The 80% rule of business partnerships

Research on alliances shows high failure rates for strategic alliances and business partnerships for up to 80%. Would your company invest in something of which you know it will have a 4 out of 5 chance of failure?

In a keynote speech in 2011, the CEO of a large company indicated that alliances are of strategical importance to his organization. The result of the alliances they had established accounted for over 40% of their revenue. If the failure rates of these alliances for this company were indeed 80%, it would be an almost impossible task for them to create and manage alliances.

Most of the time the 80% failure rate contains the companies who create alliances in an ad hoc fashion and dive into alliance opportunities in an unstructured way. There is, however, another side to the 80% rule: the success side. The companies that follow a structured approach to establishing and managing alliances and other business partnerships reach a success rate of up to 80%. These companies have made investments in building up the skills and competencies before approaching alliances. Subsequently, they create and manage alliances in a structured way, often based on an alliance lifecycle based methodology.

The value is obviously on the success side of the 80% rule, while no value is created on the 80% failure side – they may even destroy value. A partnership is created to achieve a goal you can not easily achieve alone. You are in there to create a valuable and successful partnership.

Think about it for a moment: what is the success rate for business partnerships and alliances in YOUR company?

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