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.