I’ve watched CEOs sign strategic partnership agreements many times that looked perfect on paper. And it is a recurring rule: six months later, neither company could point to a single dollar of incremental revenue.
Strategic partnerships fail more often than they succeed.
Not because the strategy was wrong, but because the execution assumptions were fantasy.
Here’s what most CEOs miss when evaluating partnerships: enthusiasm is not a business model.
Before you sign anything, ask yourself three brutal questions.
First, who owns the customer relationship? If the answer is ambiguous or “we both do,” you’re headed for conflict. One partner needs clear ownership of the customer interface. The other provides the capability. Trying to co-own the relationship creates confusion for the customer and friction between partners.
Second, how does money actually flow? I’ve seen partnership agreements with elaborate revenue-sharing formulas that require three accountants and a lawyer to calculate. If the economics aren’t simple and transparent, nobody will prioritize making it work. Complexity creates disputes and kills momentum.
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Third, what happens when priorities shift? They will. Your partner’s management changes, their strategy pivots, or a larger opportunity emerges that conflicts with your agreement. The partnership documents need clear exit provisions and performance triggers. Hope is not a contingency plan.
Now let’s talk about the ongoing management that most CEOs underestimate.
Partnerships require dedicated resources. Not someone who “also handles” the partnership along with their regular job. You need someone who wakes up every day focused on making this relationship deliver value. Without that person, the partnership becomes whoever remembers to send an email occasionally.
You also need shared metrics that both parties review regularly. Not once a quarter in a polite status meeting. Weekly or monthly scorecards show pipeline, revenue, and customer satisfaction. If you can’t measure it together, you can’t manage it together.
Here’s the profitability trap: partnerships often look profitable because you’re not allocating the real costs. The sales support, the technical integration, the custom development, the endless alignment meetings. When you actually calculate fully loaded costs, many partnerships destroy value rather than create it.
The best partnerships I’ve seen share three characteristics: clear economic value for both parties from day one, aligned incentives where success for one means success for both, and executive sponsors who actually spend time making it work rather than delegating and forgetting.
Bad partnerships are worse than no partnerships.
They consume resources, distract your team, and create customer confusion. They feel productive because there’s activity, but activity without results is just expensive motion.
Before you pursue that exciting partnership opportunity, make sure you answer the brutal questions. Because six months from now, enthusiasm will be gone and only economics will matter.
