Key Partners: who do you need and why?
Key Partners are the external organisations and individuals your business model depends on. Learn how to identify the right partners, avoid over-dependence and ask the right questions with your clients.
Key Partners: who do you need and why?
The Key Partners block describes the network of suppliers, alliances and other external parties that make your business model work. Partners help you acquire resources you do not own, perform activities you are not best at and reduce risk. Simple in theory. Harder to do well in practice.
Types of key partners
Strategic alliances between non-competitors Two companies with complementary strengths work together. Example: a software company and a hardware manufacturer bundling their products.
Coopetition (alliances between competitors) Companies that usually compete cooperate in specific areas. Common in industries like airlines (code-sharing) and pharma (joint research).
Joint ventures to develop new business Two or more parties create a new entity together to pursue an opportunity neither could address alone.
Buyer-supplier relationships The most common type. You rely on suppliers for raw materials, components, software licences or services that feed into your value proposition.
Why companies enter partnerships
Osterwalder and Pigneur identify a handful of motivations, and we think they still hold up.
Economy of scale. It is often cheaper to outsource than to own, and a specialist will almost always do it better anyway.
Reduction of risk. Partnering distributes the downside. No single company has to absorb everything.
Acquisition of capabilities you lack. You need a resource or skill that would take too long or cost too much to build yourself.
Access to a new customer base. A partner brings a relationship network that would take years to build from scratch.
What does NOT belong here
Not every supplier is a key partner. A key partner is someone without whom your business model breaks. If you could easily switch to a different supplier with no impact on your value proposition, that vendor is not a key partner.
Be selective. Four or five genuine key partners is more useful than a list of twenty. A long list usually means the client has not thought it through yet.
Questions to explore with clients
- Who are the external parties you rely on most to deliver your value proposition?
- What would happen to your business if any of these partners stopped working with you tomorrow?
- Are any of your key partners also potential competitors?
- What do your partners get out of this relationship? Is it sustainable for them?
- Are there partnerships you should be building but have not yet started?
- Which key activities or resources could a partner handle better than you?