The strategy, scope, governance, and logistics can feel overwhelmingly clear at the start of a joint venture (JV). When looked at down the line, natural differences between the partners are likely to arise about how to build, manage and evolve the venture. This can include how involved the owners and shareholders prioritize the development of the product and brand, how business development will be run, or how information and privacy protocols will be changed to keep up with the industry.
Solving these issues at the forefront leaves the JV CEOs able to prioritize their time running the operations or outmaneuvering competitors. When issues are failed to be addressed, acquisitions and capital improvements get stalled, the operational flow gets backed up, and the company doesn’t progress as quickly.
Any tool that helps manage shareholder alignment, and does so in an efficient way, is a valuable managing principle. Alignment must be built on different structural levels ranging from the board members to the joint venture staff, as well as the individual owners of the joint venture itself. There must also be agreement across topics of ownership strategy, governance, financials, company scope, and operations.
Creating foundations for guiding the development of a joint venture is a valuable practice to help promote understanding. The principles should express the owners’ managerial and strategic intent toward the JV. They are meant to extend the intent of the mission, values, business plan, and agreement of the joint venture.