What should your CEO know about strategic alliances?

A few years ago, I walked into a client’s office where I found him in a pretty upset state. Let’s call the client John. Immediately after I had entered his office, John shared his frustration with me. His CEO had met another CEO at a weekend barbecue, where they had agreed that the two companies would create a strategic alliance together. As you can guess, John was assigned with the task to make it work.

My advice to John was to relax, take a step back and confidentially perform the initial stages of the alliance process. He would need to assess within the boundaries of his company’s strategy if and where the other company would potentially fit in. Then he would need to perform a partner selection assessment on the company. Not to disqualify them, but to understand how well they would match with his company. This would also provide him with valuable input for the operational phase, once it would come to an actual alliance.

If there would be no fit at all, these two steps would also give John the right input to go back to his CEO and explain why another solution might be a better one. This is exactly what happened. With my guidance John followed the steps and together we found some elements where there was no fit. Those elements would be manageable, but we also found a definite showstopper that would harm the company when moving forward.

John went to see his CEO to bring this message. That conversation was clearly not the easiest one for John. However, his CEO did appreciate the confidential approach and was happy with the fact that John saved the company from a big misstep. He agreed to talk to his barbeque friended CEO.

Unfortunately, these CEO initiated alliances happen in the best companies. From a best practice standpoint on how to start alliances, this approach certainly does not win the beauty contest. But when they do happen, you need to deal with it. Like John did.

For successful alliances and partnerships, it is essential that all levels of your organization understand alliances, what they are and what they are not, as well as their role in them. The role of an involved C-level leader is to be the executive sponsor for an alliance, provide strategic guidance and act as an escalation point when necessary.

A well-informed CEO will understand that successful alliances in his company have a focus on the long term and that they will bring both tangible as intangible results to the company. The well-informed CEO will then also realize that ad-hoc created and short term focussed alliances will bring more worries than value.

Remember, when you are not the CEO, but you are in alliances, then it is your responsibility to ensure that your CEO is a well informed and involved one!


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