Trust Isn’t the Key to Business Partnerships
Recently a question was posed to me: what’s the most critical element of business partnerships?
It’s not trust. That’s an overly simplistic answer. Is trust important? Sure it is. But it’s not the most critical element of a business partnership.
Look, I trust my local police force but the Dublin PD is not listed on the business partners page of my website. I trust my physician but we’re not jointly marketing our services. “Trust” is the easy answer to give to this question but that’s not particularly insightful.
The most important element of a business partnership is a shared purpose. That purpose is something that aligns all the efforts of each organization. That purpose creates momentum and energy around every undertaking between the parties. Without a shared purpose, your partnership is more like The Odd Couple than it is a joint venture.
So if a shared purpose is the most important element of a business partnership, how do you identify it and harvest it?
A shared purpose is nothing more than both organizations seek to change a specific part of the world in a particular way. The strength of that sharing comes out in the organizations’ complementary skills.
For example, I run a leadership development training firm. We’re dedicated to helping people build skills to be better at their jobs. We do so through in-person training events.
I met with a firm the other day that is also dedicated to improving people’s leadership skills. They do so primarily through coaching. Shared purpose. Looks like it will be a successful venture between our organizations.
Look at some of the airline partnerships out there. Again, they share a purpose of moving people across the country (or even the world). Sure they have to trust one another, but the shared purpose is more important.
Shared purpose isn’t only based on industry or function. It can also be a matter of the objective function of the owners. Imagine two wind and solar power companies. Company A is all about saving the environment and the world one windmill at a time. They take a long-term view of their mission and place it at the top of their list of “important things.” They are on a quest for a greener world.
Company B was founded by some former dot com execs who didn’t bail out before the bubble burst. They watched their millions turn into pennies almost overnight. They’ve noticed alternative energy is a hot sector so they invest the paltry savings they have left into starting a wind and solar company. All they care about is building it large enough and fast enough that they can take it to IPO, flip it, and retire to the Caymans. They’re on a quest to put some green in their bank accounts.
I’m thinking these two organizations don’t have a shared purpose. Any relationship between them will be fraught with conflict. Eventually it would dissolve into bickering over green versus green.
Is trust important? Absolutely. But it’s not as important as a shared purpose. Reevaluate business partnerships you’re involved in. Does your purpose match your business partner’s? Regardless of how much you trust them, if the purpose isn’t there, the partnership won’t work out the way you think it will. You’ll simply be reenacting a scene with Felix and Oscar.
What have you seen make for a successful business partnership?
Mike,
I agree that shared purpose is a critical part of the business partnership equation but also believe that trust is the how you get there. In your opening, where you talk about the police & your physician, I do not think that just because I trust someone I would be in business with them.
I also believe that in order to have a profitable and enduring business partnership, you have to trust the person enough to share information that is not public knowledge so you can build a mutually beneficial relationship.
Is shared purpose important? Absolutely. Even if I believe there is shared purpose but I do not trust them, there is no foundation for a relationship.
Great post.
@Perry – good perspective. I'm not arguing that you don't need trust. I'm simply saying it's not *the most* important element. I believe one needs to start with the shared purpose to find partnerships that will make sense then build them over time (where, of course, trust will develop).
It's all in how the question was posed to me – I was only allowed to select *one* most important aspect. Stirring up a little controversy is a good thing from time to time. Thanks for reading and sharing your thoughts.
What trust devolves to is predictability. If you know that your purpose and the other companies purpose do not align, but that you know what is important to them, you can "trust" them to act predictably. Share purpose, on the other hand, may lead two companies to try to align that are truly competitors.
I think you might need a better example. In the case of the Green vs. Green, such an arrangement may well work out. If, on the other hand, company A is naive, they may well get screwed. They need to trust Company B to act i Company B's best interest. Which is a good rule of thumb for all business arrangements.
@Adam – as always, interesting perspectives. Sure the A and B might work out but I'm a believer in long-term views as a determinant of a "successful" business partnership. That one is clearly at odds with that. It might work in the short term but I'd submit it's not truly a successful venture.
As usual any time we're forced to choose only *one* characteristic about something, it can lead to a million other considerations that definitionally can't be brought into the conversation as "most" important. I need to do this more often – we end up with some provocative thoughts that way.
Mike,
I agree with you completely. It would be naive to think that we always completely trust our business partners. If that were true, we would never have to sign a contract or hire a lawyer. If I completely trusted a partner, I would never have to ask for status reports, follow up or meet with them. I can't completely trust anyone in a business relationship or I'm not doing my job.
Having a shared purpose defines the relationship and gives that relationship a reason for being.
Dave
While shared purpose is important, it is not sufficient to maximise the outcomes of a partnership. Trust had to be there in the first place to initiate discussion, the shared vision and division of tasks probably came about through the contract process, trust continues to build through joint decision-making, joint-problem solving. I think a common vision is a tool for a successful joint venture but trust underlies all of it. Without trust, partners will be busy supervising one another, second guessing one another on how they are achieving that joint goal. That’s hardly productive.