A few years ago a prospective reached out. They were an AWS partner - literally their entire business was based on AWS, and they had grown fairly rapidly to a global team of about 350. But growth had stalled, and one of the founding partners was starting to get concerned about their reliance on the AWS partner network for net new business development. He wanted to diversify their business development channels.

It was the right idea, but in the end, the necessary cost and resources were too much too swallow for a company that was generating 95% of their revenue from the partner ecosystem.

The problem with partner-based positioning

The traditional way most think of positioning is what you do and for who. Easy! "The leading AWS implementation partner for public sector organizations". That's not enough. OK! "The leading AWS partner for COMPLEX implementations for public sector organizations."

You see the problem right?

Every single AWS partner will claim to be "the best" AWS partner. There are over 140,000 partners, with over 5,000 public sector certified. That's a lot of competition for an undifferentiated firm. And if your entire market positioning depends on the partnership, then that partnership is the only differentiation you have. Which isn't much differentiation at all.

Now look, it is possible to build an incredibly successful business on the back of a technology partnership, but you either have to be first, or you have to be reeeeally good. If you are early, you have leverage. The technology vendors needs you. If you play your cards right, you will build strong relationships with the partnerships team and have your pick of the litter of business opportunities.

If you are a later entrant, you have to be damn good. Like top 0.1% good. Because your value to the partner ecosystem is the results you can deliver to clients, that keep them on the platforms for longer, and expand their use of the platforms.

If you succeed, you are stuck

I've talked to many a partner agency and managed service provider. They all want to diversify, but the vast majority get in their own way of doing so. The business model has been built around the lower cost of acquisition via the partner network, and diversifying away from it is like fighting gravity. The partners who built the business are often not willing to decrease operating margins to scale the business further. And building the go-to-market engine to source business from outside the partner ecosystem often requires a full or partial repositioning, which again, is a hard sell for an established successful firm.

And last, but not least, there are the partner commissions, which once they become part of your revenue model, are hard to get away from.

Everyone else struggles

The problem is that commission structures are bound to change, and depending on how big of a chunk of revenue they make up for your business, a change in commission payouts and partner tiers can upend your business. Just look at what has happened within the Hubspot ecosystem in recent years.

And speaking of now controling your own destiny, by basing your positioning on a particular technology partner, you are taking a gamble on their success and continued growth, as well as on their continued focus on the partner ecosystem. There have been a number of prominent managed service partner acquisitions by large software firms:

• Salesforce acquired Acumen Solutions
• Oracle acquired Cerner
• Microsoft build Avenade as a joint venture with Accenture

All of these sent ripple effects through their respective partner ecosystems.

I'm not advocating against technology partnerships

On the contrary, taking advantage of existing ecosystems is one of the best ways to rapidly and sustainable scale a consulting firm. But the question is what role should the partnership, or partnerships, play in your positioning.

I was speaking with a consulting firm founder recently who was fairly deep into the Microsoft partner ecosystem, but rather than focus on that, he was building his firm to focus on a unique use case relevant to a few specific industries; industries where Microsoft technology is very prevelant, and where their unique combined expertise in the technology and the business use cases makes them stand out. Yes, they get a lot of business of business from the partner ecosystem, but they are also building up a differentiated position with compelling IP in a niche market, which allows them to control their own destiny.

Control your destiny

Building your positioning around unique IP rather than a technology partner allows you to control how your business grows. It allows you to control the flow of inbound leads based on your ICP because they are coming to you based on your IP, not only because the tech vendor recommended you.

It allows you to to control the conversation about price. Sure you might be implementing Azure cloud infrastructure, but rather than being compared to every other offshore implementation partner and their rates, you are being compared against a small subset with a very specific skillset in your industry and business case. Or even better, your are being compared to nobody because your IP made them think differently about their problem, and they are choosing you because of that, rather than choosing you because of your technolgy expertise.

It allows you to more easily pursue other relevant technology and vendor partnerships to expand your service offering. While most partner agreements are non-exclusive, the problem isn't actually contractual. By building your business around a single technology partner, you make it difficult from an operations perspective to expand to others. You end up hiring for technolgy skillsets, your client base and success stories are focused in the single technology, and your revenue model is built around servicing that technolgy. But building your business about differentiated IP, with a set of technologies as the foundation doesn't create these operational roadblocks.

I personally don't focus on any particular technology, and like to say that what I do is technology agnostic. That said, I do have preferred vendors for certain categories of products, some of which I have actual referral partnership agreements with. But the revenue from these is so tiny, that I don't even include it in any of my financial forecasting because I don't want to be remotely incentivized or dependent on it. And if a better platform comes along, then I have no problem switching my recommendation.

My positioning is focused around my IP - focused on helping consulting firms become the low-risk choice for their ideal clients.