Partner selection guide

After having set the strategic rationale for your strategic alliance it is time to look deeper into partner selection in strategic alliances. A regular approach for partner selection is to start with creating a short list. What to look for in creating such a list?


Partner selection in strategic alliances: the long list

The first thing to do is to create a list of conditions a partner need to comply with. This will help to determine the ideal partner. Then it comes down to search and create an initial list. Google will be helpful if the area you are searching is unfamiliar to you. There may be other sources that can provide additional input too. These may be paid services or people from your network. LinkedIn is helpful to search your network. See if you have connections that may provide you with more background information on a prospective partner. But remember that you have not approached the partner yet. You may want to keep information gathering a bit confidential in order not to wake up potential partners or competitors.


Partner selection in strategic alliances: the short list

After having created a list of partners that apply to the conditions in the initial list and as such are on your short list it is time to nail the list down to an ideal partner list. Selecting your partner will have a huge impact on the success of a partnership. How well does the partner fit with your company? Here you should research elements like strategic fit, operational fit and relationship fit.

Strategic fit basically answers the question how well a partner aligns with your strategic goals as described before. You will need to have a look at the partners product portfolio, market share and financial performance. Make an assessment on the element of how important the partnership would be for this company if they were to become your partner.


Assess your options

Operational fit will need to look at the operational elements of your partner. How do they do their business, what is their management style? Another element to look at is their fiscal year. Depending on the type of partnership you are looking for, the fiscal year may have a strong influence on the partnership performance. For example if you are looking for a sales partnership and your fourth quarter is not in line with your partner’s fourth quarter you may be working extremely hard to make the quarter while your partner is more or less on holiday.

The same applies to budget availability for other kind of partnerships. Budgets may be tight in the fourth quarter and while you have the ability to move forward your partner may be constrained by budgets. The fiscal year is not necessarily an element to turn a partner away for, but if not in line it is an element that needs attention in the management phase of an alliance.


Relationships matter

The third element, relationship fit, will need to assess cultural fit. This can be a showstopper for the proposed alliance. In case your company is a public company and your partner is a family owned company there may be a conflict of cultures. The same applies to the size of the companies. Partnering between a large public company and a small startup will bring different cultures with their own dynamics. Culture does not have to be a showstopper, culture more defines points of attention for the alliance management phase.

A part of relationship fit is also to determine network fit; if the prospective partner already has a partnership with one of your competitors it may not be the best choice for you for a partnership. Also have a look at the potential impact of the partner on your other alliances. The new partnership may impact them in a positive way, or in a way that needs more management attention from you.


Rank them

When having determined all these elements for your prospective partners you will be able to rank the partners and create your shortlist. Now it becomes time to approach number one on the list and explore their interest for a partnership. When it does not work out with number one move on to number two on your list. There may after all be elements that could not foresee in your preparation. Some things only become apparent when talking to the partner, or possibly the company has no interest in a partnership.

Make sure in this phase to select your partner on rational terms rather than emotional terms.

The 4-step guide to successful partner selection in strategic alliance will be a helpful tool in the process of partner selection.


Further learning

During the Alliance Masterclass we will discuss partner selection extensively and also explore how it is applicable to your situation.

3 Responses to “Partner selection in strategic alliances”

  1. Eric Moss

    Your approach is well grounded and pragmatic.  What I would add is that the goals and hierarchy of goals that were established in the strategic rationale should be carried forward and reflected in the selection process and the specific goals for the chosen alliance partner.  This, in turn, leads me to a topic near and dear to my heart; the selection of metrics for the Alliance.  The metrics that are selected must, in my humble opinion, be aligned with the goals and consist of a combination of outcome metrics and process metrics.  Outcome metrics tell you the degree to which you are achieving (exceeding?) your goals and process metrics allow you to exercise timely control over the activities that are undertaken in pursuit of the goals.

    I think it is important to be as transparent as possible about the goals throughout the selection process (e.g., prospective Alliance Partners should be made aware of your goals and expectations).  As you move toward the Definitive Agreement with the chosen Alliance Partner, consider revisiting the specific goals for that particular alliance and make the definitive goal determination a joint activity (between you and the Alliance Partner) and then cast in concrete the appropriate metrics for the initial term of the Alliance (subject of course to annual Business Reviews).  This streamlines the creation of the Alliance Plan and enables the Deming cycle of Plan, Do, Check, Act.

    On a final note, knowing the goals, hierarchy of goals, and associated metrics is wonderful for alignment (an important factor in consensus and collaboration).  It is even better to understand and appreciate that the relative importance of the goals are not going to be the same between you and your Alliance Partner and reflect those differences in perspective when assessing the overall health and status of the Alliance.

    • Thanks for your response Eric, I fully agree with your view and importance of these elements. Also in Todays workshop alliance management it was clear for the participants that one can not start early enough with setting the goals and being transparent about them. Which is by the way essential throughout the full alliance process, transparency.