For many alliances, revenue is an important element. However, many people tend to forget that revenue is an outcome. It is the result of all the elements we have done before in the alliance and in creating the alliance.
When measuring alliance performance we need to measure leading indicators versus lagging indicators. We need to measure those elements that can be adjusted to ensure alliance success and revenue as an outcome.
As described in Tip 9, the alliance balanced scorecard can be a helpful tool to keep track on alliance performance. The measurements on strategy and financials are outcomes, while measurements on operations and relationship are the leading indicators. The leading indicators are the ones that tell you where to adjust, to optimize the outcomes of an alliance.
Financial metrics are relatively easy to gather data on and that forms the risk of measuring what is easy to measure. The relationship elements are often seen as the soft elements. However, the soft elements are the ones that lead to the hard results. Hence they need to be measured and adjusted where possible.
It is advisable to acquire outside help to assess the relationship elements. Only an independent assessment will help you to get a clear view on the relationship. Being fully honest about how one party views the relationship with the other, is one of the most difficult things to do when you are actually talking to the other. An independent outsider can help to objectively assess the relationship and work with the alliance partners to create an improvement plan.
Many alliances fail due to relationship issues that could have been prevented by timely health checks and proper course adjustment. Make sure you are measuring the right elements in your alliances!
The white paper “Enabling Transformational Alliances – Best Practices in Partner Health Diagnostics” by Norma Watenpaugh of Phoenix Consulting Group, dives into the topic of partner health assessments and is a recommendable further read on this topic.
This article is part of a series of articles extending upon the 25 tips for successful partnerships & alliances article. These 25 tips have been rewritten and published in the eBook “25 tips for successful partnerships & alliances“. See this page to purchase your own copy of the ebook in Kindle, PDF and ePub format.