Joint Ventures: Role Of The Business Architect
As there are good business and accounting reasons to create a joint venture (JV) with a company that has complementary capabilities and resources, such as distribution channels, technology, or finance, joint ventures are becoming an increasingly common way for companies to form strategic alliances. In a joint venture, two or more “parent” companies agree to share capital, technology, human resources, risks and rewards in a formation of a new entity under shared control.
Important Factors to be considered before a Joint Venture is Formed
* Availability of appreciated or depreciated property being contributed to the joint venture; by misunderstanding the significance of appreciated property, companies can fundamentally weaken the economics of the deal for themselves and their partners.
* Special allocations of income, gain, loss or deduction to be made among the partners
* Compensation to the members that provide services
The Role of the Business Architect
Business architect is a person that initiates new business ventures or leads business innovation, designs a winning business model, and builds a sustainable balanced business system for a lasting success.
Business architects can be found in a multitude of business settings: corporate change leaders, initiators of joint ventures, managers of radical innovation projects, in-company ventures, spin-outs, for more detail visit or new start-up ventures. Although the settings in which business architects act are different, they all design and run a new venture to achieve its sustainable growth.
Human Resources (HR) Action Steps to Prepare for a Successful JV2
* Begin with a sound, well-articulated strategy.
Before moving forward, determine and explain why you wish to enter into a joint venture, why you have chosen your partner(s), and what you hope to achieve. Define involvement (managerial, capital, etc) of the parent companies and how long the JV will last. Put in place strategies to define governance, for more detail visit accountability, decision-making process, and conflict- and issue-resolution procedures. Ensure buy-in and participation at the highest level. Consider outcomes: what could cause you to terminate the joint venture, and what is the preferred exit strategy.
* Develop HR strategies that align and support the goals of the JV: develop a distinct identity and culture for the new organization; communicate aggressively to employees; and establish distinct career paths, management, and a means of return for employees transferred to the JV. Create compensation, incentive, and retention programs tied to the success of the JV. Maintain open communication between the HR departments of the parents and the JV.
* Define a process for leadership selection that’s seen as fair and credible, and name top-tier leadership as soon as possible. Look for key indicators of leadership potentials such as behavior, past experience, and measurable outputs.
* Communication. To engage and motivate your employees, communication should be frequent and used to create a common vision, establish a connection with leadership, explain the new rules, support the individual transition process, aid in retention, and ultimately, define the new organization in terms of “We” instead of an “It” or “They”. Share as much information as you can, and never sugar-coat or make false promises.
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