Last week I mentioned the 80% rule of alliance success. A rule that highlights an important element for creating successful alliances: a structured alliance process. However, it is not just about the alliance process, it is also about structure in the organization.
To consistently use an alliance process in a structured way so that the process leads to high success rates, the process needs ownership and needs to be maintained. When I look at companies that are successful with their alliances, I see that, next to working with a process, they have also created a dedicated alliance function.
This alliance function owns the process and the belonging alliances tools. It captures the lessons learned during alliance management and it updates the process and tools when needed. The function is the central coordinator of alliances in the organization. This coordinating role helps to bring together internal departments like legal, intellectual property and business development to collaboratively create successful alliances.
The alliance specialists of the alliance function guide the business units in the creation of a new alliance and they assist them with health checks and evaluations along the journey. The business unit where the specific alliance project resides, remains the owner of the alliance project. From that perspective, you could see this part of the work of the central alliance function as being the project managers for alliance creation projects.
The alliance function also brings external benefits. Companies with a dedicated alliance function are often more successful in alliance creation and that is seen by outside companies, like potential partners. Many companies look at the partner-ability of a potential partner when in the selection process of a new alliance partner. The dedicated alliance function is a clear sign of a higher partnership maturity in a company.
According to a study by Dyer, Kale, and Singh, companies with a dedicated alliance function:
- have a greater alliance success rate from improved practices,
- have greater abnormal stock-market gains when alliances are announced,
- have the ability to form more alliances and to attract better partners.
The dedicated alliance function is best positioned at a central location in the organization. The central location in the organization generally also makes it easier to build bridges across departments in an organization.
Connecting it to the Strategy or M&A functions can bring additional collaborative benefits. The first step when establishing an alliance, is about business strategy and one of the early considerations in the alliance process is to consider the “make, buy or partner” question. Collaborating with strategy and M&A functions will also bring cross functional synergy that will benefit the overall growth of your company.