When I recently met Emmett Power of Silico Research in Basel at the BioPharma conference we discussed the general accepted feeling of high failure rates for alliances. I was looking for some updated figures and I hoped Emmett might be able to shed a light on this topic. Emmett offered to look into his database again for some results and to come back to me. The result is in a post on his blog. Interesting enough the figures in the post are ranging from around 18-20%, for large organisations with a dedicated alliance management function to a generalized figure across the market generally of between 20% and 25%.
These findings in this post lead to some discussion, both online as offline, as such these figures are substantially lower than what we so far saw in the reports of about 10 years ago. In response Silico Research has undertaken a systematic review of the research in this area undertaken over the past two decades and documented it in a whitepaper.
The conclusion of this whitepaper is that the true failure rate of alliances generally is estimated probably in the range of 25-30%. In earlier reports estimates of up to 70% have been made, which is quite strange considering how much organizations are investing in alliances. In a note towards this high estimate the whitepaper rightfully so questions these estimates with a remark why companies would bet their money on something with such a high failure rate:
Companies like GE and Boeing are organisations which, one would have thought, place a great deal of importance on their supply chain functioning effectively. The assertion that they would tolerate a 70% casualty rate in their supply chains strikes us as something that possibly should not be taken as obviously true without further investigation.
Given the number of papers reporting high failure rates in the past the general idea about alliances might still be that they are difficult to bring to success. And maybe rightfully so: also the lower number Silico reports still indicates that there is a significant failure rate. Alliances are not per se a route to success. They need attention when being developed and need proper management while in execution to ensure the best chances for success.
Many of the elements that should be done to ensure success are captured in best practices based upon experiences in earlier alliances. These are also the best practices that form the foundation for the certification program of the Association of Strategic Alliance Professionals (ASAP) and as such also the education programs that help prepare for certification.
When done right also your alliance can be in the 70-75% success range, it will create true synergy and will be quite rewarding for you and your organization!