SmartSynch’s Partnership Process
While partnerships may be economically efficient, many small technology-driven companies have difficulties establishing them. SmartSynch, with 18 major utility clients, is much smaller than Itron, who brings over 2000 utility clients globally. How did they convince Itron to partner?
Mr. Rodgers, CEO of SmartSynch, shared the process to founding this strategic partnership.
In January of 2002, Mr. Rodgers met LeRoy Nosbaum, CEO of Itron, at a JP Morgan conference in New York City. Suspecting that there might be ground for forging a relationship, Mr. Rodgers called Mr. Nosbaum a week later for an appointment. Mr. Nosbaum deferred to confer with his senior executive team. Another week passed, and Mr. Rodgers followed up. Like most first efforts in establishing a relationship between small and large firms, Itron turned down SmartSynch. They believed that SmartSynch’s offering was competitive in nature and not complimentary.
Mr. Rodgers considered Itron’s rejection and concluded that the potential relationship deserved a second try. He called back and again requested an appointment to clarify the partnership potential and break out of a pigeonhole. Mr. Nosbaum directed Mr. Rodgers to meet with Russ Vanos, Vice President of the Electric Business Unit at Itron, who would ultimately be responsible for distributing SmartSynch’s product should a partnership emerge.
Mr. Rodgers, along with key members of his management team, met Mr. Vanos and key members of his management team at an industry conference in Miami in February 2002. During the meeting, SmartSynch presented their ideas about the potential partnership. The key issue for SmartSynch in this meeting was to get out the right information. After this meeting, Itron agreed to further explore the relationship.
Shortly there after, SmartSynch’s management team flew from Jackson, MS to Spokane, WA. Greeting them was the senior management team of Itron, including the CEO, general managers, product development, sales and business development, and finance. The key objective of this meeting was to discuss the complimentary vs. competitive nature of the two product offerings and to receive support for the partnership from all groups within Itron.
Over the next several months, product mangers, sales, and technical support met to examine the potential for a relationship. They concluded that their offerings were indeed complimentary. By June, a letter of intent was executed and the formation of the partnership agreement began. Team synergy was key in facilitating the legal arrangements. Once finalized, SmartSynch’s board approved the agreement.
By September of 2002, nine months later, the distribution partnership was announced. Immediately afterwards, the two teams began working on the back-office integration to facilitate the sales and marketing effort. Nine months is quick for an extensive relationship between two partners with little prior experience in distribution arrangements. Well done SmartSynch and Itron.
For further discussion on the difficulties small firms face in forging meaningful partnership arrangements, see Channel Conflict of Interest, printed July 17, 2002 in the Wiglaf Journal. (http://www.wiglafjournal.com/partnership/2002/07/channel-conflict-of-interest/)