyond a pro-active strategic decision, and more by a reaction to the market. Salespeople are learning that customers do not necessarily want a one-stop shop; they want solutions that only can be formed through collaboration and partnering. As a result, salespeople who once controlled the sales process through internal teams are growing comfortable with relinquishing control and accepting the mutual dependency of the external team. This is a fundamental change, and an important one--the Gartner Group said those companies that do not effectively partner may be facing extinction by as early as 2003.
* Company revenue that are the direct result of alliances are skyrocketing. Among our respondents, the portion of total company revenue derived from partners ranged from "more than half" to 100 percent (depending on the type of company and the products or services they offered).
* Alliances have been given a higher profile and more urgent priority on the corporate strategic agenda. Alliance organizations typically now report to the president, CEO or chairman, as opposed to being treated as a sub-section of sales, marketing or operations.
* On a global front, the United States is further along in leveraging alliances than other parts of the world. Part of this is due to the US' lead in e-commerce environments. But in addition, there is cultural and political resistance in many areas by organizations that are reluctant to leave the one-stop shop mentality of vertical integration.

A New Kind Of Alliance

The most pertinent finding of our research--indeed, the true gist behind this paper --is the fact that the new alliances being formed do not resemble the alliances of the past. There are new expectations, new intents and a new set of rules that define them. They are strategic in nature. For more and more companies, their capabilities and business models are based on a very sophisticated network of alliances called 'ecosystems.'

Clearly, alliances that are built solely on volume discounts and that are arranged only between non-competing organizations, still will succeed. But they no longer are enough. To succeed in the e-marketspace, a more complex and meaningful kind of alliance is necessary--one that begins to resemble more of a true partnership rather than a mere vendor agreement. And these new partnerships--or e-alliances--will be crucial to companies that hope to succeed in the marketplace of tomorrow.

But what exactly are these ePartnerships? How do they function? More importantly, what does it take to put a successful one together? Is there a right way to ePartner with someone?

As a result of this research, we've identified eight best practices necessary for successfully forming and leveraging ePartnerships.
* Design it in.
* Pick a few, and do it fast.
* Change your metrics for success.
* Make it easy.
* Flawless execution.
* Act like a start-up.
* Be loud and clever.
* Keep it centered on the customer.

These rules are based firmly on a variety of change drivers that have surfaced from our research. Together, they form the foundation of building the successful alliances that are needed for staking out an organization's territory in the e-marketspace of tomorrow.