Editor’s note: This article is an update on modelH, the dynamic co-creation forum created by Kevin Riley and Associates, Innovation Excellence, and Batterii where healthcare innovators from around the world are building a foundation for new business models in healthcare. Their goal is to co-create an open source business model canvas that applies specifically to the US healthcare system.
Learnings on Key Partners for the Business Model Canvas for Healthcare (modelH)
We recently wrapped up our 13th business building block sprint on Key Partners. In summary, the sprint for Project 1.13 on Key Partners completed 2 objectives:
- Establish questions regarding the canvas for Key Partners
- Understand what delivery components to give to Key Partners
1. Questions to Ask on the Canvas for the Key Partners Block
We defined the questions that should be added to our business model canvas for helping practitioners define their Key Partners.
- Who are our Key Partners and what do they do for our business model?
- Are there any Key Intermediaries that we need to make into Key Partners?
- Are there any Key Influencers that we need to make into Key Partners?
- Which Key Resources are we acquiring from partners?
- Which Key Activities do our Key Partners perform?
An alliance is a relationship between your company and another, formed to tackle a common business objective while each remains independent in its structure. Alliances allow two companies to share the risks and rewards of working together. Alliances range from the simple (think Channel partnerships) to the complex (think joint ventures). Business models can use strategic alliances to:
- Reduce costs through economies of scale;
- Enter new markets through shared insights;
- Reduce cycle time for product launch;
- Improve research and development efforts; and
- Improve product quality and customer experience.
How to Form a Key Partnership
Partnerships usually fail because of a disconnect between the partners with regard to the business model requirements. Unfortunately, these disconnects often lead to damaged relationships between the groups and an unfavorable ending. Vantage Partners, a management consulting firm that focuses on negotiating and managing the relationship with key business partners, estimates that up to 79% of the potential value of the partnership is lost once the alliance turns corrupt.
Forming a good partnership is simple to understand, and can be boiled down to three steps:
- Define how the Key Partner fits into the business model canvas and list objectives that will be measured for its delivery.
- Select a Key Partner based on the commitment and fit with the business model canvas, both today and as the company grows.
- Sign a formal and well-written agreement that includes well understood protocols for measuring mutual performance.
Executing these steps is no easy task, yet this problem can be somewhat alleviated if these elements are defined within the Key Activities of a business model.
How to Manage a Good Key Partnership
Once established, managing a good partnership becomes a matter of managing the business objectives met through the Key Partner, as you would organize your own Key Activities. This means actively and consistently evaluating how the partnership is performing according to the binding objectives and performance measures established in the agreement.
According to Vantage Partners, a partnership should have 10 key components:
- Building and maintaining internal alignment
- Evaluating and considering relationship fit with potential partners
- Building strong working relationships while negotiating optimal deals
- Establishing common ground rules for working together
- Having dedicated alliance managers
- Having collaboration skills in alliance employees
- Having a collaborative corporate mindset
- Managing multiple relationships with the same partner
- Auditing alliance relationships
- Managing changes that affect alliances
Depending on your company size, this partnership may be spread across multiple resources or lumped into one role. But no partnership will survive the impact with the market unless these components, or something similar, are in place.
Source: Sarah Keen, Stuart Kliman, Jeff Weiss. “Managing Alliances For Business Results: Lessons Learned From Leading Companies. Boston, MA; Vantage Partners, 2006.
What is Next?
We are just wrapping up a two-week sprint on Costs and Revenue. Up next is Platforms and Externalities.
Interested in what we are doing?
Step up to the plate and become involved. We are getting close to the end of the first major stage of our modelH project, so get involved today before it’s too late!
- Click here to learn more: http://www.modelh.org/modelh.htm
- Click here to join: http://bit.ly/modelH_joinup
- Follow us online at: https://twitter.com/ModelHForum
image credits: Kevin Riley & Associates, modelH Business Model Canvas for Healthcare, drawings by Mike Werner; modelH.org
This was cross-posted from Kevin Riley & Associates BLOG – http://bit.ly/modelhkeyactivities
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Kevin Riley is an entrepreneur, healthcare executive, and business model innovator who works with start-ups and legacy companies across the healthcare industry. He founded and was CEO of a national health care retail company, has played leadership roles for national retail health start-ups, and served as the first Chief Innovation Officer of a major insurance plan. In 2006 he started Kevin Riley & Associates Health Model Innovation to help companies with the convergence of health care and the consumer.