Howdy Partner . . . By Director Wayne Hall

September 27, 2007

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Strategic partners & core competency….  Both are terms that have come back into vogue recently. In the case of the business music industry, the need to assess whether strategic partners are required and the ways in which they can add value to the operation is certainly high on the agenda. The nature of music programming and the culture required to produce great music programs is very different from, for example, that of associated tasks such as software development, manufacturing, or hardware installation & service, and often a business which tries to integrate all of these services under the one roof can struggle – not least because of the clash of “cultures” associated with each of these operational requirements.

Here at SBA we have spent quite some time determining (I would even say agonizing over) what it is that we want to be as a business. It was certainly not a straightforward process, because businesses, like people, form habits which can be hard to assess objectively. One thing became clear to us through the process, however -  as markets become more sophisticated (and clients more demanding) the resources and focus required to meet all of the supply components in turn become more demanding to manage. Consequently, our first major decision, which represented a shift in business philosophy, was to accept that we were carrying out tasks and offering product solutions which were below par. The logical extension of this was that we had to determine what it was we wanted to be exceptional at doing (our core competency) while identifying what to discard or outsource to strategic partners.

Importantly, the first thing we had to come to grips with when contemplating strategic partners and operational change was the need to be less “precious” about certain areas of our business. In short, we needed to accept that it was OK to be the maker of the fries to go with the hamburger - so long as the whole meal tasted great, the customer was happy . . . and they came back for more. This is not an easy thing to do, because it involves giving up control (over components of the product/service supply chain), and in some instances, allowing other parties to be the primary “customer-facing” party. The reality though, is that the incredibly broad and intense set of requirements associated these days with music supply to juke boxes, DJ’s, hospitality, instore retail, offices and a growing list of applications means that it has become very, very difficult to be exceptional at all components of the supply chain. Better to be a profitable maker and supplier of snap-frozen fries than go broke trying to manage supply of all the ingredients.
Our conclusion was that it was best for us to focus on the core task of creating exceptional music programs, while partnering with music system developers, manufacturers, hardware contractors and communication providers to satisfy other key areas of supply.

To date the outcome has been very positive. The culture of the business has become more focused on music, music-programming and relationship-building - the latter in terms of both customers and key strategic partners. Furthermore, the working capital that was being sunk into the endless cycle of music-system development (“sunk” being the operative word) has been freed up to further improve our core music and relationship-based areas. There are also real benefits of managing a more closely aligned set of staff and resources, and these include simple - yet vital - things, such as improved communication, more profitable sales and better cost control.

I also believe that there is a “total market” benefit to a strategic partner/core competency approach like the one described above, particularly in a niche market like business music. This is because such a model tends to spend relatively limited funds more efficiently, because rather than a host of businesses individually competing against one another and attempting to develop all of the supply components in isolation (everyone creating a different hamburger), it attends to allow businesses to specialize and direct a greater percentage of their funds and expertise into developing a specific component of the package or supply chain. The result is a better total product/package backed by more focused expertise, funding and infrastructure.

Of course, the whole approach needs to be underpinned by trusting relationships. But that’s another story . . .


Wayne Hall
Director

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