In today’s economy, strategic alliances enable businesses to gain competitive advantage through access to a partner’s resources, including markets, technologies, capital and people. While this has been true for decades, the state of the market has changed significantly over the past 5 years (globalization, lack of easy access to capital, speed to market, financial crisis, uncertainty, customer-driven economy….) and its forcing companies to reassess the way they do business.
There is no question that teaming up with others adds complementary resources and capabilities, enabling companies to grow and expand more quickly, efficiently, and hopefully, profitably. We often see fast-growing companies rely heavily on alliances to extend their technical and operational resources. In the process, they save time and boost productivity by not having to develop their own resources or intellectual property from scratch or to acquire what they might be missing internally. When partnering, companies often give themselves the ability to concentrate on innovation and on their core business.
But since 60%+ of all alliances fail to meet the needs of one or both parties, you must proceed consciously. Here are some questions to ask each party before you begin:
- Does this alliance offer a clear, sizeable and near-term value proposition to our company, our partner and to our new and current customers?
- Does this alliance solve a real problem elegantly that neither of us can fix on our own?
- Does this alliance fit within our brand strategy and our strategic priorities?
- Does this alliance fit naturally within our respective cultures?
- Do we have the ability to truly measure and quantify the benefits and results of this alliance?
- Are we designing the alliance for ease of implementation and manageability?
- Does this alliance help us achieve differentiation in the marketplace?
- Is this alliance “value creation” for our new and current customers?
- Is this alliance testable and scalable?
- Will this alliance be something that our employees will easily support?
- Is this alliance as equally relevant and important to both parties?
Clearly identify the company’s needs and objectives for partnering by conducting a strategic analysis of your target markets and industries to determine which areas would be the most profitable or have the greatest potential.
Develop the Ideal Partner Profile and Evaluate Potential Partners according to a Framework – do the due diligence up front to avoid costly mistakes.
Be brutally honest and objective about what you need and what you can offer potential partners – there’s no point approaching businesses to propose a strategic alliance if you can’t offer them anything in return.
Refrain from cloning policies and procedures that are already in place at either company. Set and clear expectations, roles, and responsibilities, as well coordinate measurements for success before signing an official agreement.
Develop key objectives and goals that stipulate very clearly (not subjectively) what both parties are expecting to gain from the alliance and get buy-in from both parties.
Be patient and flexible as strategic alliances take time to develop and maintain. Keep focused on the intent of the alliance, but be prepared to modify your agreement and processes if necessary.
Remember, at the end of the day, it’s all boils down to the fact that partnering isn’t so much about the tools or the processes… as it’s about people and relationships!