Tag Archive for 'Strategic alliances'

Blasingame’s Three Laws of Aggregation (or Two reasons your small business is like Sakrete)

Sakrete is one of the handiest products ever developed. It’s basically a bag of rocks and sand, but to a weekend warrior with a honey-do list, it can be a magic dust.

Packaged in small bags almost anyone can carry, Sakrete is an aggregation of Portland cement, sand and different size gravel. Just stir in water, apply it to your small construction project, wait a little while and, badabing badaboom, you’ve got real concrete supporting your project.

So, what does a small business have to do with a sack of rocks? Two things.

1. Chemistry.

When the components of Sakrete come in contact with water, a productive reaction occurs that, in a short time, manifests as a handy and enduring result. In the marketplace, productive chemistry between people and organizations is has long been known to be critical for sustaining successful performance. Whether Sakrete or your small business, the right chemistry is critical.

2. Aggregation.

Sakrete doesn’t just aggregate the correct combination of stuff, but also different sizes of masonry material. The larger pieces provide critical mass and structure, while the smaller ones bind everything together and nimbly fill in the gaps to eliminate weak spots. But unlike chemistry, aggregation is not as much of a natural law and requires more maintenance. Which is why there are no Blasingame Laws of Chemistry, but three Blasingame Laws of Aggregation.

Blasingame’s 1st Law of Aggregation

Find your success in aggregating the success of employees.

Simply put, this is servant leadership, a term Robert Greenleaf coined in his book titled, you guessed it: Servant Leadership. But the concept goes back thousands of years to the ancient Chinese wisdom of I Ching, “The highest type of ruler is one of whose existence the people are barely aware.” And in his gospel, Mark quotes Jesus, “Whoever wants to be great among you must be your servant.”

Leaders who sustain success, year after year, are those who subordinate their ego by helping their people to be successful professionals, and then aggregate those success stories for the benefit of the company. They celebrate others first.

Blasingame’s 2nd Law of Aggregation

Aggregation prevents aggravation.

In business, aggregation is also known as strategic alliances, which small businesses must build with other organizations, especially larger ones.

It’s aggravating at least, and dangerous at worst, to manage threats and take advantage of opportunities without strategic resources. Compare the merits of forming a strategic alliance with an organization that already has what you need before you risk the expense and possible delay of capitalizing the ownership of that resource. And if you prefer, you can call it strategic aggregation.

Blasingame’s 3rd Law of Aggregation

Associate your brands with those that are more established.

I also call this the “Forrest Gump Strategy.” As you develop strategic alliances, look for partners with brands and influence that have a higher recognition factor than yours, and arrange for the relationship to include your brand being presented in the marketplace alongside theirs. Brand association is smart aggregation, but you have to step up your game to earn the right to that level of aggregation.

Write this on a rock … If you’re not having the level of success you want, perhaps you should take some lessons from Sakrete.

Why strategic alliances are a 21st century imperative

In the 1990s, when I began thinking about how to help entrepreneurs prepare for the 21st century, I condensed the areas requiring a heightened level of importance into three critical disciplines:

1. Leveraging technology in every aspect of your business;

2. Professional networking, as opposed to just meeting new people;

3. Building strategic alliances as a growth strategy.

If by now you haven’t become at least somewhat proficient with the tech stuff, you don’t have much time to adapt, adopt and survive. Better get busy.

And thanks to the work of people like the legendary Ivan Misner, founder of Business Network International (BNI), most of us now subscribe to what I call Misner’s Razor: “It isn’t netplay; it’s network.”

But what about that alliance thing?

Blasingame’s Second Law of Small Business states: It’s redundant to say, “undercapitalized small business.” It’s a natural law that small businesses come to the end of their resources - people, assets, technology, cash and credit - much quicker than do our big business brethren and sistren. So by that definition, we have to do something as primordial as when Og asked Gog to hold the chisel while he carved out his new stone invention that looked a lot like a donut. We have to seek and develop alliances.

Answer these questions:

  • Is your business growth hampered by a lack of people, capital or other assets?
  • Would you like to bid on a request-for-proposal (RFP) that has specifications beyond your company’s ability to perform?
  • Are you reluctant to ask a large customer about their future plans for fear that your organization may not be able to step up to the answer?

