Define your alliance exit before you start

What is in your alliance business plan, would you define the exit strategy already, before you even start with an alliance?
After having selected your partner and having reached on an agreement with the partner, it is time to start drafting the business plan for the alliance – at least on a term sheet level. Several terms are used for the alliance business plans, often depending on the type of alliance you are drafting. In channel alliances it may be called a sales plan, in R&D alliances we often see the name operating plan used for the joint alliance plan.

Given the breadth of alliances in the spectrum there is not one single template that covers all that should be in an alliance business plan.
At least I am not aware of such a “one size fits all” template. For your own organization it may be beneficial to create a master template, that will allow future business plans to be created in a faster mode. But still remember that every alliance is different and every alliance may require other elements to be in the business plan.

The moment to work on the business plan is usually in the design phase of the alliance.
But be aware that an alliance business plan should not be a static document that is build once as a “tick in the box” exercise and then disappears into a drawer. It should be a lively document that is used to build and manage the alliance. You may as such already want to start building the plan in the earliest stage of strategic rationale. A part of the thinking you do in that stage, will need to be captured in the business plan too. Also during the management phase of an alliance, the plan will need to be refreshed, as insights will change with time in the alliance progress.

Among the elements in your plan are:

  • Strategic Objectives/Imperatives
  • How are you creating value?
  • For what target customer?
  • Win/Win/Win Value Proposition
  • Contributions of the partners
  • Risk sharing plan
  • Reward sharing plan
  • Communication plan

One element that should be in there for sure is the “exit plan”.
How strange it may seem when designing an alliance, it is the best moment to talk about the exit strategy. Compare it to a marriage, how odd it may be to discuss the divorce scenario when heavily in love, it is the best time. The moment the love is over and all that is left is disagreement and difficulties – to put it mildly – it will be much harder to find a common ground based whereupon both partners can exit gracefully. Therefore it is best to plan the exit of your alliance before it even started.

Think about it for a moment, before you draft your next alliance business plan:
What typical elements should be in your alliance business plan? Do you plan for an exit scenario early on? Do you have any elements that are always in your plans that have not been mentioned here?