Ruminating about 'Smart Partnership'

Ruminating about 'Smart Partnership'

How do you craft a profitable business alliance? Louis R. K. Paul gives some views.

Malaysia is spreading the gospel of "Smart Partnership" to other developing countries. While the concept of Smart Partnership is not new in business, this is probably the first time that a government has recognized it as a formula for accelerating a country's development process and is willing to share its experience.

What is Smart Partnership? In a business context, a profitable alliance that survives the long term. The key is that it must be underpinned by a "win-win" outcome for the partners. This, in turn, means that the partnership is not only crafted intelligently but also steered intelligently. It requires no leap of imagination to see that it is driven by enlightened self- interest, on both sides of the partnership. This logic is what Malaysia credits for its rapid progress on all fronts.

By creating a sensible economic, social and industrial environment, Malaysia had provided a seed-bed for Smart Partnership -- firstly, within the private-sector itself, and secondly between the private sector and the country as a whole, the "cement" for partnership being prosperity.

To share the benefit of its experience, particularly with other developing countries, two international "dialogues" took place in Langkawi in 1995 and 1996. These were co-hosted by the Malaysia Industry-Government Group for High Technology (Might), and its Commonwealth counterpart, the Commonwealth Partnership for Technology Management (CPTM).

Drawing from the deliberations at both events as well as from this writer's own experience, it seems that Smart Partnership requires three interlocking building blocks. The first and most important is that the partners must be able to identify an outcome that is fair and results in mutual gain -- a "win-win" situation. It is here that the initially stronger partner has to ensure that the initially "weaker" partner is not disadvantaged in the deal, be it a long-term agreement or a short-term transaction. No one should expect a free lunch, nor should there be hidden mark-ups.

The reluctance of many developing countries to add value internally by complementing their natural comparative advantages with the skills and technologies of enterprises in the industrial world could well be attributed to their feeling of weakness based on a perception of having been shortchanged in the past. But times have changed. Despite bottom-line pressures and the temptation to make a fast buck, enterprises with a long-term outlook realize that hidden mark-ups surface sooner or later, souring partnerships. Anyway, enterprises cannot pull out vast capital investments and put them out to greener pastures at will.

Equally, countries have learnt that arbitrary and unilateral changes jeopardize future direct investment and technology flows. In short, a Smart Partnership requires equity from the word go.

Second, partners have to bring complementary attributes to a transaction. In the business world there are numerous examples where even competing enterprises have joined forces involving complementary technologies, creating a multiplier effect, or reducing lead times and costs for generating own technology.

Likewise, partnering by competitors is commonplace, particularly in large, pioneer projects, in order to reduce financial outlays and share risk. A supplier-principal partnership is another example where complementary attributes lead to mutual benefit. Without it, identifying mutual benefit could be difficult.

And then you need trust. This is perhaps the "softest" building block in the edifice. There are no simple guidelines for this. It can only be built up by both sides exercising fairness at all times. A litmus test of trust and fairness may be the willingness to renegotiate when the original "win-win" outcome becomes skewed through unforeseen developments. Enlightened self- interest would point in this direction.

At the two dialogues the predominance of participants from the business world (international and Malaysian) meant that most of the practical examples cited for Smart Partnership, and the driving force behind it, were naturally drawn from business. Malaysia's proof that Smart Partnership also works in a country context was the only example of its kind. In this writer's opinion, there are many other examples.

Singapore itself led the way in using the concept to great effect. In a smaller way, Singapore's "technology corridor" venture with Bangalore, in India, complementing India's software know-how with Singapore's financial and trained human resource backing, is another. The European Union, ASEAN, NAFTA and the proposed mammoth Greater Mekong Sub-Region project (to harness the Mekong river's potential for the joint benefit of the countries through which it flows) are all typical examples of Smart Partnership applied to nations and societies.

Nevertheless, it was Malaysia's initiative to discuss its experience in an international forum, and offer it as a formula to developing countries that is noteworthy. It has already spawned two other regional dialogues, one in Barbados this year and another planned for southern Africa next. No doubt, as word spreads, others will follow.

Louis R. K. Paul is a management consultant in the field of strategic planning and technology transfer.