I was writing about venture capital the other day and how it compares with creative partnerships, which I personally favour as a business option.

Today, I’ve just finished watching Eric Schmidt, Google’s CEO and Apple board member, addressing the British Conservative Party Conference at Bournemouth. I was interested to see the admiration on the face of his host, George Osborne, a future UK Chancellor of the Exchequer (Treasury Secretary). Make no mistake, Schmidt is a very smart observer. He partly addressed the question, or necessity, of partnerships.

By another coincidence, Eric Schmidt has been interviewed for Time Magazine and goes into some detail on partnerships, particularly for Google, which has a very narrow base of operation for such a large company. “… we tried to pick partners that represented different initiatives that we wanted to work with for a long time.”

It’s in the secondary growth period that the need for new talent becomes irresistible :

“I think that to some degree when you’re a small company you sort of have to do everything yourself, and as you get more established you begin to realize you’ll never get everything done by yourself. You’re fundamentally going to be a better player, a better solution, if you can share in the success, and get the benefit of the hard work these other people have done.”

Essentially, Schmidt recognizes that it’s a matter of distribution, of reach towards new customers. “In most cases what I’m describing is distribution: they have a way of reaching customers that we do not on our own. And also the combination solves a new problem.”

Finance is not the central issue here, as it is with venture capitalists : “So it wasn’t particularly financial, although the financials are all good in these deals, it was really more reach; distribution. It was really strategic. My point is you don’t just do partnerships to do partnerships. You do partnerships for a reason.”

There’s also much more variation in the type of deal on the table. You can work loosely with the people or company concerned beforehand to assess compatibility and synergy issues. You can simply swap shares, or one side buys a stake in the other for cash. A simple joint venture deal is also possible. It’s a far more creative and flexible arrangement than the VCs offer.

You will be taking in people with expertise you don’t have in specific technical or business areas. Growth often comes in torrents under such conditions.

Creative partnerships are the best way forward. And if Google agrees, the rest follows.