Joint Ventures: The Key Role of the Project Director During the First 90 Days

A few years ago I wrote an extensive article for Business Law Currents, a Thompson Reuters publication, that laid out the “Top Dozen” list of issues that parties to a prospective joint venture (“JV”) needed to consider before investing the extensive amount of time and resources necessary to achieve the expected benefits of collaboration associated with a JV.[1]  The discussions surrounding each of those issues are important in establishing the overall goals and objectives of the JV and the framework for implementation.  However, while well-drafted legal documents are useful, they obviously are not enough to assure the success of a JV.

This article is adapted from material in Managing Growth and Change: A Handbook for Sustainable Entrepreneurs, which is prepared and distributed by the Sustainable Entrepreneurship Project and can be downloaded here.

While a JV and a merger are distinctly different strategies, with their own unique consequences to both sides of the deal, they share one thing in common: the need for a clear planning and building agenda for the first 90 days following the announcement of the combination.  In the merger context this is often referred to as an “integration plan”.  When a new JV is on the horizon the idea is to bring the JV alive and move it along from being just an announcement from the management of both parties to an accepted part of the day-to-day experience of personnel from both parties.

As it becomes clear that the parties will soon reach agreement on the outline for a new JV action should be taken to initiate quick and aggressive, yet carefully orchestrated, planning overseen by an experienced JV project director who can provide strong leadership from the very beginning.  The project director, ideally supported by a staff of specialists in particular areas (e.g., human resources), should be prepared to engage in a number of different activities and deploy a wide array of tools and strategies.  While each of the parties to the JV will have one or more persons with primary responsibility for implementation of the JV from the perspective of that party the JV project director should be selected by both parties and empowered to engage with both parties to facilitate the JV formation and organization process.

The experience that the JV project director brings to his or her role should include a project procedure manual that lays out the key steps that will need to be taken and provides the tools necessary to complete each of those steps.  While the launch activities for a complex JV are quite extensive experience shows that the following “Key Dozen” should be on every project director’s list:

  • Embark on detailed planning of the structure of the JV as well as the provisions that are to be included in the charter documents (i.e., shareholders’ agreement) and operational plans and policies
  • Conduct a full audit and assessment of the resources (i.e., technological, informational, strategic, physical and human) that are owned or controlled by both of the parties and determine their suitability and availability for the JV
  • Interview key players from each of the parties to identify their concerns about the proposed JV and any challenges they believe will need to be overcome and establish processes for developing strategies to address and overcome potential problems
  • Establish an ongoing program to secure the commitment and ongoing engagement of key players from both of the parties from the very beginning of the JV review and formation process
  • Identify the business and financial goals and objectives of each of the parties with respect to the JV and incorporate alignment of those goals and objectives into the planning process
  • Develop a systematic and continuous program for educating each of the parties about the strengths and resources that are available from the other party and the reasons that the other party was identified as a suitable partner for the JV
  • Carefully determine the requisite level of experience and skills needed to fill key positions within the proposed JV organizational structure
  • Establish a clear and mutually agreed process for selection and assignment of key personnel within the proposed JV organizational structure
  • Develop and implement a clear and comprehensive set of personnel policies and procedures supported by training and other methods for establishing cultural norms and expected behaviors from the very beginning of JV operations
  • Design and launch a program for educating all JV personnel, up and down the entire organizational structure, about the conditions, norms and expectations in the markets in which the JV will be operating including local regulations, culture and customs
  • Establish a clear and mutually agreed strategy for engagement of the JV with key stakeholders in its marketplace (e.g., pricing and marketing strategies for products to be manufactured and sold by the JV)
  • Establish procedures for cooperation and coordination between the parties with respect to initiation and negotiation of strategic alliances between the JV and other parties

In order for the project director to achieve success with respect to each of the initiatives listed above he or she needs to be prepared to engage in extensive face-to-face dialogue with executives, managers and other personnel from both parties.  Once agreement or consensus is achieved, the results should be immediately documented, and commitments from the parties should be confirmed, so that there is no confusion at a later date.  For example, if it becomes apparent that one of the parties has a large pool of engineers or other technically-trained personnel with skills and experience that are ideally suited for the JV it is important to obtain a commitment from that party to provide staffing support to the JV including agreement on who will be made available to the JV and when, the terms of the assignment and plans for allowing personnel to return to their parent company upon completion of certain activities.

