This article examines why approximately 80% of corporate partnerships fail and reviews the investment rationale and failure factors through the example of BlueOval SK, Ford and South Korea's SK Group. It also discusses the practical challenges of partnerships and the importance of conducting due diligence in advance.
Partnerships are intended to produce results far exceeding X+Y by having one party handle X and the other handle Y, but they are often said to generate conflict and hostility in practice, resulting in a high failure rate. Harvard Business Review supports this view, stating that the failure rate in the first few years may reach as high as 80%. McKinsey research also puts the rate of joint ventures achieving their objectives at below 25%. These findings are not merely a matter of terminology, but demonstrate the importance of setting realistic expectations and aligning the parties.
A case that exemplifies this situation is BlueOval SK, formed in 2021 by Ford Motor and South Korea's SK Group. The companies invested more than $11 billion in multiple battery plants, but dissolved the partnership approximately 5 years later due to declining demand for electric vehicles in the United States. The case suggests that assumptions that initially appeared attractive can change as economic, political and competitive conditions evolve.
It has been argued that overcoming these obstacles requires devoting time to a premortem, or advance assessment, to identify areas of conflict before they become apparent. Resolving the issue requires more than simply changing the terminology; the parties must align their expectations with reality.
The article introduces research on various forms of partnership, including collaboration between hospital systems and home healthcare companies, suggesting that appropriate divisions of responsibility and clear agreements may improve health outcomes and reduce healthcare costs. However, breakdowns in priorities and changes in market conditions can still pose threats.