Many organizations are struggling to maintain or grow their business in current economic times. Traditional organic growth asks for investments that may overstretch Today’s budgets. Acquiring other companies requires substantial investments that may not be available and when you are depending on government subsidies you may be facing sincere budget cuts too. Despite the headwinds you want to maintain growth of your organization and if possible even grow faster and healthier than the competition does. Growth in a changing environment will ask for a different approach.
Such a different approach may be to create a strategic alliance rather than pursuing the path of growing organically or by acquisition. In a strategic alliance two or more organizations will work together to create a solution or an offering they can not easily create on their own. With the current economic tide we will see that more and more organizations will need to focus on their core business and hence need partners to create the solutions to grow that core business. By creating strategic alliances organizations may be able to share investments, share knowledge, or create new unique solutions by combining products.
Creating successful strategic alliances asks for a good amount of attention and a thorough approach. The word “strategic” is in there and is pointing to the fact that these alliances are of strategic importance to your organization or department. Anything you do with your organization that is of strategic importance will most likely receive your undivided attention.
It all starts with the strategy. The alliance you create should fit with the organization and product strategy otherwise it will make no sense. One of my customers was approached by a potential partner with, what looked at first sight, an interesting proposition where both parties would be able to contribute knowledge and share from the revenues in the future. A closer look into my customer’s strategy learned that the product for which the prospective partner was proposing the partnership was in plan to be phased out during the year. Maybe not yet a reason to fully say No to the partner, after all the products on the verge to be phased out had served the company well in the past. These products may still have potential to create a new revenue stream through the new partnership that my customer could not easily create on his own. As the proposition did not fit the current strategy it was a red flag that indicated that further research was required before fully embarking on this new alliance.
Every aspect in the lifecycle of an alliance has it’s own peculiarities, whether it be in partner qualification, negotiation, alliance design or alliance management. As a business owner/manager you know all about your business but may not be experienced in creating alliances. This is where a strategic alliance professional comes in. The external strategic alliance professional will in general not be the expert in your business in particular, but he is the expert in alliance creation between businesses in general. Based on his experience and alliance best practices the strategic alliance professional will guide the management of organizations through the formation of an alliance and be the sounding board and sparring partner for tough business decisions around the alliance. As such it is the professionals task to help protect his customer from common pitfalls in alliance creation and provide advise where needed. It remains an advisory role, the business owner/manager is the one that will make the decisions about the future of an alliance.
In the example mentioned above, where the product was being phased out, a couple of more red flags arose along the way, which led me to advise my customer not to pursue with the alliance.