The difference between alliance success and alliance failure has many causes. However, when I drill it down to the most important key alliance success elements, then governance is for me one of the seven elements that often makes the difference.
A good governance is created with an eye for continuity and enablement of the partnership. A bad governance structure can cripple the partnership and prohibit it from coming to fruition.
Just recently, a chief executive shared with me the challenges he has in a collaboration of six parties in which his organization is involved. He answered my question about how the governance structure was organized with a big smile. The governance of this multi-party alliance was actually stopping this partnership from moving forward, simply because the decision structure was purely based on consensus. Each of the governance board members had an equal say and as three were continuously in favor of decisions where the other three were against, it stalled the decision-making process.
An effective governance structure is often constructed of multiple layers with continuity in mind:
- An executive steering committee or governance board
- An alliance management team
- The operational teams
The steering committee consists of the executive sponsors from both partners, the alliance managers or business managers that lead the partnership and possibly some key organizational leaders representing, for instance, finance or strategy. This committee meets in general quarterly, it provides direction, including the necessary strategy decisions, and it keeps track of progress.
The alliance management team consists predominantly of the alliance managers of both organizations. They are the conductors of the alliance and will generally meet on a weekly basis. Their work has a focus on the relationship and on ensuring that both organizations play in tune. When needed, the alliance managers will be seconded in their regular meetings with key team players.
It is in the operational teams where the real collaboration takes place. This can be a different set of teams, depending on the scope of the alliance. In a sales alliance, it will be sales teams who work together, in a development or innovation alliance the R&D or innovation teams.
In a good governance structure, only the alliance managers, as the central conductors, will be part of multiple governance layers. If your governance structure currently has other duplicates, then it is time to reconsider the structure.
This basic outline of an effective governance structure is a simplified outline assuming your alliance has only one structure. In the more complex alliances, with possible multiple structures of collaboration, it might be needed to choose a more complex governance structure as well.
The alliance governance will be designed in the earlier stages of alliance creation and will be part of the alliance contract. However, you have to stay alert. When working together, you and your partner will learn to know each other better over time and you will gain new information and experiences about the collaboration. You should regularly consider if this new experience provides information to adjust course to optimize the alliance.
This means that sometimes, you need to be open to renegotiating the contract and, like in the situation of the aforementioned executive, adjust the governance structure to help transform the alliance into an effective one.