It’s a cliché, to be sure, but it’s true: The world is complex, and more so by the day it seems. The challenges we face collectively are immense and, in some cases, existential—climate change, deglobalization, geopolitical turmoil, and wealth inequality, to name a few. Some challenges are also opportunities: Artificial intelligence may be at the top of that list. How do we put it to best use while managing the risks?
Given the scale of the challenges and the pace of change in the world, many of the asset owners we work with have concluded that managing the risks and tapping the opportunities will require more information, data, and analysis than they have today. Increasingly, they are seeking to fill these gaps by establishing strategic partnerships with asset managers and other subject matter experts to foster knowledge sharing. It’s not a new concept, of course, but it is one that resonates with many business leaders I speak with and that has broad applicability across industries and organizations as they seek insights that can help with a wide range of objectives—from upskilling employees to conducting joint research projects to scaling and strengthening a business over time.
Each of these partnerships is unique, but we have found that there are some core requirements and best practices:
Successful strategic partnerships don’t just happen. They require intentionality and planning.
Trust and transparency—This is the foundation of a successful strategic partnership: a deep and abiding sense of trust between two organizations, which can only be developed over time and through many interactions. It requires a full understanding of and mutual respect for the challenges and objectives of each organization.
A two-way street and a degree of cultural alignment—The relationship should be mutually beneficial, with shared responsibility for success, as well as a shared commitment to build and complement one another’s capabilities and knowledge. Often, the glue that holds these relationships together is a common set of core cultural values, including integrity, collegiality, and excellence.
Clear expectations—It may seem obvious, but this step is often overlooked. Each organization’s goals should be clearly defined early on and reviewed on a regular basis. There should be agreement on how success will be measured against the goals, including on a qualitative level (e.g., regular engagement and transparency) and a quantitative level (e.g., key performance indicators). In addition, the roles and responsibilities of those managing the relationship should be spelled out.
A long-term focus—Aside from the individual organizational goals, the success of the overall relationship should be evaluated over the long term. It requires patience and an understanding that the nature and scope of the partnership will change, given the inevitable evolution of each organization. This goes hand in hand with the growing belief, which we share, that companies and investors need to think beyond “quarterly capitalism” and adopt a longer-term mindset.
On a related note, there should be reasonable assurance of continuity of staffing within the participating organizations and a willingness to be transparent about succession planning.
An open and broad exchange of information—There should be regular communication across multiple touch points on both sides of the relationship. This should include strong, consistent engagement between key stakeholders and senior management, as well as across various areas of expertise. Within our own strategic partnerships, for example, the engagement often extends beyond our investment expertise to other areas of our business, such as risk management, trading, legal and compliance, information technology, and talent development.
Increasingly, we see opportunities to extend partnerships more broadly to tackle complex problems. In climate research, for example, we’ve helped to bring together a coalition of 10 large asset owners and two leading research institutions—the Woodwell Climate Research Center and the MIT Joint Program on the Science and Policy of Global Change. Collectively, these organizations help to shape a research agenda that will serve the coalition’s long-term needs.
Successful strategic partnerships don’t just happen. They require intentionality and planning to set the relationship’s characteristics from the outset and avoid unwanted surprises. They also demand a good deal of care and feeding, including regular partnership reviews to seek feedback and adjust engagement to ensure the program remains relevant and avoids stagnation.