The project director needs full and visible support from the executives of each of the parties and executive support can be particularly useful to the efforts of the project director to pursue and achieve alignment of interests between the parties in general as well as among the functional and support units within each of the parties and the JV.  For example, if a JV is formed to conduct research and product development activities relating to a specific technological opportunity a concerted effort must be made to inform and engage relevant research specialists from both parties, even if they are not being assigned to the JV, and establish communications between them and the researchers who will be working on the problem within the JV.

Finally, the project director needs to be provided with sufficient financial and other resources to be successful and complete all of the activities suggested above in a very tight time frame.  Support from specialists has already been mentioned; however, the project director should be able to access meeting rooms to conduct planning and training activities, engage outside consultants to facilitate brainstorming and problem-solving sessions and obtain assistance to create documents, budgets and schedules.  The project director should also be in a position to facilitate the extensive flow of information and communication that will be required during the first 90 days.  In particular, the project director and the executives from both parties need to take advantage of multiple communications channels (i.e., print, meetings, video and e-mail) to disseminate a full and clear vision of the hopes for the new JV and impact it will have on everyone on all sides of the deal.

A JV project director occupies an important role; however, the director must be mindful that the mission he or she is pursuing is often seen as threatening by people from both parties and that planning for the JV will begin in an atmosphere filled with rumors, misinformation and worries.  In the ideal world, for example, the project director would obtain full commitment and support from all quarters and gather information on “best practices” that can be transferred to the JV to reduce the learning curve for the new business and accelerate progress and success.  The reality is that people will be reluctant to share their knowledge with the project director and the JV until they fully understand what the JV means to them and their careers.  The JV project director may also be stymied by personality issues and the personal ambitions of executives and managers on both sides who either see the JV as a threat or a path to advancement.  In order to reduce the potential damage to the JV launch from these issues the project director must have the support of top executives from both parties and their commitment to invest time and effort in personally addressing the “me” issues that persons from each party can be expected to have regarding the JV (e.g., “will I have a job, will I be assigned to the JV, who will I report to and will my duties change?”).  The executives also need to set the stage for success in the way that they act during the negotiation process, which means avoiding unnecessary hostility and establishing a foundation for ongoing communication and cooperation which naturally flows down to everyone else involved in the JV.

While all the advice above is valuable, the task is clearly daunting and there is much to be done in a very short period of time.  While each of the issues are important the JV project director, acting in concert with the senior executives of both parties, such identify and pursue a small set of key, and measurable, goals and objectives during the first 90 days in order to get off to a good start in the JV launch process.  These goals and objectives, which should keep everyone tightly focused and engaged, should be announced and widely communicated and accompanied by guidance to everyone as to what their role will be in achieving those goals and objectives.

This article is adapted from material in Managing Growth and Change: A Handbook for Sustainable Entrepreneurs, which is prepared and distributed by the Sustainable Entrepreneurship Project and can be downloaded here.

Alan Gutterman is the Founding Director of the Sustainable Entrepreneurship Project, which engages in and promotes research, education and training activities relating to entrepreneurial ventures launched with the aspiration to create sustainable enterprises that achieve significant growth in scale and value creation through the development of innovative products or services which form the basis for a successful international business.  Visit the Project’s Library of Resources for Sustainable Entrepreneurs to download handbooks, guides, articles and other materials relating to sustainable entrepreneurship and keep up with the Project’s activities by following Alan on LinkedInTwitter and Facebook.


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