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Partnering Will Drive the Economy in an Open Environment

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Mergers, acquisitions, joint ventures and strategic alliances will continue to multiply and drive the economy in an open environment. Optimizing these organizational relationships demands that companies develop a collective partnership capability and capacity.

According to Thomson Financial Securities Data, a New Jersey-based research organization, 32,795 announced merger and acquisition deals were made in 1999 for $3.35 trillion. This number was up from $2.5 trillion in 1998 and $1.6 trillion in 1997. Clearly, the trend is upward and shows no sign of slowing as exploding communications technology enables further corporate consolidation.

Thomson Financial Securities Data also reports a rise in the number of joint ventures on a worldwide basis, reporting 5,772 in 1998 and 7,258 in 1999. Interestingly, a research analyst at Thomson reports that currently there are very few inquiries coming in from business journalists about joint ventures and that the data may be unreliable.

Apparently, while mergers and acquisitions are of great interest to the business audience and readership, joint venture data is not in demand. Even more interesting is the fact that Thomson (and probably others) does not gather data or track the number of strategic alliances formed by companies on a domestic or global basis on an ongoing basis.

We can logically assume, however, that these too are rapidly on the rise as new communications technology opens the doors of interaction and integration on every front of society. Drug company Abbott Labs, for instance, wrote in a letter to shareholders in early 2000 that “we completed about 60 agreements [external alliances] in 1999, as many as we accomplished in the previous two years combined.”

Clearly, the world has evolved to the point where mergers, acquisitions and other forms of business relationships have become a source of competitive advantage and an absolute requirement for sustained revenue growth. Given this, the intent and goal is to optimize the synergies, opportunities and impact of these relationships.

In this context, partnering intelligence is like an untapped critical strategic capability. While many mergers, joint ventures and alliances fail, others succeed in that they achieve their intended cost reductions, margin improvement and business synergies. But do they do so to the utmost extent possible? While they generally achieve their aims, do we look at mergers and alliances as a major business process that can be characterized, analyzed, improved and optimized?

Partnering intelligence and the partnership continuum provide a theoretical constructs and practical model for doing so. The nature of business mergers and alliances is not getting simpler but more complex. Unique challenges are presented when, say, a traditional brick-and-mortar company merges or initiates a joint venture with an Internet company. We can imagine the culture clash that might ensue when WalMart and AOL try to put their business models together. Or imagine the people of Ford working with the people of Yahoo.

In addition to old-new economy mergers, as globalization spreads, companies face the challenge of aligning multiple cultures as they engage in mergers, acquisitions, joint ventures and business alliances. Author Harry S. Dent reports in The Roaring 2000s that the next leap in transportation technology, due sometime in the next five years, will yield as much as a ten-fold increase in jet power from its original speed. Such a jet, says Dent, would not only travel from Los Angeles to Tokyo or Sydney in two or three hours but do so at approximately 20 percent less than current coach travel.

Dent’s point is that, while the Internet is making the non-physical world of information far smaller and more accessible, the new modes of air transportation will make the physical world far smaller and more accessible, thereby ushering in a truly global economy. When this occurs, there will be a greatly increased requirement for people with partnership savvy to navigate their way through different cultures and languages and create business leverage and synergy among such diversity.

Add to this the fact that major countries in Asia, the Pacific Rim and South America are quickly scaling the development curve, creating further global integration and opportunity. The sheer population numbers in these countries represents enormous demand and opportunity for multinational corporations, and such opportunity is sure to spawn more mergers, acquisitions, joint ventures and strategic alliances that cross geographical boundaries on a global scale.

As we witness ourselves moving closer to one world–one market, partnership capability will increase in strategic value. The world has always needed successful partnerships to drive progress, as it has needed developing technology and a rational polity. In today’s world, however, partnering capacity and capability must evolve in accordance with leap-frogging technology, just as political structures must adapt and adjust to enable rather than stifle progress.

Recently, President Clinton addressed an audience at the MCI Worldcom Operations Center in Ashburn, Virginia. At that meeting, Clinton pointed out the need to partner with China in meeting the two countries’ mutual economic agendas. He advocated a move away from giving China the “back of our hand” to working with China in achieving liberty and better human relationships. During his speech, the President pointed out that “with every passing day, there is no more a fine line between what Americans call a domestic issue and a foreign issue.”

Clearly Clinton has put his finger on the utter importance of breaking down old barriers, whether those barriers are political, economic or social in nature. He has expressed just one example of the political ramifications of an evolving human consciousness from one of skepticism, regionalism, racism and ethnocentrism to one of tolerance and inclusion.

Ultimately, as borders and boundaries fall and as companies merge their forces, nothing less than acceptance and integration will work in a global economy. Those companies that take deliberate action in preparing themselves for such integration (ie by developing a strong partnering capability) will tap into and exploit this trend and build competitive advantage.

Stephen M. Dent, founding partner of the consulting firm Partnership Continuum, Inc., is an award-winning organizational consultant working with such clients as USWEST, Inc. Northwest Airlines, AT&T, GE Capital Services, the U.S. Postal Service, NASA, Bank of America and Exult. He lives in Minneapolis MN.
Stephen M. Dent
Partnership Continuum, Inc. www.partneringintelligence.com
1201 Yale Place Suite 1908
Minneapolis, MN
e-mail Sdent@partneringintelligence.com phone 612.375.0323

Partnering Will Drive the Economy in an Open Environment
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About Stephen M. Dent
Stephen M. Dent, founding partner of the consulting firm Partnership Continuum, Inc., is an award-winning organizational consultant working with such clients as USWEST, Inc. Northwest Airlines, AT&T, GE Capital Services, the U.S. Postal Service, NASA, Bank of America and Exult. He lives in Minneapolis MN. Stephen M. Dent Partnership Continuum, Inc. www.partneringintelligence.com 1201 Yale Place Suite 1908 Minneapolis, MN e-mail Sdent@partneringintelligence.com phone 612.375.0323 WebProNews Writer
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