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)

In an interesting article published 7 January, Adweek reports their research findings confirming perceptions that 2007 was indeed a busy year for client-agency relationship reviews.

According to Adweek's analysis:

• A record $27.5b of advertising business moved or went into review in 2007, eclipsing the previous record of $22b in 2006

• The number of clients that switched agencies was up 20% from 128 in 2006 to 153 in 2007

• The five most active categories reviewed, were:

Computers / Software $5.2b (eg the Dell global marketing services review)

Telecommunications $4.7b (eg the AT&T media account and the SprintNextel creative account)

Packaged Goods $3.3b (eg the J&J global media review)

Automotive $2.6b (eg the Hyundai/Kia media buying & planning account)

Retail $2.2b (eg the Sears Holdings media review).

Retail was the only sector of the five above to register a year-to-year decline, with $2.2b reviewed in 2007, down from $3.2b in 2006.

And more media-only business went under review ($12b) than creative-only ($8.1b).

Robert Passikoff of Brand Keys offer the following comments on why 2007 was a particularly active period:

• The increasing complexity of the media landscape is driving change
• Clients are placing greater pressure on their agencies to differentiate their brand better than the competitors
• Clients are placing greater demands on media agencies to:

> provide better data about the impact of the ads they buy
> deliver deeper insights into how consumers are using traditional and emerging media
> demonstrate the cost-effectiveness of media buys
> prove that placement of ads is literally engaging consumers

Source: Adweek, 7 January 2008

Author: Viji Ratnam

A recent survey conducted and published by supplymanagement.com in the UK has revealed:

• Most UK buyers (61%) expect to have more spend under their control in 2008;

• Many said growth of their firm, including European expansion was the reason why they were expecting to control higher levels of spend;

• Some respondents also indicated they would add to their portfolio of spend categories.

The Aberdeen Group comment on the topic with their research findings "... that enterprises have been able to achieve a 5 per cent to 20 per cent cost savings for each new dollar brought under management."

Source: See Supplymanagement.com
3 January 2008

Author: Derek Groom