The business world has seen many successful and loyal partnerships, yet few have been as enduring through difficult times as the partnership between Kmart and Martha Stewart.

The relationship started more than a decade ago when then CEO Ben Fauber signed the relatively unknown former model to design a line of home fashions for Kmart. Soon Fauber would exit and Joe Antonini would further expand the product line, making Martha Stewart one of the most well-known names in households across the nation. Martha's talent and steadfastness landed television and print media deals that catapulted her career.

Although the partnership seemed unshakable, conflict arrived when the two partners began to argue over royalty calculations. It was 2000 and Kmart's financial problems, even though the cash flow trouble was denied by Kmart, caused Kmart to seek a more favorable calculation of the percentages and when they were paid. The move caused many inside the steel and glass palace in Troy to wonder if Martha would jump ship for Sears, Kohls, Federated, or Penney. Martha stuck with Kmart even though the payment problems continued, even under the new deal.

Then came the normal partnership breaker, Kmart filed bankruptcy in 2001. Martha was free to go if she wanted to as the contract was voided. Yet Martha stuck with Kmart and even was able to stay profitable during the downturn in Kmart's business.

The loyalty would pay off for Martha as she soon found herself in trouble with the SEC and FBI over a probe into a suspicious stock deal. It would remove Martha from the board of the company that bore her name and land her in jail. The company continued to turn out product and produce profits by anticipating a downturn in popularity for the product before the actual sales decrease occurred.

From Loyalty-Mode to Survival-and-growth Mode

The Romeo and Juliet partnership of a discounter and upper-class designer began to unravel when Kmart purchased Sears and combined many product lines. The Martha Stewart product took a back seat to product from TY Pennington, popular host of Extreme Makeover Home Edition. Ty had developed product for Sears and, as a less hands-on entrepreneur, company leaders decided to stick with laid-back Ty and cut back on the demanding Martha.

With the loss of Kmart's loyalty to Martha, she has shifted from loyalty mode to survival mode. Martha has now inked a deal with Macy's to develop product an upscale line which is expected to have a 10% share of Macy's home furnishings business by 2007.

When Does Loyalty End and Survival Begin?

Loyalty is important in business. With the seven businesses I have founded or co-founded there has always been a significant impact from the strategic partnerships founded on mutual loyalty. However I have also learned to carry an "insurance policy" or fall-back plan for the time at which the loyalty might end. This does not mean that partnerships should be looked at with an expectation of failure, it means there needs to be a pre-determined exit strategy should conditions dictate the partnership has run its worth.