Posted by: prataap | March 9, 2008

POLARIZATION TREND 3: Cross Industry Alliances


CROSS INDUSTRY ALLIANCES

BIG & SMALL

CREATE NEW LIFESTYLE CHOICES

As globalization of the world economy continues, Europe and Asia will continue to fall victim to the US phenomenon of corporate mergers and break-ups. That’s but a mere distraction. A whole new phenomenon of temporary partnerships or alliances is fast emerging at unthinkable scales and among unlikely bedfellows.  In 2008 Boss and Ferrari joined forces on the $266,00 limitted edition Ferrari 612 Scaglietti. Only 400 of these cars with the ultimate music experience did this exclusive partnership decide to produce. Only a few of these will sold in the US.

Don’t be surprised if the next one is a cross industry and cross cultural partnership like Sony/Martha Stewart/Air France (entertainment/style/travel). That will create new “life style” marketing ideas such as the “Brand You” or “Extreme Care” concepts or themes focused on leveraging advantages of each industry/company to sell new personal identity or self care option. Providing individualized products and services that meet unique and constantly changing identities and life style options will be the coming trend.

Who would have thought in 2001 that Bertelsman of Germany would chose to build a strategic alliance with Napster instead of following its first instinct

to shut them down. They formed a smart alliance which in turn made Bertelsman the leader (albeit for a short while) in the emerging market trend of music download. Now with i-tunes we take phones, music and video downloads for granted!  Multiple service, product and content industries partnering to create new markets.

This sort of alliance is not to be confused with the Airline Partners/Alliance which is mostly about nominal increase in efficiency. Nor should it be confused with Oracle or Pfizer choosing to buy out its competition or buy the next product. That is a growth strategy based more on increasing market share and size and less on creating whole new products or services out of the synergy of bringing two related products or services together. The new generation of alliances will leverage the advantage of one partner with another, and mostly only for a limited market cycle duration. The focus is not on size but the creation and capture of a new market. Imagine the synergy created if Toyota SUV’s were to market the “rugged outdoors as entertainment” life style concept partnering with Damien Hirst, Levi, and Apple instead of going it alone. Theirs would not be just another SUV and, and they would stand out of the pack, which is what it’s all about in the 21″ century. Brand yourself as the innovator in the pack. The combinations are endless. Do what it takes.

Next Opportunities: This phenomenon will especially give smaller, more nimble entrepreneurs or companies lots of opportunities to create short term limited strategic alliances to fill non-traditional market niches that cut across current industry/market niches and that bigger conglomerates will be too slow to be able to capture. A small example of this trend waiting to happen; partnerships/collaborations (not mergers of companies) of smaller retailers such as restaurants and high end clothiers creating the new “life style concept” of eating finger food while you shop, a hybrid created out of an innovative partnership between related activities. And next generation of fast food items after “the wrap” and “smoothies” of the late 90’s will be created that are grease free and spill proof, and can be eaten or sipped on the go. Department stores with lounges are already here….but with a bar and tattoo/massage parlor, that would be the logical next step. There are ten reasons why it can’t be done…but find the one compelling reason why it should be done. And do it! Be the one that stands out of the pack.

In air travel, airlines will introduce pay for services (including food, massage, showers) in the next few years, Virgin Atlantic is leading the way for now in its Upper Class. Suppliers of products and services ready to tailor their packaging and products to the airline needs and passenger tastes will be able to tap that market (see Vision: Customization). Watch for a base airline price and then pay as you go options for food, massage, manicure, showers, sleep chambers, among other options.

In the day to day world around us, Peapod.com or Urbanfetch.com and others already function as the one stop delivery system for the full spectrum of goods and services, from video/junk/food /magazines/ electronics/resumes on demand now!  Brought to you by Partnerships Inc.

In manufacturing you can be profitable from day one if you are in the right manufacturing niche and willing to find the best partner for your services. Cisco Systems the world’s number one maker of computer networking equipment (not just software), routers and fiber optic equipment was also the largest company in the world (based on market capitalization) beating Microsoft in March 2000 and second only to GE in Nov 2000. But the company only owns five factories; the majority of its equipment manufacturing is outsourced to what Cisco calls “virtual manufacturing“.  

From i-phones to medical research, the right partnerships are what is allowing products to hit the market before the competition.

You can do the same and reduce capital costs and outsource even if you are a single person or a small group operation. Focus on what you do best and outsource the rest. Or be the manufacturer for the mega companies. If you do, be sure to have your finger on the pulse to know where and when your next order will come from, and always be looking ahead to know when to re-tool to meet the shift occurring upstream before it gets to you. And be ready to be bought out by the company wanting to leap frog and get into the market. Leverage your position and create the next partnership or go realize your next passion, and the partners will come knocking on your door. Let your imagination run. Create the future and smell the roses, it’s your move!

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