How to Manage a Joint Venture: 
Do You Have the Right Stuff? 

Running a joint venture is a difficult business - a job only for those who have the right stuff. 
By James Bamford, Gerard Baynham, Peter Daniel, David Ernst, and Geoff Walker
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MANAGING A JOINT VENTURE can be the most exciting job you will ever have, but it is also pound-for-pound one of the toughest jobs in business. As we watch the continuing stream of new joint venture announcements – whether that be Japan’s Softbank entering into a new joint venture with India’s Bharti Enterprises to invest $20 billion in renewable energy in India; or Cargill, ConAgra, and CHS combining their flour-milling businesses into a JV – it is easy to see the allure of joint ventures in the eyes of those who will be asked to run them. After all, joint ventures often involve combining technologies, capabilities, and capital in novel ways, and JVs are usually instilled with exciting growth prospects. And joint venture CEOs and management teams are afforded a level of responsibility rarely seen in leadership positions within a business unit of the same size. 

But running a joint venture is a difficult business – a job only for those who have the right stuff.

Indeed, many public companies have found JVs to be a useful proving ground for their own top leadership ranks. The current or recent chief executives of BP, Kvaerner, and LyondellBasell were all JV CEOs in the years leading up to their top appointments. Running a JV can offer persuasive evidence that an executive has what it takes to operate in a complex environment involving disparate stakeholders. At BP, CEO Bob Dudley fully forged his reputation between 2003 and 2008 when he was running the company’s massive Russian JV, TNK-BP – a hornets’ nest of shareholder misalignment and palace intrigue that ultimately generated more than $40 billion in value for BP.

For every Bob Dudley, however, there is at least one spectacular flameout, and countless tours of duty cut short with disappointment. As the new JV CEO of a large, 50:50 JV told us: “The last five CEOs were carried out on stretchers, and most were just dumped on the side of the street, left for dead or with careers that never recovered.” The purpose of this note is to distill our experience serving hundreds of joint ventures over the last 20 years – and to offer guidance to JV CEOs and their teams on how to address the added challenges that JVs introduce.


What does it take to run a JV? First is a recognition that the job of a JV CEO and management team requires all the capabilities needed to succeed in any ordinary business, plus the skills and tools needed to meet the added demands resulting from the shared ownership structure of joint ventures. These added demands are felt most acutely in five areas: Strategy, governance, shared services and operations, organization and talent, and finance and planning (Exhibit 1). In strategy, for example, a joint venture CEO must steer the business to meet the needs of the market and the needs of multiple owners – owners that often hold differing objectives, investment and risk preferences, views on which products and markets to prioritize, and how the JV should evolve.

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Second is a willingness of management to take on these challenges, and not wait for the Board to solve them. While all of these issues relate to the shareholders – and therefore are not fully within management’s delegated authority or control – strong JV CEOs and management teams proactively catalyze discussions, shape solutions, and help the shareholders resist some bad behaviors that are detrimental to the businesses. This is not to say that a JV CEO can or should do this alone, or that the Board has no responsibility. On the contrary, the Board as a whole – and the Chair or Lead Directors in particular – must set the frame, and create an environment where JV management can create solutions to these challenges.

Make no mistake: There are real consequences, both business and personal, for JV CEOs and management teams that do not meet these added demands. JVs that fail to meet these challenges tend to stall, under-delivering on their potential, and on the owners’ financial and operating objectives in forming the JV. In addition, JVs that discount these challenges may expose themselves – and their owners – to elevated levels of risk with regard to safety, health, environment, and reputation.

More personally and insidiously, a failure to respond to these JV-specific challenges can lead to chronic misalignment among owners, and shareholder overreach into the venture – creating a “tax” that can easily lead to management team members spending 30 to 35% or more of their time responding to shareholder-related matters, rather than operating the JV. For JV CEOs, the challenge of managing the shareholders cascades into deep frustrations across the management team, undermining productivity and professional satisfaction, increasing turnover, and making it harder to recruit new talent.

The extent to which any particular JV will face these added challenges varies based on the relationship between the JV’s shareholders, the extent to which a JV is independent, the cultural similarities or differences between the partners, and the venture’s scope, performance, and other factors (Exhibit 2). For example, the management teams of long-standing, highly independent ventures with similar partners (such as Dow Corning or Bosch Siemens) may face some added JV challenges (e.g., governance and aligning on growth), but, generally, these are fairly limited. The same can be said for the typical production-phase asset joint ventures in the oil and gas, mining, and chemicals industries that are operated by a single partner – and thus much less susceptible to owner-related complexities.

Contrast this with, say, joint ventures like TeslaToyota, Walmart-Bharti, or TNK-BP – ventures that assemble partners with radically different corporate cultures. Or compare this to JVs like Merck-Schering, Starbucks-Pepsico, Airbus, and Kashagan – ventures that, at different times, have depended extensively on their parent companies for technology, services, and infrastructure along the value chain, and have needed to orchestrate a web of operational interactions with the owners’ internal functions and other businesses. Or compare this to Star Alliance, a 27-partner global airline alliance, where the alliance’s activities are woven into virtually all of the operating functions of its owners – including the product, network planning, technology, maintenance, purchasing, branding, and customer service functions.

While a JV will not face all of these added challenges at any one moment, the presence of any of these challenges is enough to undermine the success of the mission. Below, we outline the five functional areas where the added challenges of JVs are felt most acutely, and illustrate some of the ways that JV CEOs and management teams can address them.1


The challenge. JV CEOs face two distinct issues in shaping JV strategy. First, the parent companies may not be aligned with each other – or internally – on the strategy for the JV. For instance, one parent may want the JV to grow into new markets or products, while the other parent may view those arenas as possible avenues for its own growth. In this case, the JV is blocked from pursuing those opportunities, despite the fact that neither parent is acting to pursue them. Or one parent may see the JV as “captive” (i.e., focused on serving its needs as a customer), while the other parent may see the JV as an independent entity that should be truly oriented toward serving the market, not just its owners. For example, the CEO of one European financial services JV proposed an ambitious strategy to the Board, which was supported by rigorous analysis, and which showed that the JV had an opportunity to capture a critical market in mobile payments. Although one of the parent companies was highly supportive, the strategy was nixed, because one parent wanted to pursue that opportunity on its own.....

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