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Strategic Alliances

Strategic Alliances: a Form of Synergy
Ever stop to think why organizations are increasingly seeking alliances to become more effective despite having to face the uphill battle of financial pressures and time constraints that push managers in the opposite direction of developing the needed capabilities within? It's because 1+1 = 3 when the partners are in a quality Strategic Alliance and so consistently get more from a relationship than they put in!

Basic Characteristics
To be sustainable and successful, each partner needs to have a mutual vested interest in the other's future. Alliances need to benefit both, create new value from the combined skills and capabilities of each, and have a governance structure that embodies shared values, trust and respect.

Value Dimensions of Strategic Alliances
Alliance value is more than just its cash return over a short run. Instead, its value may be found in future net improvements in market share, competitive advantage, innovation in products, services, and processes, organizational know-how or capacity to thrive on change, as well as improved financial return and profitability.
Studies show that your consumers want an integrated buying experience - not just individual products and services but seamless, flexible and reliable best-in-breed solutions from a single source. By providing adaptable solutions encompassing products, services and best practices you allow your consumers to focus on their core business rather than the intricacies of piecing together a network of solutions themselves.

 How to Avoid Buying Swampland
An alliance needs to be backed by a business strategy. Your business strategy dictates what capability you need to acquire as a result of the partnership. Additionally, a partnership strategy decides which is the right partner, what is the most appropriate structure, how decisions will be made, how the risks will be managed, and so on. Yet, time and again, organizations enter into alliances without a clear sense of their underlying strategy, particularly since only 67% have a documented strategy.

How do I Make it Produce?
You might want to consider working through the following in the much the same order as presented. The rewards are considerable but you need to be thorough and objective. As such, you may need the realism of outside opinion to validate your less certain findings.

• Critically evaluate the logic and fit of an alliance to meet the needs of your business strategy

• Precisely define what your organization needs to get out of the alliance in dimensions such as market share, competitive advantage, products, services, and process innovation, knowledge transfer and profitability

• Identify and evaluate a list of possible partners and select a partner and design of partnership to satisfy your needs

• Develop a document in plain language that defines your common goal, the strategy and timeframe for each partner to archive their goals, the parameters, guiding principles, roles, and responsibilities of each, as well a governance framework for decision making, performance measuring and reporting, and resolving of all conflicts.

• Use this plain language document as the base for the future legal agreement.

• Evaluate your preparedness and commitment as evidenced by your internal support structure for the alliance

• Monitor and measure ongoing to confirm that the strategy and how it is implemented are achieving your intended results.

Jules Selymes

Managing Director

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