Winning In The Partnership Economy

Pari: Hello and welcome back to another exciting episode of Zinnov Podcast Business Resilience Series. I’m Pari Natarajan, CEO of Zinnov and you’re listening to the second part of my conversation with Avanish Sahai, Board Member, Investor, Mentor for B2B SaaS Cloud Computing and Non-profits.

Avanish’s expertise lie in building and leveraging the power of ecosystems and platforms to scale businesses non-linearly. In the past, Avanish has held several C-level and leadership positions across a range of early to mid-stage B2B companies, as well as tech giants like Oracle, Salesforce, ServiceNow, and Google Cloud.

In the first part, Avanish and I discussed nuances of partnerships, its evolution, and why organizations should prioritize partnerships. In this episode, we’ll be discussing why many companies fail to form meaningful partnership despite leadership focus and buy-in. Let’s dive right in

Avanish: Hey Pari. So good to talk to you again, and thank you for having me. Excited to chat. Fun topic.

Pari: Great. So you’ve been doing this whole platform partnership for a long time and truly an industry expert. So the initial wave, it was about more technology integration. Like you said, SAP and Oracle, they had to make it work together. But the go-to markets were not synchronized. Right now it seems like there is a high level of alignment in go-to markets.

Avanish: Exactly right.

Pari: Very, very interesting how this is evolving. And even though this makes a lot of sense, it’s super exciting, but it’s also a lot of failures. 10 years ago, or even and five years ago everybody wanted to be a platform company. You have GE come and build out products and you have every industrial company say, ‘Hey, I want to be the industrial platform software platform.’

Most of them have failed or still struggling. Like, so why is… if this makes a lot of sense, a market is moving towards it, but why are not many companies able to replicate and make that a key playbook.

Avanish: Yeah. Look, Pari I do spend a lot of time studying the industry as a whole in this particular space, and I think there’s two or three key things that need to be in place.lk us through Apple and Salesforce? They both almost build one, a consumer platform, and another one an enterprise platform.

First and foremost, it’s really hard. This is not an easy undertaking and it involves technology decisions. It involves investment decisions in people, and kind of internally a lot of alignment that needs to happen across many different functions. And third, it involves a long cycle. We talked about Salesforce and and AWS and so on.

You know, in 2009 when I started at Salesforce, our business was small. AWS was even smaller but they committed to this. They made this part of their core strategy, and here we are 12-13 years later, it’s about a $100 Bn business. So there was alignment at the top. There was alignment internally across again, product engineering, sales, marketing, partnership, et cetera, that this is core to the business and we’re going to stick to it.

So I think when companies try this it sounds very cool and sexy. It sounds like the right thing to do, but I don’t think they spent time thinking through that it’s hard. You got have a lot of alignment and frankly, you got to have deep pockets for an extended period of time. And then finally, I think none of it matters if you don’t have the right team and there’s not too many people, frankly, who’ve like you said, not too many companies have done this successfully at scale. And what I often find is you have to make that investment in the right team and the team that kind of really understands this… there’s not too many folks who’ve done that so far.

Pari: Got it. Getting into the alliances team itself, when we interview them, one of the biggest frustration for them is influence. If the Product team doesn’t listen to us, Engineering doesn’t listen to us, Sales doesn’t listen to us on both sides. And it seemed like an influencing role. Like they don’t own the P&L, but what does it take to be strong alliances leader?

Avanish: Sounds like you’re talking to some of the same people I’m talking to . So look I think it goes back to, uh, your original question actually, which is how is this evolving. And I think the old school partnerships, channel folks, really we’re a bit arm’s length did build too many of the relationships internally particularly that are critical now.

So that question of alignment with Product, with Sales, with Marketing, with of course the partnership organization itself ,with Customer Success, I would argue that the next generation of ecosystem leaders need to be one, business leaders. They need to really understand how to make all those things come together and build a business case for why the partnership model or the ecosystem model is going to be successful and worthy of the investment that’s required. So that’s number one.

Two, I think more and more, if you don’t have a, a pretty solid technical and product background, your credibility with that product organization that you mentioned with the Chief Product Officer, etc. could be suspect. So this requires that level of engagement that says, what are we going to build? What are we going to buy? What are we going to partner? And that’s strategic.

So they have to have the strategic mindset. I think they have to have the product and technology mindset. And of course the third one is, and I think this again is understanding how to measure success, how to define the metrics that this is something that the rest of the organization whether it’s the CRO, whether it’s the CEO, whether it’s the Board, they really look at this and say, you know what, yes, I see the impact. I see the business impact, the financial impact, the retention impact, the customer success impact, all those things that partners can bring to the table have to be well articulated, measured, tracked, etc.. So I think that we are in the midst of an evolution. I think it’s exciting, but also does require the folks who are in this kind of function to start thinking very differently.

