Objectives of Strategic Alliances in Tech

Sarah Loughry December 19, 2022

Sarah Loughry

It’s becoming harder than ever these days to go it alone in tech. That’s where strategic alliances come in. If you’re not actively engaged in partnership strategizing, you’re simply going to be left in the cold when it comes to engaging new customers and frozen out of emerging market spaces by more cooperatively-oriented competition. 

The language around strategic partnerships and alliances can be a little confusing, so let’s clear it up now: there are regular, run-of-the-mill partnerships, and then there are strategic alliances and partnerships. We’ll explain.

Partnerships

Partnerships take off when tech companies decide to work together for their mutual benefit, generating value for all stakeholders. It’s a general term that encompasses a lot of different kinds of relationships. A strategic alliance, for instance, is a kind of partnership.

Strategic alliances and partnerships

“Strategic” means something specific. “Many companies recognize the value of partnering with companies at scale,” explains partnerships expert Scott Pollack, “ such as by building ‘partnership programs’ that enable any agency, consultant, or software company to collaborate.  

But in order to achieve scale, these programs are pretty cookie-cutter; everyone gets the same deal terms, promotional opportunities, etc.  But a truly strategic partnership?  That’s a deal that’s designed around the unique needs of both companies.  It takes a lot more work, but can pay off with a lot more reward.” 

A strategic alliance is all about:

  1. Long-term growth 
  2. Multi-department collaboration
  3. Non-standardized, bespoke negotiated deal terms that deliver the maximum value to both companies

Strategic partnerships involve two companies working together to achieve their individual business goals when all the stakeholders at each company, from the marketing team to the legal department to the product dev team, are on board. 

For instance, when Volvo and Aurora—a self-driving tech startup—partnered to develop autonomous vehicles. Aurora knew how to make a car drive itself, but they didn’t know a thing about mass-producing them. It was a good match that produced a valuable product neither could create on their own. 

In another example of a truly strategic partnership— between rivals, no less— Apple and Google teamed up to integrate Google Maps and YouTube with the iPhone iOS, that was strategic. It was obvious to both of them there was a lot of future value and competitive advantage in positioning themselves together on the smartphone landscape. The result? The iPhone is the most popular phone in the country and Google Maps is the most popular way to get around it. 

Strategic Alliances in Tech

Strategic alliances are the bread and butter of the tech industry because, frankly, it’s too complex and specialized for anyone to do it all. If you’re trying to grow in a cost-effective way, you’ll benefit from creating a strategic alliance.

Data Exchange and Sharing

Swapping data and increasing compatibility between their products is one of the simplest ways for businesses to strategically partner for their mutual benefit in their respective markets. Integration partnerships like the one between Apple and Google can be some of the most beneficial and rewarding collaborations in tech since they can set the partnership up in a position of strength in the marketplace for decades. 

Reaching New Customers

When Taco Bell and T-Mobile partnered up to offer free tacos to their mutual customers, they were creating “an iconic mashup you never knew you needed, but now you want so bad.”

Taco Bell and T-Mobile realized there are people in this world who like tacos so much they might switch cell carriers over it. And to their credit, Taco Bell’s epiphany that texting the word “taco” at 4:20 to a few million college students is all it would take to pack their drive-thrus every Tuesday was a stroke of partnership genius. 

What may have started as a marketing gimmick evolved into a truly strategic partnership, going so far as to open co-branded stores to serve their audiences – and extend their brands.

Venturing into New Markets

If you’re trying to find new customers, this is how you do it: start thinking in terms of where you are not, who is, and how to get connected with them. Rural India for instance, has about 37% internet penetration and it’s rising fast.  

By 2030 India will also be the most populous country in the history of the world, which means that a massive new online customer base for all kinds of goods and services will be entering the world of e-commerce within a decade. It has the potential to be an explosive hotbed for global partnerships ever, as businesses and tech firms find creative ways to engage with these new consumers. Without a doubt, it will produce some of the most interesting and unexpected strategic alliances the world has ever seen.  

Meta (nee Facebook) is already leveraging strategic alliances to tap into emerging markets, as evidenced by their partnership withJio. In addition to investing $5.7B into the fast-growing Indian telecom provider, the two companies agreed to integrate their small-business-focused solutions, JioMart and WhatsApp, to further ingrain themselves in their respective customer bases.

Improving Products

Finally, strategic alliances can sometimes be as simple as getting two products in the same package for a better overall experience. 

Uber and Spotify, for instance, put their heads and their services together to make ride-sharing a little more fun and personalized by letting people play with a jukebox app. Uber gets a competitive feather in its brand’s hatband, Spotify makes some inroads with a diverse commuter public, and customers get a better experience. Win, win, win. 

Build Strategic Alliances Like a Partnerships Leader

So, you’re the partnership matchmaker for your company? Congrats. Firneo has the courses and experts to bring you up to speed on all the ins and outs of nurturing and developing partnerships. 

Whether it’s forging lasting strategic alliances and partnerships to better position yourself in the competitive jungle, or simply getting the right partner for your business to flourish, Firneo will give you the guidance, support, and resources you need as you walk the partnership pathway.