Strategic Alliances Fail – Keep Yours from Being Next
“Two successful alliance partners walk into a bar….”
You’re probably aware, maybe first-hand, that alliances don’t always succeed. You probably didn’t know that your company’s chances of having a successful alliance is less than 50%. Making matters worse is that many companies (maybe yours) are expecting to generate upwards of 40% of their annual revenues from these collaborative business relationships.
So, here’s the painful math: You’re a $1 billion company expecting to get $400 million from your strategic alliances. If half of them fail, you now have a revenue shortfall of $200 million and if you’re the CEO or Head of Sales, you’re looking for heads (or someone’s looking for yours).
It goes without saying that partners enter into strategic alliances highly motivated to work together…so why is it so difficult to be successful? Quite simply, a collaborative business relationship, at its core, is a large and complex program that requires a solid foundation of policies, procedures, and governance practices. Typically, in a failed relationship, that foundation was not effectively built (or eventually eroded).
Since there’s a statistical likelihood that at least half of your alliances may fail, how will you know which ones are at risk?
SPOILER ALERT: There are six easy-to-spot “cracks in the foundation” that should set off alarm bells:
Senior management commitment and engagement (from one or both partners) is minimal or at the wrong organizational level (generally too low).
Strategy and scope for the alliance is unclear or hasn’t been communicated to alliance team members and other stakeholders.
A collaborative and trusting working relationship has not developed between the partners.
The goals, objectives and KPIs of the alliance have not been defined or are not clearly understood by alliance team members and other stakeholders.
An alliance governance model has not been implemented or is not being followed.
The resources assigned from one or both alliance partners are inadequate.
So that’s the bad news…got any good news? As a matter of fact, I do! Building a solid alliance foundation is not only possible, but very doable.
To significantly improve your chances of alliance success, build your alliance foundation on three guiding principles, Imagine, Align, Succeed:
Imagine the Alliance
Strategy – Define, document, and communicate the strategy and vision for the relationship
Goals & KPIs – Establish and agree upon clear objectives, goals and KPIs for achievement of the strategy and vision
Business Case – Document the Business Case that justifies the investments, commitments and expectations
Align with your Partner
Agreements & Contracts – Formally document the relationship and communicate within each partner organization to establish clarity and alignment
Governance – Establish the governance structure and management processes to manage the relationship.
Execute to Succeed
Operations - Keep the relationship focused on achieving the objectives and goals and executing on the operational alliance activities
Reporting – Produce periodic reporting and dashboards on the agreed-upon goals, objectives and KPIs
Continuous Improvement – Leverage learnings to refine and improve internal and joint processes and proactively manage issues and risks to identify other areas for improvement
So, here’s the wrap-up (Reader’s Digest Version):
Strategic partnerships and alliances fail more than 50% of the time
The consequences of failure go well beyond the alliance itself
It’s easy to spot the symptoms of a failing alliance by identifying the “cracks”
Although complex, building a solid foundation for successful alliances is doable
Following the 3 guiding principles of Imagine, Align & Succeed will greatly increase your chance at success
Execute, execute, execute and you’ll Succeed!
Simple as that.
For more details or questions please contact me at bobjones@collabtogrow.com or visit our website.