Relationships Matter

Research demonstrates the ability to form strong partnerships is integral to a company’s success
By Erin Voegele | April 25, 2011

Analysis completed by Lux Research has determined that the stronger a company’s commercial partnerships are, the stronger the company tends to perform overall. According to Mark Bünger, a Lux Research director and the report’s lead author, financial backers and academic collaborators help many new biorefining companies get started. However, too many promising technologies never move beyond the development stage. “Only multiple, active commercial relationships with other businesses will turn these technologies into mature processes and products that actually have a commercial and environmental impact, and a return for their investors,” he says.

Bünger and his team used network graphs to study the relationships biorefining companies have formed, focusing in on those companies that are developing new technologies. “A network graph is a way of representing connections in a group,” he says, noting the method has a long history and has been used to study other industries. “Any relationship is complex and very difficult to boil down to just a few factors,” he continues. “What we wanted to do is capture some of the most salient points; things like when the partnership started, what form the partnership took, some of the terms of the partnership…the duration of the partnership, but we also wanted to get some more qualitative or subjective impressions of what works and what doesn’t, what are best practices and things like that.”

The study ultimately uncovered how integral the formation of partnerships is to a company’s success. “To say they are critical would be an understatement,” Bünger says.  “In a lot of ways the relationships between the entities are more important than what happens with each individual entity. [For example], if company X has a breakthrough, but they can’t afford to scale up, or they can’t get access to the technology they need downstream of that breakthrough, there are lots and lots of different ways that fantastic performance on a company level won’t have any impact on the real world if it isn’t helped along by partnerships.”

One unique aspect of partnerships in the biorefining sector is that they are multidisciplinary, Bünger says. “You’ll see Ford and Pfizer both partnered with companies in this space,” which is unique. You wouldn’t see that in other industries, he continues.

The million dollar question is what makes some companies better at forming these relationships, Bünger says. “It’s not just a function of the technology alone,” he says. “I think it’s very much a function of culture, and leadership.” While some companies are very good at forming meaningful partnerships with other companies, others choose—for one reason or another—to hold their cards close to their chests, he adds. “They think that’s a good strategy because they are going to own whatever comes out of their invention, but more often than not they end up really hindering themselves by doing that,” Bünger says. 

—Erin Voegele