While the executive suite and shareholders may be keen for a joint venture to proceed, for success to be realised one must assess how it is operated on a day-to-day basis. There are generally multiple parents of the joint venture. The owners, unlike the shareholders of a large, publicly owned corporation, are often times, visible and influential.
A joint venture must make use of its advantages, primarily those stemming from the joint venture owners, and ensuring that the appropriate lessons are being learnt and implemented to ensure that the financial rewards are recognised. The role of executing the joint venture’s objectives is overseen by the board, who then entrust the employees and primarily the management to instrument the joint vision.
Managers
Managers often disparage joint ventures as losing propositions, citing them as being too complex, too ambiguous, too inflexible. But as projects get larger, technology more expensive, and the costs of failure too large to be borne alone, managers in many businesses must learn to accept and work within a joint venture structure. Furthermore, joint ventures assist with the technical, economic, and political risks involved to allow for different parties’ strengths to be utilised to tap and grow a market niche.
Operations
The board and operational management of the joint venture will naturally go through various iterations of how best to reach their goals from an operational perspective. Their will be a metamorphosis of how, when, and in what capacity will the joint venture partners be involved in the day-to-day operations. This will differ from the stages of forming the relationship, implementing the relationship, and refining the relationship as one becomes more adept at the business case and the various synergies between the partners develop.
It is often advised that the first 100 days of operation is where there is greatest scope to ensure that the joint venture will have its best chance for long term success. Thus, there should be an emphasis on regular board and management meetings in this period. This will ensure that the operational issues that arise, may be dealt with appropriately, and should the partners need to dedicate more of their resources or re-allocate them, they will be able to in a timely and efficient manner.
On an ongoing basis the lead board member is to set-up regular board meetings, which as the joint venture matures can be extended from weekly, to monthly, to quarterly. In addition, the board members need to discuss the human resources that they are allocating on both a board level and operational one. At a board level, one needs to ask how senior the personnel are, such that the decisions taken at board level, will have the necessary repercussions in the joint venture mother company, for example should further management resources be needed these can be quickly assigned from the mother company/ies.
Executive concerns
In addition, should the mother company/ies have assigned managers to the joint venture, do they view their assignment at the joint venture as a place where they can grow, or is it a place, where one goes in the shadow years of their career. Furthermore, it has been observed that certain joint ventures, have managers assigned to them to be trained for future roles in the mother company/ies, thus the joint venture is continuously left with a brain drain and is unable to learn and optimise its operations, as the managers are not being given enough time to incorporate all that they are learning and to properly implement it.
Executive recruitment
Very often to avoid operational management being assigned from the parent company/ies, the joint venture may look at the possibility of recruiting a separate management team, with possible oversight from the mother company/ies, and possibly secondments at the mother company/ies to ensure that the best practices are appropriately implemented in the joint venture.
Conclusion
Each joint venture will have its challenges, though it is important that the partners, maintain trust between themselves, are aligned in their objectives, and are results driven. In addition, the joint venture agreement should be sufficiently flexible to allow the venture to manoeuvre and react to market stimuli.
Readings and insights include: How to Make a Global Joint Venture Work – J. Peter Killing
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