In a previous post I wrote down the definition of a strategic alliance as:
“A strategic alliance is a strategic cooperation between two or more organizations, with the aim to achieve a result one of the parties can not (easily) achieve alone.”
A basic definition that covers the essence of a strategic alliance. Two years ago I conducted in the original Alliance Conversation a series of interviews with people working in the alliance domain and I asked each of them the question “what is for you a strategic alliance?”. The answers that I received contained several angles to the definition of a strategic alliance and show that an alliance can mean different things to different people. To expand a bit on the definition of a strategic alliance in the previous article here are some of the expert opinions in their own words:
A strategic partnership is where you critically need something that I have or something that I’m capable of delivering and I critically need that from you as well, sufficient to get the interests of our executives on both sides and get some real commitments to showing each other preference and investing in the joint business.
Anoop Nathwani was interviewee number four, being in strategic alliances for 15 years Anoop gave the following definition of a strategic alliance:
For me an alliance in a business environment is where 2 companies have a need to work together for either from a technology leadership perspective or a product leadership perspective. And quite often it is driven by competitor activity or a requirement for growth as one of their strategies.
You can have a build strategy, you can have a buy strategy and the third option is the partnering strategy. The drivers tend to be either accelerating growth or competitor activity. Now, from a strategic alliance particularly in large organizations it’s where 2 very large organizations get together and they fundamentally do something that is so game changing and it’s very very strategic in the long term in its very nature. So that’s what I would then class as a strategic alliance as opposed to a normal alliance.
The best definition that I’ve seen for what strategic alliance is I came across in a book I read several years ago by Neil Rackham. The book is called Getting Partnering Right. I do a lot of reading about strategic alliances stuff and in this book he defines strategic alliance as a partnership between two companies where three elements are present: vision, impact and intimacy.
So by vision he means a compelling picture of the possibilities. What can the partnership achieve and how is it going to get there? By impact he meant the capacity to deliver real tangible results. So impact really is the raison d’etre of a strategic alliance. If you’re not creating impact in the market, it’s not a strategic alliance. And then lastly intimacy which is a level of trust and information sharing between the two companies, collaboration that really makes the vision and impact possible.
So that to me when you’re talking about strategic alliance, you’re talking about a partnership where those three elements are present and if they’re not present then to me you’re not talking about strategic alliance.
When we look at an alliance, generally what we see is there is a contractual relationship in place and at the time that the contract is established, the alternate risk and reward can’t really be determined because there are events that are going to occur in the alliance that can impact the value and also the risk that exists in any alliance.
If you broaden that out to a collaborative network, a collaborative network is any collection of individuals and businesses that are brought together in order to achieve a particular purpose. And it’s very dynamic; it can change over time depending upon how the needs of the customers are changing.
So, for example if we think about the needs of a patient who has MS or another disease that the pharmaceutical company worked to develop product in order to be able to provide therapy. At the time, they’re striking relationships with organizations that help patients in physical therapy and with organizations that help them adhere to medication and understand various outcomes. So while the core might be in alliance, in order to really satisfy the set of needs of that customer has, there are other companies and other organizations that participate creating the network. That’s just one example but when we take a look at some of the complex issues that are out there today, we see that it is in fact networks that are solving them.
In all cases we see the strategic element coming back as well as the resources that are required from the other party. Now we have created a clearer view on the definition of alliances let’s in the next article on Tuesday have a look at why companies enter into strategic alliances. In the mean time interested to learn what alliances can do for your organization? Contact me to have an exploratory conversation.