Who’s Your Partner?

Sometimes I catch myself sounding (at least to my own ear) like Andy Rooney of “60 Minutes” fame, when I start asking questions that are obviously rhetorical. He would always ask some sort of simple minded question and then launch into an extended explanation of why it really was a simple question and therefore deserved a simple answer. Unfortunately (or fortunately, depending on your point of view) this is again one of those times.

When did we all fall prey to the metaphorical seduction of thinking we were, and more importantly wanted to be business “partners” when in reality we are, and will always be customers and vendors?

Have we ritualized the sales process to the point where we must now claim to be partners when we want to deal with each other? Isn’t it enough that one entity is trying to sell the other a good or service, and the other entity is considering buying a good or service? This is the essence of a healthy business relationship, not a partnership.

As usual, when in doubt about something, I go and look it up. Webster’s Dictionary, on line. I understand that this is viewed as an unfair practice in today’s day and age. The very idea of gathering information before putting forth an opinion runs totally against everything we learn, by watching television. No matter.

There were basically 4 definitions for “partner”:

• A person who shares or is associated with another in some action or endeavor; sharer; associate.
• A person associated with another or others as a principal or a contributor of capital in a business or a joint venture, usually sharing its risks and profits.
• A spouse; a husband or a wife.
• The person with whom one cohabits in a romantic relationship

Since this is a business and sales related forum, I think it is safe to say that it would not be in good taste to explore potential business partner definitions in terms of spousal or romantic relationships. Although there may be many good and potentially colorful examples of the exchange of capital for the provision of a good or service in this area, it is probably best to take the high road and just consider the first two business related partner definitions only.

The key word that I take out of the two business related definitions for partner is “sharing”. Partners usually share the risk and they share the (rewards) profits. This is the essence of a business partnership. You are diffusing and reducing your risk by having someone else share in it, and the price you pay for this risk reduction is that you must also diffuse and reduce your potential profit by having your partner share in that as well.

This is a basic tenet of economic theory associated with risk and return. If you want a greater return you must take a greater risk. Conversely, if you want to reduce your risk by having a partner assume some of it, then you must also expect to reduce your return because your partner will expect to share in that as well.

We often think of partners as being on the same team. This would mean that they both win or they both lose equally, and have a joint desire to minimize risk and to maximize profit. If a customer were to try and acquire a partner, wouldn’t that more correctly be seen as partnering with another customer to share the risks associated with the pending purchase?

But what happens if the supposed partners are not on the same team? What happens if the only way for your “partner” to minimize their risk is to shift that risk to you, and the only way for them to maximize their profit is to take that reward from you? Vendors, despite their seemingly most fervent desires cannot both sell and buy their own services and products. They can only sell them.

That doesn’t sound like the makings of a very harmonious partnership to me. What kind of partnership are you creating where the main objectives are to shift the risk to your partner and to appropriate as much of the return as possible for yourself? I think the best you can hope for here is an acceptable balance of the risks and returns between the vendor and the customer, and even that will take a lot of work.

As an example I would point to the everyday purchases that we all make. Despite my desire to share the risk of my food spoiling before I can eat it, my grocery store “partner” insists that I pay for my food at the grocery store in advance of eating it. The golf course “partner” where I play golf insists that I pay my fixed price green fee before I tee off instead of sharing the risk of my playing poorly that day and the resulting lower green fee that I would ask for based on my reduced satisfaction with my round of golf. Conversely I guess they could ask for a higher green fee on those days where I play well, but that so rarely happens that it is a “risk” that as a customer I would gladly sign up for.

They say that good fences make for good neighbors. I would assume that the business equivalent would be that good contracts make for good partners (if you insist on using that term).

The implied contract at the grocery store is that the food is fit for consumption on the day you buy it. If you wait too long or store it improperly, it is not the store’s fault, so you can’t ask for a refund. At the golf course they charge a fixed price and it doesn’t matter if you have a good day and use fewer strokes or have a bad day and use more strokes.

These are risks that as a customer I must take into consideration before I make the contract with the grocery store or the golf course “partners”. I must examine the food before I buy it to make sure it is in edible condition and see the golf course before I play it to make sure it is in playable condition.

As we move to larger more complex purchase contracts between businesses, we see that the terms associated with the agreement also get more complex. However these terms rarely include anything about “sharing” any specific risks or rewards. They are more focused on the specific responsibilities that each partner in the contract must fulfill, and the penalties that each partner may have imposed if they do not.

If marriage partnerships were negotiated with ferocity that these business “partnerships” are, I think it would be safe to say that marriage would in fact be a dying institution, but I promised earlier that I would not go down this interpersonal partnership road.

Suffice it to say that based on the onerous conditions and requirements that I have witnessed being placed in just about every business to business purchase contract that I have been a party to, either as a vendor or as a customer, there is very little that was contained therein that could even remotely be construed as “partner” or “sharing” oriented.

Being a trusted or valued partner is nice phraseology, but the bottom line, as it almost always is, is to get it in writing. With a contract in place you will invariably find that regardless of what side of the contract you are on, you will be called a “partner” to the contract when there is a desire to ask you provide something, and a “party” to the contract when there is a desire to compel you to provide something.

It just seems to be the way that vendor – customer partnerships work.

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