The Most Critical Factor for the Success of an Alliance

At the start of the 21st century, I received a phone call from my partner.  He and I were working together on a joint venture and he informed me that going forwards, I would have to fund our alliance. During the setup stage of our joint venture, we had agreed that he was the financial guy! He would fund the venture and I would run the business. Now suddenly, he had decided to pull his financing back. This was the beginning of a nasty six weeks that led to a painful business divorce.

I was hurt, not only from a personal financial perspective, but also from a trust and leadership perspective. I trusted my partner and we had 6 employees who trusted us too. So my first responsibility was to find a solution for their sudden unemployment. Thankfully, that largely succeeded. 

It was a tough personal lesson. I liked my partner, but it appeared that likeability wasn’t enough when it came to making a successful alliance partner choice. If I had done my due diligence right, I would have found out that the culture of his company was different to what I had in mind. I would have learned from public available information that his financial situation wasn’t as buoyant as he’d said it was. So, I could have known better. But I did not, simply because I liked my counterpart and naively thought that we would work well together. 

If you think that such an opportunistic partner selection only happens in startups, think again. Unfortunately I’ve seen many situations where C-level executives agree on establishing partnerships during hockey matches, neighbourhood barbecues and on aeroplanes!

In a recent publication by the Boston Consulting Group, the authors stated: “The most critical factor in the success of an alliance is to choose the right set of partners. […] roughly three-quarters of failed alliances can be attributed to the wrong choice of partners …

Choosing the right set of partners takes time and requires conscious preparation. There needs to be a strategic rationale and a win-win-win value proposition as a result of bringing the partners together in an alliance.  You also need to assess your partners and get to know them. It is important to understand where they differ from your company. It is especially those differences that you’ll need to bridge during the lifecycle of the partnership.

Don’t make the mistake I made back then! Conduct a proper partner assessment before you enter into a partnership. We teach how to do so in our Alliance Masterclass and I’ve also written a step by step guide on partner selection that will help you to build a solid foundation with the right choice of partners for your alliances.

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