The rise of strategic partnerships and consortia brands
One of the striking findings from the 2019 KPMG CEO survey – which I’m banging on about this week - is the marked decline in the stated importance of organic growth. In 2017 72% of CEOs saw organic growth as their principal growth strategy. In 2019, it was just 25%. Wow! M&A, JVs, and outsourcing remain popular but the most important route to growth is strategic partnerships
On talking to some people here, one tactic that seems to be springing up in support of this phenomenon is the creation of what one could call “consortia brands”. These are often created around technology standards, and the brand exists as separate from the contributing partners, but is shared in some way by them all. Android is well known example, owned by Google but shared by Samsung, Huawei, etc. There are lots of others (Zigbee in IoT for example, which is managed by the consortium of members). The idea is that a perceptual benefit is gained by participants: they all participate in a shared approach – often a technology-enabled ecosystem - and the beneficial ‘whole’ is great than the sum of the participant parts.
But for every successful Android, there’s a failed Symbian or Windows Mobile. Business owners will need to plan carefully here and make sure that, in sharing the limelight, they don’t get crowded off stage. How can the originating participants create successful consortia brands and avoid the pitfalls?
Firstly, and most obviously, be clear that there is a “whole is greater than sum of parts” value proposition here. It takes effort and resources above and beyond business as usual, and there needs to be a clear return. If the participants are not seeing a chunky upside in being involved, their support will wain quickly.
Secondly, gather the right company. The partners can have a co-branded effect, positive or negative, on each other and on the consortium brand itself. Shopping malls make sure they have big name retailers in early as these attract the second division participants. It’s the same principle. If the big handset manufacturers hadn’t supported Android early, it would be nowhere.
Finally, manage the premium. Like any brand, a consortium brand will need proper managing: lots of communication that reinforces the value proposition, demonstrates the value in action, shows how the brand is evolving over time. Make sure the lead participant members make resource available for this - including people! – and that they respect the brand and talk about the consortium in the right way. The use of consortium brand needs proper governance behind it as well. For example, ensure the expectations around usage and support are clearly set out in the terms of the brand license (yes, you’ll need one for each participant).
If the KPMG study is right and we see strategic partnerships continue to flourish, we can expect to see more of these consortia brands coming into existence. But, as there’s no single right model here, the initiators of these consortia brands will need to think through their creation and ongoing management carefully to ensure they are built over time so they add on-going value, and don’t wither on the vine. As Nicholas Griffin, head of KPMG’s strategy group, writes “moving to a strategic partnerships model is not straightforward…it will require a different set of competencies”. Brand management is like to be part of this.