‘We created an alliance, but do not see the return that we expected in advance.’
Frustrating if there were so much optimism and enthusiasm at the start of the alliance. Difficult too, if the managers like each other, but cannot point out the problems. Yet it happens often. And the problem is often not easy to label. There could be several causes. We check four of them:
The first possible cause is on a strategic level. Do the partners have a well-considered strategy in which the alliance fits? The initial step of starting an alliance is to look at the strategic ambition and how this can be realized best. By organic growth, through purchase relationships, through acquisitions or through partnerships. In short, the question is what the strategic ambition is and why an alliance is the right approach for that.
Type of alliance
The second possible cause is the type of alliance. A well-considered choice for the type of alliance can prevent disappointment concerning the returns. Which type of alliance is a suitable vehicle to help the company strategically further? If the actual ambition is to progress innovatively, the company should take on innovatory alliances. Is the next step to realize the strategic growth of the organization contained in optimizing the company processes? Then another type of alliance is needed.
The third possible cause concerns the partner selection. Did a systematic and careful partner selection take place? As soon as it is determined that partnering is the right way of filling in the strategic ambition, it is important to determine who could be relevant partners. A long list of partners will lead, through discussions with the management and reviews of the reputations of the concerning organizations and key persons in the network, to a shortlist and a final partner.
The fourth possible cause concerns the implementation and involvement of the alliance managers. To which extend did the organization set up the alliance management professionally? Alliance management is a particular job just like project management, business development or account management. Managing alliances as an operational department will not lead to the desired results. To which extend are the alliance managers involved in the creation of the alliance? They can help to formulate a realistic level of ambition and focus sufficiently on the practical opportunities and risks. They also direct the decision-making in future to come to results.
In short, start with a clear analysis to decide what the cause of the problem is. With the right preparation and management, alliances can offer very successful possibilities to realize the strategic ambition of the company (faster).
In these series of posts, Peter Simoons and Friso van Abbema discuss recognizable problems of managers concerning alliances and they give a summary of their advice. Early 2012 ‘The handbook Alliance Management’ is released, with extensive advice on how to carry out this beautiful occupation in practice.