“An airplane is off course most of the time, yet it arrives at its destination thanks to constant corrections along the way.”
Wind, turbulence, and traffic are all factors that make that an airplane cannot fly in a straight line from airport a to airport b. An airplane only reaches the right destination thanks to measurements and evaluations of the data acquired based upon which the pilot or the autopilot will adjust course.
It is similar in alliances, partnerships and other collaborative business relationships. In the beginning of the collaboration, you have set some clear goals. After all, you started the collaboration to reach a goal you cannot easily reach alone. Along the road, as the partnership progresses, it is important to know how you are doing. Wind and turbulence may show themselves to a partnership in the form of setbacks and unexpected competition. Only by measuring progress and evaluating the outcome of the measurements, you will be able to adjust the course of a partnership if needed.
There are several ways to measure an alliance. I will highlight three of them:
The balanced scorecard finds its origin in the work of Robert Kaplan and David Norton, originally intended as an internal tool for strategic planning and operational performance. The balanced scorecard can also be used as an alliance dashboard.
The dashboard looks at four areas of performance:
- Strategic: measuring the key performance indicators (KPIs) connected to the corporate objectives of both organizations.
- Operational: providing the performance of the key processes in the alliance.
- Financial: indicating the financial contribution of the alliance; are we still on target with our alliance from a financial perspective?
- Relationship: measuring partner health, loyalty, and satisfaction.
This article on HBR.org extensively describes how Quintiles and Solvay use the balanced scorecard to manage their alliance.
A periodical health check will help to get clear insights on the status of the alliance. The health check can be done based on a set of predefined criteria, where both partners will score their view on the alliance. Criteria can include elements like the progress of the alliance, trust in the partner and responsiveness of the partner. By comparing the scores from the two partners, the areas for improvement can be easily identified.
The third way to measure alliance progress is by conducting alliance review meetings, where the partners will be evaluating the state of the alliance and where they will define the areas for improvement. An alliance review meeting is less structured than the health check and therefore contains the risk that only elements that are easy to identify will be discussed. It is good practice to have an alliance review meeting facilitated by an external independent party. An external party will be neutral to the alliance and will see issues that the involved parties might not necessarily be able to identify. The external independent party can name the elephant in the room.
These three ways to measure and evaluate alliance performance will allow you to adjust course in order for the alliance to reach its goals.
This article is part of a series of articles extending upon the 25 tips for successful partnerships & alliances article. These 25 tips have been rewritten and published in the eBook “25 tips for successful partnerships & alliances” that can be downloaded for free.