Microsoft truce with Palm - Strategy Co-Creation in Action

Much to the surprise of Wall Street analysts, Microsoft and Palm have put aside their long-running marketplace battles and have forged a strategic relationship that ensures a highly differentiated offering for Palm's Treo mobile device and greater mobile marketplace reach for Windows and other Microsoft software products.

Three important observations about the new relationship:

1. Palm was tenacious - even relentless - in pursuing a closer relationship with Microsoft. Indeed, Palm spent years meeting and wooing with the industry giant in the face of extreme arrogance and resistance.
2. The most senior levels of Palm drove the relationship - from Jeff Hawkins (founder) down. Jeff took a personal role in lobbying, cajoling, negotiating with Microsoft Chairman Bill Gates.
3. Palm focused on co-creating relationship strategy - powerful ways to differentiate Microsoft's position in mobile devices, a hot marketplace the company desperately wanted to improve its position in. Palm put significant emphasis on integrating its products more tightly with WIndows, as opposed to taking the operating system as is. WHile Microsoft was initially resistance to the customization moves, Palm was relentless in demonstrating the strategic logic from a marketplace perspective.

Palm's success in forging this essential relationship with Microsoft is an excellent demonstration of why it makes sense to work collaboratively with customers and other value chain partners on growth strategy. Transparency and advocacy will gain increased visiblity as the new hallmarks of powerful partnerships and relationships.