Making business alliances work

I promised back in a May blog to write about "the pitfalls of alliances".

First of all, there is always a lot of debate over terminology in this area, but to be clear I think these factors apply to both joint ventures, business alliances and strategic alliances.

I thought a cool definition of an alliance was by Rosabeth Moss Kanter in an HBR article: Alliances are the corporate equivalent of "friends with benefits." The partners combine forces to achieve strategic goals of their own without getting married, being engaged, or dating exclusively.

Secondly, I'm pretty sure there are entire semesters devoted to this and related topics at business schools around the world, so this blog is by no means exhaustive - just my two cents on the topic. :-)

My personal views as to why alliances fail are as follows:
  1. The business model wasn't clear;
  2. There wasn't a shared plan & measurement;
  3. There wasn't a clear enough value proposition for customers;
  4. Senior Management didn't make a commitment to making the partnership work; and
  5. The people factor.
Trying to get a square peg in a round hole is simply a lesson in futility, so setting out with a partnership or alliance without clarity on the business model is going to end in a world of hurt.

A good article on the "why are we doing this and what is the best structure for us to achieve our objective" is the Booz Allen Hamilton article here. In The Art of Profitability the issue of business model design is simplified into easy to understand models. And of course, there are tonnes of assets online including at McKinsey's wesbite and HBR.

With any business endeavour - if you want to get from A, to B, to C - you've got to have a plan. And for a plan to work, you've got to ensure everyone with something at stake is involved.

Sounds obvious, right?

What's amazing is how hard it is to get 'busy people' to commit to joint planning to put on paper "here's what I want, here's what you want, and here's how we're going to win together".

Planning by itself, however, isn't going far enough. As an Open Texter said in his blog "if you don't keep score then you are only practicing" - a statement Lou Gerstner echoed with "people respect what you inspect".

There are some really good tools out there to make both the planning & measurement easy. Checkout and Channel Dynamics for ideas.

To point #2 - a good example of 1+ 1 = 3 is how Open Text has selected it's strategic partners, Microsoft and SAP. In both cases, the partner is a leader in a segment (Knowledge Worker vs Enterprise Processes), lacks the value that Open Text provides (Enterprise Content Management) and customers are clear on why they need the combined solution.

With any endeavour, if senior management isn't committed to the deal, no one is going to get behind the partnership. Jack Welch makes this point in Winning where he advises managers have to become cheerleaders for the new project.

Finally, the people factor. Like all relationships, you've got to work at it. Advice given to me a long time ago by a great boss & mentor was that "people deal with people". I think all too often people come to the party with their point of view and their agenda forgetting that the other party could be doing that as well.

Image by Mateusz Stachowski

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posted by Lee Gale @ 1:04 AM,


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