What is alliance success and how do you define it? It seems such a simple question, yet it can lead to lengthy discussions.
Some people will immediately connect alliance success to the amount of revenue an alliance generates. If that is the universal view of alliance success, then how should we measure the success of development alliances, those that don’t generate any revenue at all? In fact, you could argue that development alliances only cost money! Yet they can still be very successful.
Additionally, an alliance needs to have a level of balance. A few years ago, a CEO shared with me that they were surprised that a partner wanted to terminate their successful alliance. Their partner was even more than willing to pay the termination fee too! Later on, it turned out that even though this particular alliance was generating money for the CEO’s company, the alliance was a loss-making endeavour for the company’s partner. So, paying the termination fee was a wise business decision for the partner. This alliance had many flaws, with misalignment and imbalance being the most notable ones, therefore, this particular alliance clearly wasn’t a success at all.
If money isn’t the universal measure of success when it comes to an alliance, then what is?
Every alliance starts with a goal. If done well the partners jointly have a clearly defined vision and goal to strive for, within the alliance. The measure of success should therefore be connected to the goal. When the goal is achieved, the alliance is deemed as successful. Simple, isn’t it?
No, it is not that simple!
Some alliances can be successful yet the goal will never be reached. Take for instance drug development alliances. If you determine early on in the project that the development of the drug (the alliance’s goal) isn’t feasible then an early out is a success because you’ll save a large amount of resources.
Also, alliances can fail to reach their goal, yet create tremendous collateral benefits for the partners and that makes the collaboration highly successful, while the initial purpose of the alliance may have failed.
Defining alliance success might not be easy and depends on many elements. What does help in reaching success is having a shared approach with your partner and making sure that you stay closely aligned. Sharing the right, common information is a critical element for staying aligned and reaching alliance success. Together with Anoop Nathwani and Michael Roch I have written an article on the topic of jointly managing alliance information with your alliance partner. You can read the article here.
How do you define alliance success? I would love to read your definition of success and measurement in a response to this article!