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Simple Rules for Making Alliances Work
By
Jonathan Hughes and Jeff Weiss
Reviewed by Debra Sherman, Beyster Institute Staff
Businesses don’t always have in-house all of the talent, experience and know-how necessary to compete in today’s complex world. But customer demands must be met, so many companies form alliances that capitalize on each partner’s strengths and offset their weaknesses.
In their article, “Simple Rules for Making Alliances Work ” (Harvard Business Review, November 2007), the authors discuss five principles that really get to the heart of business alliances. They offer persuasive evidence that these principles foster success when embraced but foretell failure of the alliance when ignored.
As I read the article, I found myself reflecting on the many alliances with which I’ve been involved over the years. Whether simple inter-departmental arrangements or complex multiple-company associations, employing these principles would have greatly benefited the alliances, smoothed many of the bumps in the road, and perhaps made them more successful.
From the HBR website comes this synopsis:
Corporate alliances are growing in number—by about 25 pecent a year—and account for up to a third of revenues and value at many companies. Yet some 60 percent to 70 percent of them fail. What is going wrong?
Because alliances involve interdependence between companies that may be competitors and may also have vastly different operating styles and cultures, they demand more care and handling than other business arrangements, say Hughes and Weiss, management consultants at Vantage Partners. The authors have developed five principles—based on their two decades of work with alliances—to complement the conventional advice on alliance management: (1) Focus less on defining the business plan and more on how you and your partner will work together. (2) Develop metrics pegged not only to alliance goals but also to performance in working toward them. (3) Instead of trying to eliminate differences, leverage them to create value. (4) Go beyond formal systems and structures to enable and encourage collaborative behavior. (5) Be as diligent in managing your internal stakeholders as you are in managing the relationship with your partner.
Companies that have adopted these principles have radically improved their alliance success rate. Schering-Plough, for example, engages in a systematic “alliance relationship launch”: four to six weeks of meetings at which the partners explore potential challenges, examine key differences and develop shared protocols for managing them, and establish mechanisms for day-to-day decision making. Blue Cross and Blue Shield of Florida measures the quality of alliance progress through regular surveys of both its own staff and its partners.
These companies have learned that the conventional advice is not so much wrong as incomplete. The five simple rules can help fill in the blanks.
The full article can be downloaded at hbr.org or amazon.com.
©2007 The Beyster Institute and its authors and their entities. All rights reserved.
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