While successful alliances require work and process, the benefits
justify the effort. To
improve your organization’s performance, production and profitability
you must do more than just fix a problem. You must burrow deeper and
change the system (culture). The following steps will help you to
evaluate your system before you embark on your strategic alliance
journey:
1.Analyze
2.Educated and contemplate
3.Select
4.Organize and plan
5.Charter: Agreement or contract
6.Alliance follow-up and maintenance
Analyze
Study
organizational needs through self-analysis. Observe, and identify your
areas for desired improvement. Develop an organizational evaluation
method to be completed by your customers, suppliers, employees and
management. This will help you to inventory your core strengths and
weaknesses. Which strengths might be valuable to a potential alliance
partner? What weaknesses do you want to shore-up?
Educate
and Contemplate
·Identify other industries that have embraced Partnering. Study
the individual companies that have been successful in building
alliances. Study what worked and what did not. If Partnering was not
successful, learn and understand why not.
·What will it take to change your organization?
·What are the potential obstacles? Is your culture open or closed?
Changing a closed culture organization will be much more difficult than
one that is open.
·Has collaboration worked in the past?
·What competencies do you desire in an alliance partner?
·What kinds of (or reasons for) strategic alliances would best
work with your culture and/or fulfill your growth needs?
·What criteria will you use to select alliance partners?
·What new training programs will be necessary to help you with
your shift to Partnering?
Select
This
is the critical step—all your future efforts will be built on this
foundation. Learn about those companies you consider as Partnering
candidates. Ask yourself and your management teams these questions: What
are their strengths and weaknesses? What affect would they have on our
business? Be sure that the company cultures and core strengths are
complementary. Can the people who will make the alliance work get along?
What is the growth opportunity, short and long-term? Select alliance
partners, with knowledge, understanding and commitment. You can only
partner with a person or organization that wants to partner. It would be
a serious mistake to think otherwise.
Search
for the strongest material for your Partnering foundation, the best
possible partner. Customer-oriented culture is critical to the success
of the partnering alliance. The greater the sophistication of a company
and its officers, the more likely the company will enter into. Embrace
long-term thinking. Strategic alliances are rarely a quick fix, but
rather a sound long-term business strategy. Target companies, large or
small, that can aid you in rapidly and efficiently, reaching the goals
of research, technology, production and marketing.
Another
element to consider is the focus of the individuals involved. Be certain
their focus of the Partnering relationship is strategic to the
individuals' goals. Be clear about your and your partner’s critical
driving forces that pull each into an alliance arrangement. Can the two
organizations work together at the daily operation level? Even though
there might be an exceptional strategic fit, the two organizations must
compatible on an ongoing operational level.
Outrageously successful alliance relationships take time to develop. Over
the last decade too many alliance relationships have failed due to the
quickness of selection. Research and due diligence must come first.
Selecting your alliance partner well reduces the chance you’ll need to
exercise your exit agreement.
Organize
and Plan
Once
you’ve selected your potential alliance partner short list, you can
establish mutual goals. You can agree to who gives and gets what, when,
where, and how. Mutual performance measuring instruments can be
developed. It is time for identifying, understanding, and putting
together the possibilities for an alliance. Internal and external
personnel should be involved in developing not only your alliance
structure, but also your road map as well.
The success of the blending of cultures is pivotal to the success
of any strategic alliance, take great pains to ensure this achievement.
Access is crucial—emphasize the importance of understanding and access
to each alliance members' staff. Create a convenient communication
system for all partners especially decision-makers. Plan procedures to
keep relationships between key people of partnering companies open and
constantly alive.
Make
sure that all levels of both organizations share the partnering
attitude. Stress strong information systems and share information
constantly. Agree on pricing with your partners and delete income
accounts (accounting practices) that have nothing to do with your
business or the real price of your goods and services—things that only
make a singular department look successful.
Look
into the future, plan for the long-term relationship and encourage
strategies that will sustain the relationship through to its conclusion.
Phasing in the partnering relationship could be a preferred strategy, as
this method will allow partners to have a get acquainted time. This can
assist in the identification of reaching milestones, successfully or
identify the need to reassess before moving on to a higher level in the
relationship. Maybe even institute a pilot program at this point.
Charter:
Agreement or Contract
This
is the agreement, handshake or contract. Most who have been down this
path would strongly urge that your strategic alliance agreement be
committed to paper. For the safety of all concerned, the agreement will
be so much clearer six months or two years later. Sometimes people
forget what they agreed to or, even worse, they have been transferred to
a completely different division thousands of miles away.
The
agreement should spell out conflict and dispute resolution and exit
strategies. Be ready for it and the conflict can be resolved timely and
amiably. Have an agreed-upon set of procedures in place that will help
resolve the issues that arise. Inevitably, there will be a need for a
mechanism to handle things like price increase discussions, inability to
ship and dispute resolutions.
Develop
a clear agreement on what your goals are and make sure they are
measurable. Have a formal mechanism for alliance members to identify the
goals, milestones, and turning points crucial to the success of the
relationship. Devise an evaluation that will measure both implementation
and performance. The Partnering agreement should establish the terms and
conditions under which partners will resolve questions of opportunity,
accountability and risk. The final agreement should be reviewed and
agreed upon by all parties involved or affected. Check with your
national trade or professional association, they may have already
developed a standard agreement for you.
Alliance
Follow-up and Maintenance
Regularly
review your mutual goals and performance. Regularly meet with alliance
partners to evaluate the status of your relationship. Should the alliance be
upgraded, maintained, or downgraded? Should new goals (short and
long-term) and performance expectations be established? Are new
measurement systems available?
It
has been said that in an ideal marriage one partner is blind and the
other deaf. To keep your strategic alliance alive and healthy, each
partner must overlook some of their partner’s misgivings. At the same
time, each must keep an open line of communication to minimize conflict
and relationship meltdown. The best way to do this is through regular
Relationship Value Updates (RVUs). Quarterly RVUs are preferred, but
semiannually can be acceptable.
Copyright
2010 Ed Rigsbee
This
article was adapted from Ed Rigsbee's, PartnerShift-How to Profit
from the Partnering Trend. Ed Rigsbee, CSP is the President of
Rigsbee Research located in the Los Angeles, California metro area. He
has also authored two additional books on alliance relationships: Developing
Strategic Alliances
and The Art of Partnering. His articles are frequently
published in business magazines worldwide. He travels internationally
sharing his insight on alliance relationships through his consulting and
keynote presentations. When you need a speaker on partnering or alliance
development, Ed may be contacted through www.rigsbee.com,
ed@rigsbee.com or (805) 498-5720.
