Thursday, February 7, 2013

Grow Your Business Through Partnering: Modular Corporate Growth

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If you can put your ego aside in your role as a "company builder" (this includes business owners, strategic planners, major project managers and most acting chief executive officers), you can grow through a series of partnerships and co-ventures with companies who are either much larger than your own (by revenues or by capitalized valuation), or who have a synergistic complementarity with your own.

The classic examples of this complementarity are in the case of 1) vertical integration, where you combine, through a merger, acquisition or joint venture, with your supplier or with your distributor; and 2) horizontal integration, where you consolidate with other companies within you industry in order to consolidate and eliminate fixed costs and increase total market share.

In situations where you enter into joint ventures or partnerships with companies better established and significantly larger than your own, you have an opportunity to leverage their knowledge and assets. Some people like to refer to this (in a folksy way) as "standing upon the shoulders of giants."

You can build a company rapidly (within the constraints of intelligent risk assessment and containment) by assembling the right modules. It is a matter of getting the right modules at the right terms.

The article excerpt which appears courtesy of SmartBrief, talks about Bill Gates' corporate building strategy:

How Bill Gates got rich by playing second fiddle
Bill Gates became the world's richest man not by having the best ideas or building the best products, but by executing brilliantly and forging partnerships in which Microsoft played "second banana" to players such as IBM. "By parlaying his way through a series of ever-bigger business deals -- all with fairly ordinary products -- he went from zero to billions in less than a decade," writes Lewis Schiff. Inc. online (free registration) (2/6)

The ultimate leverage ("piggyback leverage" - a clever Lingovation) is when you utilize a third party's assets (whether corporeal or intellectual) in order to advance your fiscal and strategic position. Bill Gates was a master of this.

It's a wonderful, albeit occasionally controversial way to grow.

Douglas E. Castle for The Business And Project Planning And Management Blog
sponsored by CFI - CrowdFunding Incubator LLC, Global Edge Technologies Group LLC and ICS - International Connection Services

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