Unfortunately, we are all often listening to the radio station WIIFM (what’s in it for me), on both sides of the equation.
It’s not reasonable to expect people to contribute to our business without return. We need to consider what’s in it for them. I believe that we need to look at partners and employees as customers. They pay us with their time, their outputs, the doors they open and their loyalty.
At the same time, it is a two sided equation ad we need to make sure that that payment is something that fits our business model and provides us with value. The same way that we would expect a customer to pay us for the value we provide them.
The lean approach does take a look at these relationships. In the Business Model Canvas (Alexander Osterwalder & Yves Pigneur) the left hand side of the canvas takes a good look at the required resources. First we identify the key activities that are required to deliver value. Then in order to execute these activities we consider what we need as internal resources (including people) and external partners.
It’s an excellent exercise to make sure we understand the business reasons for choosing co-founders, partners and hiring employees. As well highlighting the key “key activities” can inform us on whether we bring it inside or go external. But that’s another discussion.
I also like Ash Maurya’s Lean Canvas, though it steps back from this detail of who does what, it also adds two important pieces. On the right-hand side of the lean canvas we identify he unique advantage that we offer customers. And on the left-hand side we identify the key metrics we will use to measure the business model is successful. In terms of partners and employees, we need to make sure these relationships also align with these attributes of our business model.
So now that we know what we want from them, why should we also consider the value that they get from us? (Which is what treating them like customers actually means)?
Why should we consider treating partners and employees as customers? Because to not do so, adds inherent risks and costs to our business
With employees, it may mean not being able to attract and retain the talent that we need in our business. If we don’t understand the value relationship between us and our employees, it becomes difficult to setup clear performance agreements and incentive programs. And harder still to measure the effectiveness of these.
It can result with us setting up uneven partnerships, or partnerships that don’t fully benefit us. Often this is an issue with new businesses, who go after bigger partners because they think that will help them. But in setting up the Ts & Cs of the contract, give away too much to be getting real value from the relationship.
What we are often left with then is unsatisfied relationships. But without the compelling business case for the relationship easily identified, no real language or measurement to explain the dissatisfaction.
So, how do we build that Partner or Employee business model? It’s almost like we need to create versions of the canvas focused on partners and focused on employees.
I took a little time out to create my own one page Partner Canvas. (For ease in discussion, I’m using the term partner in replace of “partners and employees”, because in truth under this framework, employees become partners in our business as well.)
At the heart of my Partner Canvas, is a value proposition that defines the benefits of the relationship with the partner. By then focusing the right-side on the partner value and the left side on the business value – laying it out on one page lets us see the balance between the two. And that both parties benefit from the relationship.
The value proposition needs to be a clear statement that defines the value of the relationship. I believe it’s similar to the traditional customer value proposition, with the addition that you need a benefit clause for the business and a benefit clause for the business.
A simple one might be something like this: We partner with reseller x, to sell our products, so that their sales teams have better traction when offering complimentary products, and our customers can purchase from a channel they already use.
On the right hand side we define the partner or employee segment we are looking at with this canvas. When we want to look at the distinct advantage they offer us, we want to do this as identifying more clearly the value that they provide our customers. Why would including these people in our business, help us to deliver value to the customer above and beyond what we do without them? We also should look at how they do this. What service do they provide? What product or output do they produce? How do they deliver this value? Then finally, what direct impact does this have on the revenue of the company.
On the left hand side of the canvas we look a little closer at what we do for the partner or employee. We expand on the value we provide them. What do we need to do to enable them to perform? For a sales partner, what sales collateral or product information do we need to give them? For employees, what direction, tools and environments do we need to provide? What metrics should we track to make sure that we can measure the value we provide partners as well as the partner performance? And then to draw a line under all this, what does it all cost? Breaking out the costs both in terms of the fixed spend, and the share in the resulting revenue.
In truth, I don’t think this is rocket science or anything new. In sales & services teams, incentive bonuses based on metrics is common place. Vendor management often includes the reverse of a bonus – a penalty for lack of performance. And even though engineering teams don’t always have incentive bonuses, these employees often expect a share in equity.
To me this is offering a new look at an old problem. A way of seeing it laid out on one page. So we can better see the business case behind the relationship, whether or not it is a balanced relationship, and possibly where it needs to be fixed or changed.