Sooner or later every alliance will reach a point where it is time to transform, innovate or exit the partnership. Transformation or innovation can mean that there is more opportunity for the partners in working together. For instance new projects in different areas or an extension to the current project. It can also mean that the current shape of the alliance needs adjustment to enable it to really flourish for both partners.
How do you recognize the signs that it is time for a transformation?
The most obvious sign to transform, is when one of the parties is unhappy with the current situation. However, this might not be the easiest one to recognize. Both partners will need to be open and transparent with each other about it and that might put you in an unpleasant situation. However, you will have to bite the bullet and open that conversation for the better.
When the strategy of one of the partners is changing significantly, it might require a transformation. As a result of the changing strategy, the product line for which you have the alliance might become of different importance for that company. This can lead to a change in balance in the partnership and thus to the need to transform the alliance into a different format.
Limited market or unsuccessful technology
When you start an alliance, there is often limited information available about the real opportunity. You will make assumptions about the size of the opportunity. When working together, you will both gain more information about the real size of the opportunity and you might conclude that the opportunity is not as feasible as anticipated. Also when working together, it might turn out that the technology you are developing is not successful or needs more time to develop. Stubbornly continuing in the direction chosen is not the best option. Better is to sit around the table and have a conversation about the best new options forward: transform into a new format or exit the alliance.
It is not always obvious to recognize these signs of transformation. A properly executed health check will help you to identify the potential areas of misalignment or dissatisfaction.
When transforming an alliance you will have to go back to the drawing board with your partner and redesign your alliance. You will know each other better than at your initial alliance creation. You won’t go through a new partner selection, but it might be good to perform a partner assessment of both companies. Are you still compatible or have new issues come to the surface that need to be addressed? With the redesign also comes a renegotiation phase. Make sure to involve the right functions at the right time. I once learned the hard way that I should have involved the legal function earlier in the process!
Then finally, after all the hard work is done and the new alliance structure has been designed and agreed upon, remember to do a proper alliance launch. Make sure all stakeholders are on board, celebrate the kick-off and make a jump start into the new alliance!