Decideware

HBR recently published an interesting article written by principals at Vantage Partners advocating the need for Alliance Managers to adopt a new set of rules to achieve better results.

While alliances are typically outside the scope Decideware's operations (assessing key supplier relationships), we think the article offers interesting insights which can be applied more generally to most client-supplier agreements

Corporate alliances exhibit a particularly high level of company interdependence with high expectations and significant risk.

While apparently they're growing at 25% pa and account for nearly one-third of some companies revenues and value somewhere between 60% to 70% fail.

So what's needed to improve the likelihood that an alliance will be successful?  

Vantage have identified 5 key principles for alliance management.

1. Focus on how you'll work together

 Move beyond business plans and contracts (both necessary and sensible) to focus on the working relationship.

• Accept that disagreements are inevitable, agree on how to manage them
  
• Understand how the other team works - decision making, budgeting, resource allocation, etc
• Discuss and define in pragmatic terms how the two teams will work together.

2. Develop metrics pegged to alliance progress

Many alliances take years to produce results.

In the interim, build performance scorecards which focus on the quality and productivity of the relationship.

That is, focus on the 'means' to achieve goals that will not be delivered in the short-term.

Consider metrics such as:

• Information sharing
• Developing new ideas
• Speed of decision making

Deploy scorecards to help drive the relationship and ensure that both parties articulate their mutual expectation.

3. Leverage Differences

Partners enter into alliances because they're different.

Differences like customer segments, markets, technologies, processes know-how, etc.

As the relationship matures, remember it's those differences which made the your alliance partner attractive.

4. Go Beyond Formal Governance Structures

Yes, a formal governance structure is vital.

But consider adopting behavioural protocols which encourage a mindset of inquiry rather than judgement.

Develop and tracking adherence with behavioral protocols can help drive collaboration.

5. Spend Time on Managing Internal Stakeholders

Sometimes the focus on alliance management is so heavily skewed towards the other party that efforts to ensure internal stakeholders are on-side are forgotten.

To achieve true buy-in across the company managers have to direct some of their efforts to ensuring business units are committed to, and aligned with the alliance objectives and process.

Source: AFR Boss, 25-28 2008

Author: Viji Ratnam (Decideware)