Why You Should Be Taking Partnership Ecosystems Seriously

If you’re not taking partnership ecosystems seriously, you’re missing out on the most powerful and transformative business strategy of the last 40 years.Jay McBain is calling the 2020s the “the decade of the channel ecosystem,” and he’s right on point. Most people had no idea what the Director of Strategic Partnerships was doing for their company 10 years ago. Today, the age of corporate ironclads has sunk and a new epoch of global tech-tonics has emerged. It reflects the lessons behind new societal values of connection and diversity, and it’s founded on the discovery that communicating and sharing for mutual benefit is statistically more valuable than unilateral self-interest. It crystalizes and confirms that economics is a measure of dollar signs, but it’s a theory of something immeasurably more profound:It’s a description of us.And that’s where we are today. The dawn of the Age of Partnership Ecosystems.

Putting Up Numbers

Partnership ecosystems are putting numbers on the board that nobody’s ever seen before. Blogs are peppered with juicy stats like 96% of B2B customers expect to increase revenues through their partnership ecosystems. It’s great. It’s hot. We get it. But it doesn’t really tell the tale.The big story is Microsoft, whose transformation from sputtering software producer to a cloud service provider produced that “partners influence more than 95% of Microsoft’s commercial revenue” figure tech has been drooling over for the last three years. You know the stat, but do you know the story? It’s a great one. Their partnership ecosystem is basically their whole business today, and the revenue it teased from the marketplace is a wonder to behold. 2014 Microsoft: An Ecological DisasterIn 2014, Microsoft was performing well below expectations. They were looking for another answer, and churning out PC OS after OS wasn’t really getting the job done. It just wasn’t the future, and they promoted Satya Nadella as CEO to right the ship. You probably know Nadella today as a tech transformation legend, and you would be right. Before he took over, however, Microsoft was trying everything and getting nowhere. Their partnership with Nokia on the Windows Phone situation was great in principle but ultimately wasn’t enough to compete with the likes of Apple and Google. It wasn’t that their product was bad, it was just late. As Nadella put it in 2016, “we clearly missed the mobile phone, no question.”  They also had this little search engine called Bing. You can google it. Let us know what you find.

An Endangered Species

The company was in danger of becoming a battleship in an aircraft carrier age, and it was going to be pivot or divot.In 2013, Nadella was the president of Microsoft’s servers and tools division, and he’d been working on this little project called Azure. It was a cloud server, and it seemed like another bronze medal in the making because Amazon already had a miles-long headstart with AWS and Google had its astonishingly un-sexily-named Google Cloud Platform (c’mon guys, that was terrible). The die seemed cast. The only X factor was Nadella. And it was a game-changer.

Changing the Climate

There’s no record of it, but Nadella clearly walked into a Microsoft senior board meeting and did what partnerships leaders do. He identified stakeholder value, aligned them behind a vision, and executed, except it was also the sickest meta deal ever. It wasn’t a partnership vision. It was a vision of partnerships. Nadella led the transformation to a cloud partnership ecosystem model behind Azure. The idea was that you create a framework of operational value for businesses and then they build their business around it. What you end up with is a product that is the sum of the value of its partners—an “ecosystem.” It was brilliant. Between 2015 and today, the company went from a stagnant $85 billion pork barrel losing 5.75% of its value, to double-digit gains every year and worth $200 billion today. They’re partnered with over 800 independent software vendors, 17 device partners, and over 1000 system integrators worldwide, and they have one of the healthiest and most robust partnership ecosystems on the planet. And it’s just getting bigger.On the back of their example, everyone has realized that the future of value is in partnership  ecosystems. It’s an entirely new way of thinking about revenue, business, and value, and it’s going to dominate the business universe for many years to come.

“Partners influence more than 95% of Microsoft’s commercial revenue.”

Oh, and that quote. You think the first time anyone ever heard that was in some tech blog? Not a chance. It was the tagline of Satya Nadella’s 2014 vision alignment pitch to every C-suite exec over coffee and lunch for the rest of the year. Boom. The guy’s a prophet.

Exploring Partnership Ecosystems with Firneo

Nobody mentioned you’d have to be an ecologist as well as a partnerships leader? Don’t panic. Firneo’s got you covered. Our experts have been helping partnerships leaders understand the ins and outs of partnership ecosystems for over a decade. We’re focused on all the stuff they don’t teach you in school, from finding the right partners to aligning your stakeholders behind real value. And we’re giving it to you. Registration for our Q1 2023 partnerships cohort begins Jan. 26. Be a part of it.