Form Follows Function in Strategic Relationships as well

Executives love familiar labels. Partnership. Alliance. Joint Venture. Merger. Acquisition. Relying on that familiarity can be dangerous.

Too often, organizations begin by deciding what they want to call a Strategic Relationship and then try to make the relationship fit the label. The better sequence is the reverse.

First determine what the relationship must accomplish. Then determine what functions must exist for it to work. Only then should you decide what form the relationship should take.

Form follows function.

That principle is common in architecture and engineering.

A structure should be designed around what it must do. A bridge, an office tower, and a warehouse may all use steel and concrete, but their forms differ because their functions differ.

“Strategic Relationships are infrastructure. Their form should follow the function they are built to perform.”

Consider a simple example. Two companies may want to enter a new market together. One company has the product. The other has distribution, customer access, and local market knowledge. They may be able to accomplish their objective through a partnership or alliance without combining ownership, leadership teams, systems, or Cultures.

If executives begin with the assumption that the opportunity requires a joint venture or merger, they may create far more organizational integration than the objective requires.

The reverse can also happen. Two organizations may call something a partnership even though the work requires shared investment, tightly integrated operations, joint decision authority, and long-term commitments neither company can reliably make through a loose commercial agreement.  In this case a Joint Venture indeed may be the more appropriate Strategic Relationship form.

In both cases, the mistake is the same: choosing the form before understanding the functions.

Instead of asking, ‘What kind of relationship should we create?’ ask, ‘What must the organizations be able to do together?  What value are we trying to create together? Which functions cannot be accomplished while remaining separate?’ 

Most importantly, ask ‘Are there aspects of either organization's Culture that it is unwilling to give up or that would create continuing abrasion if the relationship required greater integration than a Partnership or Alliance?’

Once those questions are answered, the appropriate form usually becomes much clearer.

A partnership may be enough. A joint venture may be necessary. A merger may be justified. Or the best answer may be not to enter the relationship at all.

The point is not that one form is better than another.

The point is that the form should serve the functions required to create the intended value, not the other way around.

Form follows function. In Strategic Relationships, getting that sequence right can be the difference between building a structure that enables value to flow and building one that creates continuing abrasion and eventually gets in the way.