The difference between alliance success and alliance failure can be attributed to various factors. Yet, when we distil it to the most crucial elements of alliance success, governance emerges as one of the seven elements that often makes the decisive difference.
A robust governance system is cultivated with an emphasis on continuity and the facilitation of partnerships. Conversely, a flawed governance structure can cripple a partnership, hindering its fruition.
Recently, a chief executive shared the challenges he faced in a collaboration involving six parties, including his own organisation. His response regarding the organisation of the governance structure was telling.
In this multi-party alliance, the governance structure was impeding progress, solely due to its consensus-based decision-making. Each governance board member had an equal say, resulting in perpetual deadlock between those in favour and those against decisions.
An effective governance structure typically comprises several layers, keeping continuity in mind:
- An executive steering committee or governance board.
- An alliance management team.
- The operational teams.
The steering committee consists of executive sponsors from both partners, alliance managers or business managers who lead the partnership, and potentially key organisational figures representing areas such as finance or strategy. This committee typically meets quarterly, providing direction, making necessary strategic decisions, and monitoring progress.
The alliance management team primarily consists of alliance managers from both organisations. They orchestrate the alliance and usually meet weekly to focus on relationship management as well as ensuring both organisations remain in sync. When necessary, alliance managers involve key team players in their regular meetings.
The real collaboration unfolds within the operational teams, which can vary depending on the alliance’s scope. In a sales alliance, it involves sales teams collaborating, while in a development or innovation alliance, it encompasses R&D or innovation teams.
In a well-structured governance system only alliance managers, acting as central conductors participate in multiple governance layers. If your governance structure includes unnecessary duplications, it’s time to reassess it.
This simplified outline of an effective governance structure assumes a single alliance structure. In more complex alliances such as those with multiple collaboration structures, a more intricate governance structure may be necessary.
Alliance governance should be designed during the early stages of alliance creation and formalised in the alliance contract. However, vigilance is crucial! As you and your partner gain a deeper understanding of each other and gather new insights and experiences in collaboration, periodic evaluations should consider if adjustments to optimise the alliance are needed.
This means being open to renegotiating the contract and, as in the case of the aforementioned example, modifying the governance structure to transform the alliance into an effective partnership.
PS: Learn more about the seven alliance success factors in “Creating Successful Partnerships“.