Give-to-Get Corporate Partnering
In The Reciprocity Advantage, Bob Johansen and Karl Ronn argue that the most successful partnerships start with sharing, not protecting, your intellectual capital.
In late 2010, Microsoft introduced Kinect, a motion-sensing device that enabled Xbox users to play games using gestures and speech. Within days, however, the platform was hacked by people who started using it in all sorts of ways that Microsoft hadn’t intended.
At first, the company announced it would take legal action against anyone who tampered with its device. But hackers—excited by the opportunities presented by the first general purpose, low-cost gestural interface—ignored the threat. Then, a few months later, Microsoft decided to take a different tack, and embraced the hackers by releasing a software development kit for Kinect. They effectively turned the new platform into a huge open source project, with the company at its center. It was an unexpected about face, one that Bob Johansen and Karl Ronn describe as “truly remarkable and even inspiring” in their new book, The Reciprocity Advantage: A New Way to Partner for Innovation and Growth (Berrett-Koehler, 2014).
Johansen, a distinguished fellow at the Institute for the Future in Silicon Valley, and Ronn, managing director of Innovation Portfolio Partners, point to Kinect as an example of reciprocity-based partnering. “This new type of partnership gives a partner access to your best assets now to achieve rapidly scaling future growth that neither of you could have pulled off on your own,” Ronn explained in an email interview. “At a time when disruption is the greatest threat to business, it allows you and your partner to embrace disruption and harness it for rapid growth.”
With more conventional partnerships, like those between suppliers and their customers, the big problem is that one partner is in control, Ronn says. As a result, only one partner is seeking to develop the asset and the potential for innovation, and profit is reduced. This was the problem with Microsoft’s initial inclination to restrict access to the Kinect platform: Its potential was being limited to the gaming applications for which it was created.
Instead, the authors of The Reciprocity Advantage urge companies to share their most valuable intellectual property and other assets. “Sharing instead of protecting your assets sounds scary,” Ronn says, “but it's not when the partner you are sharing your intellectual property or know-how how with is the partner that unlocks new growth potential.”
The goal is a two-way partnership focused on creating a “new ecosystem that will support radical changes in products and services.” The authors profile various examples of such partnerships: IBM and its big data initiative Smarter Planet; Google and its Google Fiber program; TED and its TEDx partners; and Apple and well, everybody.
The payoff for such initiatives, even when they are launched in a less-than-premeditated way, can be handsome. Microsoft already had a billion-dollar business selling Kinect to gamers. But in July 2014, it released Kinect V2, with improved body tracking, development support, and tooling to the developer market. It also announced that developers who create Kinect apps can sell them through the Windows Store if they wish.
How can your company create a reciprocity-driven partnership? “First define what you can share. Apple shared its iPhone platform, for example,” Ronn says. “Then define a partner whose skills could be combined with your assets to create a new business. When Google wired Kansas City with high-speed fiber, it partnered with the whole city. Kansas City is now a hotbed for digital businesses. Finally, learn together with your partner by conducting small experiments until you perfect the new business model. When you have it perfected, scale it quickly.”
The underlying principle in reciprocity partnering is one we’ve heard before: Give first, and taking will take care of itself. Wharton School prof Adam Grant made a strong argument for individuals to focus first on giving in his book, Give and Take: A Revolutionary Approach to Success (Viking, 2013). In The Reciprocity Advantage, Johansen and Ronn extend the same line of thought to the art and craft of corporate partnering.