If you answer any of these - or variations thereof - in the affirmative, perhaps it’s time to pursue one or more of these three alliance examples, in descending order of formality.

Partnership

A partnership is more formal and typically longer term. Regardless of how it’s structured, in general, all partners have a vested interest in the success of the entire enterprise. Think of two business owners buying a commercial duplex and sharing the space because neither has the cash or credit to swing the deal alone. Most partnerships are best organized with the help of an attorney. But remember, because it’s more formal, probably even legally binding, choose your partners well.

Once, when consulting a mentor about choosing a business partner, he used hyperbole to encourage caution by saying, “A partner is only good for two things: sex and dancing.” But it isn’t hyperbolic to say that alignment of values between the parties is imperative to a successful partnership. This is a natural law: Regardless of how symbiotic the combined contributions may be to the venture, a partnership founded by parties with conflicting values is doomed from the beginning. Choose your partners well.

Subcontractor

By definition, a subcontractor becomes a contractual participant you bring in to help fulfill a larger project for which you are the lead vendor or general contractor. Unlike a partner, a sub expects to get paid for delivery of work or products regardless of how the project turns out.

Subcontractors are a great way to leverage your business without giving up control of the opportunity. But remember that with this step you’ve created a performance chain. And we all know that any chain is only as strong as its weakest link. A weak subcontractor could undermine your performance, harm your brand, and may even take you down.

Like partners, choose your sub-contractors well.

Strategic alliance

This relationship is typically less formal. Let’s say a web designer, a programmer and a search engine optimization expert plug each other in on projects as peers, instead of as subcontractors. After a project is executed and paid for, the participants go their own way until the next symbiotic scenario. The most successful professionals I know claim, nurture and go to market with many and varied strategic alliance relationships. And most were born from networking.

Going forward, I believe we’re going to see more enthusiasm and growth in the marketplace than in the past few years. That should mean more business, which should present more opportunities for alliances.

Before giving up on a project because you don’t have the in-house resources, look around for ways to create alliances that allow you to take advantage of an opportunity.  Start establishing them now - before you need them.

Write this on a rock … If Og the caveman can create an alliance, you can, too.

Build strategic alliances for sales growth

There are three management disciplines which, while not new, have a heightened level of importance for success in the 21st century: Leveraging technology, networking and building strategic alliances.

No doubt you’ve become more proficient with the tech stuff. And who isn’t a better networker today than 10 years ago? But can you say you’ve nailed the partnering thing?

When small businesses come to the end of their resources of people, assets, technology, cash and credit, they have to do something as primordial as when Og asked Gog to hold the chisel while he carved out his new stone invention that looked a lot like a donut. They have to seek alliances.

Answer these questions: Is your business growth hampered by a lack of people, capital or other assets? Would you like to bid on a request-for-proposal (RFP) that has specifications beyond your company’s ability to perform? Are you reluctant to ask a large customer about their future plans for fear that your organization may not be able to step up to the answer? ___(Your lament here)___.

If any of these – or variations thereof – are way too familiar, consider one or more of these three alliance examples, in descending order of formality.

Partner

A partner relationship is more formal and typically longer term. Regardless of how it’s structured, in general, all partners have a vested interest in the success of the entire enterprise. Think of two business owners buying a commercial duplex and sharing the space because neither has the cash or credit to swing the deal alone. Most partnerships are best organized with the help of an attorney.

Sub-contractor
By definition, a sub-contractor becomes a contractual participant you bring in to help fulfill a larger project for which you are the lead vendor. Unlike a partner, a sub expects to get paid for delivery of work or products regardless of how the project turns out.

Strategic alliance

Here’s an informal strategic alliance example. Let’s say a jeweler, florist and photographer join forces to produce a marketing/advertising campaign for brides that represents all three brands. After the campaign is executed and paid for, the participants may have no further connection.

Before giving up on a project because you don’t have the in-house resources, look around for ways to create alliances that could allow you to take advantage of that opportunity.

If Og the caveman can create an alliance, you can too.

I talked more about the 21st century business practice of creating alliances this morning on my radio program, The Small Business Advocate Show. Take a few minutes to listen and leave your best practices on creating strategic alliances.

How good are you at building strategic alliances? with Jim Blasingame

For more information on building alliances to grow your business, click here: Strategic Alliances.




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