So in this lesson, we're looking at your key partnerships. That is, who are the companies, individuals or groups or communities that are your key partners? And also whom are your key suppliers? Yeah, who are the critical pieces in your supply chain that is going to make it all work. So a couple of examples to get you started. If you think about Apple, who are its key partners, the obvious ones are Foxconn who does the assembling of lawful or the iPhones in its huge batteries in Taiwan and China.

And also Samsung, who produces a lot of the the critical components including the OLED screens, for for for the iPhone. So Apple needs to basically make sure that they keep those on one side or the customer other companies. have very different supply chains very different key part. So you need to ask what are the key resources that you're you're getting from your key partners. And generally, there is this link between key resources and key partners or key activities, key partners. You don't have to do all your activities yourself.

You don't have to own all your resources yourself, you can get them from other people. If you get them from other people, you include them in this section and key partners. So for example, I think he was tumbler or one of the other photo sharing sites, they used to have a key partner and listen, and because they did all the hosting on Amazon, AWS. Once they got to a certain point, they then decided that that was a key resource that they needed to have in house So they brought the the whole of the whole state management of the tech stack in house and that Amazon then cease to be a partner, a key partner. For them very much you need to be looking and making this decision. Do I rent?

Or do I make? Can I can I buy an activity or a key resource from somebody outside more cheaply that I could do it do it myself. So for example, one of my customers build some apps for residential associations. Yeah. They made the decision that it's cheaper to go to somebody who specializes in building out fine, and he then delivers that I good but not very customized solution, rather than trying to build a customized solution themselves. So this is this is an important decision that you need to make.

And it helps you reduce the amount of capital that you have to put into a business. I was talking to somebody the other day in Mountain View, say that, okay, he needs to spend 500,000 developing the Yeah. Okay. His app in that case, is based on somebody doing some work pro bono for him is he, as he said, nonprofit, but he also needs to say, Okay, is there a way that I can get an app that does an equivalent thing where I don't have to invest all the capital, and this is often where key partners can come in. They may have something that you can use as a platform that allows you to leverage on somebody else's resources or activity, what are the forms that a key partnership can take? Well, the the The first one is a strategic alliance between non competitors.

This is where two companies agree to work together to achieve some sort of common common aim. A second approach is thought petition where you've got competitors working in a non competitive way on a particular project. So for example, in the car industry, often now you'll find companies grouping together to work to deliver either chassis smartphones, or new electric motors or autonomous driving systems, because the cost of actually developing something themselves is too large and too risky for them to do themselves. But when you can do it together with a group of competitors and satisfy the competition now, authorities that you know have a cartel then you can deliver something a lot more effective. The third approach is to create a joint venture to do new business together. So a good example of this is when say no wager on secure, BP went into Russia and it formed a joint venture with a Russian oil companies.

Bp brought in technological low power exploration know how the Russian company brought it, sort of the asset ownership and the ability to supply manpower and resources to the project. And then that joint venture work successfully over the six or seven years producing producing oil. And what you're looking for in a joint venture is two companies coming together with different skill sets or resources that are able to deliver something that is greater than the sum of the parts and then finally, The final type of key partnership relationship is the buyer supplier relationship. And this can be absolutely critical in ensuring that you're able to deliver your value proposition. It's most commonly seen in industrial supply chains where you will have a primary and a secondary supplier for your goods and you're going in and you're making sure that your supplier delivers the quality that meet the specifications that you require from them.

Yeah, and they start cooling their factory up to meet your demand. So Foxconn, for example, has its factories entire some of its factories entirely dedicated to producing iPhones. It opens new factories based on demands. It understands what Apple wants and everything is dedicated and unwinding that relationship would take several, several years because both parties have invested a great deal. Similarly, Nike and other branded shoe wear companies invest a lot of time in going into their supplier, supplier companies and work in the factories, making sure that everything is done appropriately or finding out that it isn't investing to make sure that he does the supply chain does work according to the ethical principles. So why why do we create partnerships with other people?

What Why do we Why don't we do it ourselves? Why don't we go live? Simply, I mean, the simplest answer is, in many ways, you can do more with less capital if you have partners. Yeah. So the first big reason or detailed rates and a way that you can get somebody else's economies of scale So, if, for example, I want to set up a company making shoes, I got fundamentally two choices. Yeah, start with I'm gonna be a pretty small company.

So I got enough capital to make a factory or set up a battery that might say 50,000 pounds a month. However, I could go to a guy just across the road, and he already does is he makes shoes for other other people. He doesn't sell them to the market. And he makes 5 million sheets a month, because of the economies of scale that he's able to deliver. He can sell me shoes 30% 40% 50% cheaper and I will be able to make them myself. And I don't have to invest my capital.

To set up the factory. I don't have to use my management time to set up the factory. He's always doing The base test. The second reason is the reduction of risk and uncertainty. Certainly it's true that when you're when you're doing a startup, there is an awful lot that you don't know. I mean, market research takes you so far, but it's when the rubber hits the road and you find out what reality is really like that you start to understand your business.

So when you can have a key partner who is already in the market, that can really help you to reduce the risks that you're facing. So this is one of the reasons why I say franchises work so well because a new franchisee goes, sets up the business. And he's already been given a set of principles, systems, structures, processes that work and they work in lots of different places. So he knows that if he follows this way With a few other various variables that he can then consider to control he's going to have the business. And that significantly reduces his risk and significantly reduces the failure rate that he's likely to expect. And then the final reason to have a a partnership is that you're able to access particular resources or skills.

So, for example, with the growth in lithium ion batteries and make that the demand for electric vehicles on lithium mines have suddenly become very, very valuable. So there's often a good reason for somebody like Tesla to actually either partner or partner up with lithium mines to ensure that he's going to be able to get a good flow of lithium going into expanded battery manufacturing facilities because If it's at the mercy of, say market prices, and there's a crunch, then suddenly it's economics start stop being becoming a little bit of a bubble. And there are many other reasons or ways that you can actually access other resources out there. But very much this is one of the biggest areas that I think entrepreneurs have a lot of flexibility in is looking at your competitors to see, okay, where did they get their resources? And then say, Okay, can I get better resources from somewhere else?

If I do this in house, that will be a test? Is there a way that I can get it better, cheaper, faster, more effective from somebody else that then gets me on a par with them, and then a lab lets me spend the time on freedom from not having to stand on finding or developing a much stronger competitive advantage. And this is one of the most important things about key partnerships. They let you leverage, they let you grow faster and more effectively than if you had to buy and make everything yourself. So what to do next? Sit down again with a business model canvas and sketch out four to five key partnerships that you think would be really important.

And the best way to do this is to look at your key activities, look at your key resources and say, Okay, what can I buy from somebody else that is going to make me faster, better, more effective, that is going to let me deliver more value to my to my customers. Yeah, if you haven't got any key partners, then there's a risk that your business model isn't innovative enough and you're going to be facing difficulties as you try to implement it. On the other hand, if you've gone through the the process of looking at each of your key activities, your your key resources, and you can't see any options are then that's also fine. What works for you? Bear in mind though, partnerships let you leverage and do more faster. So, any questions, do ask them down in the comments or send me an email