Pari: So they have to have Business, Product and strong operational capability in terms of measuring the right metrics and so on. So truly a P&L leader capabilities is required for a leader?

Avanish: I think so. And in fact, you have organizations now that are naming Chief Ecosystem Officers. The other CEO, which is cool, may be a bit confusing, but it’s cool. But I think it is a different mindset if you have that approach of thinking this from a kind of really C-level perspective.

Pari:And one of the challenges we have seen is conflict around the different areas. Say, for example, some of the hyperscalers have their own services organization. So when they’re partnering with GSI, the question is, ‘Hey, are you doing the services yourself versus are you competing with us?’ Are there products which share ISV you’re bringing into marketplace, the product team says, ‘Hey, I had that feature in my roadmap. Why are you bringing that into the marketplace?’

So we have these conflicts across different types of ecosystem partners. How do you think about managing conflicts and co-optation in general?

Avanish: You think about it very carefully. So look, yes, it is one of the most frequent common challenges and establishing these kind of ecosystem playbook. And that’s again why when we were talking about the organizational model, having leaders and participants in the ecosystem team who can truly understand and who can articulate, one being a platform and being a platform company, I think at least in my definition, kind of requires you to be open-minded and have a sense that the reason you’re doing that is because the end customer who is really what matters, they have options and that they have the ability to choose among different approaches to solve different problems. Therefore having your own offering, plus maybe one or two or three competitive offerings that are also running on your platform is important.

So I think that’s point number one. But in order to do that, again the participants or the leaders of the ecosystem team need to be able to somewhat stand toe to toe against a product leader or a set of product leaders and define why it’s the right thing from a customer’s perspective. So I think that’s, that’s one.

Two, it’s also again from a strategy perspective, spending time with those product leaders and really defining that build versus buy versus partner framework and roadmap. Because remember every organization is going to be resource constrained. So I would argue that it’s nearly impossible, even if you want to, to build every possible offering for every possible scenario customer.

So having clarity and alignment on that build by partner framework helps both internally. It keeps everybody on the same page. ‘Hey, here are the things we know are on the roadmap. We know we’re going to build. They’re strategic to us. Might not be a great idea to find too many partners and do the same thing.’

On the other hand, things that are white spaces where we truly think the customer needs them, but for a variety of reasons could be economic, could be skillset, could be whatever. We’re not going to do that. Well, that by the way probably needs partners. So I think having that clarity of vision is really important and that helps. I don’t think it’ll completely eliminate the co-opetition, but certainly helps reduce the tension in the system.

Pari: Interesting. At some level the alliance’s leaders has to drive that conversation. The product team is not going to drive that.

Avanish: That’s exactly right. It is again, I think the customer first mindset is critical and that involves a huge number of organizations within your own team, Sales and Customer Success, etc have clarity on that. And then two, frankly, it’s part of the alliance leader’s job to figure that thing out.

Pari:And what should be the investment CEO should think about when you think about building the ecosystem? You can have a strategy, but you don’t have resourcing for the strategy. Nothing works. How do you think about investments? How much in a SaaS company… are you going to spend X percent of your revenue on sales and marketing. But is that a metric by ecosystem?

Avanish:Honestly, Pari, I don’t think there’s a defined metric yet. I think that’s part of the evolution. However, what I strongly believe is when you have clarity on what that ecosystem’s strategy and the sequencing is going to be. Then I’m a big believer in what we call crawl, then walk, then run.

So make a targeted investment, don’t spread yourself too thin. May be start with, ‘Hey, we need to build.. maybe just use a couple of examples, we need to build some APIs so that we can integrate with other technologies. So that’s the first pillar, the investment there is maybe a bit more on the engineering side. It’s a bit more on the developer marketing, et cetera, but that’s constrained. It doesn’t require a big organization or someone like you said earlier. It could be, you know, we need a few implementation partners because we don’t want to build up our PS organization, therefore, we need to make sure the product is ready to to be implemented or delivered by a third party.

And that again may require some engineering investment, but maybe one partner manager or two partner managers to go recruit and onboard a handful of services partners. I think having clarity of that sequencing and trying not to do everything at once is really key.

And then again being able to define what that crawl, walk, run motion looks and then having milestones or metrics that say, look at the end of year one, here’s what we’re going to be able to achieve. And being very… I’m a big believer in data and metrics. So having clarity on what those metrics are, tracking those, reporting back on those tweaking things as needed… to me, that’s the way you kind of start. But if you come in and say, ‘Hey, I need 50 people out of the gate.’ Chances are that is not a path to success.

Pari:  Thanks Avanish. Thanks for giving us a great view on the evolution of platform and partnership from the client server world to the new AI world, the challenges faced with the companies and really giving them a playbook, a step-by-step approach on how they should think about crawl, walk, and run strategy. It was really interesting and super insightful for our audience. Thank you for your time.