| By forming strategic alliances, large
pharmaceutical firms gain visibility to new drug concepts. New technology and customer
solutions are jointly developed and delivered. Businesses of all types achieve new market
penetration.
Yet, when you ask business professionals "What are
strategic alliances?" They often say:
- Two companies working together, it is kind of fuzzy.
- Those employees over there, we don't know what they really
do and what value they provide
In conducting research and in our work with global clients,
we discovered that many companies treat alliances as a narrow sales, marketing or R&D
function.
The value of strategic alliances is continually described
through the services it delivers for that particular function. Too often, alliances are
pushed in the direction of "What sale has this partner delivered for us lately."
Consequently many companies do not achieve the most value
from their alliance and partnering investments.
Five Key Indicators that Signal You Are Not Getting the
Most Out of Your Strategic Alliances:
1. Siloed Organization:
Where do alliances reside in your corporate structure? If
alliances reside entirely within a functional area such as sales, it is
"siloed". It only supports objectives for that part of the organization. There
may be a broader opportunity especially if the partner is a large corporation.
2. Drive-By Alliances:
Are there sufficient resources in place to manage the
alliance? Too often executives meet, cut a deal and get the PR wagon rolling. After the
announcement, no resources are in place to execute the plan and it is destined to failure.
3. Tactical Executive Mindset:
If executives view alliances as strategic rather than
tactical, they will invest in it. If they do not, alliance budgets will be cut the moment
belt–tightening occurs. If alliance executives only have experience in a single
functional area, they typically will shape the organization from that perspective.
4. History of Success:
What worked before? If alliances have been successful in
building an efficient supply chain, they are thought of as part of procurement. If
alliances have been part of an effective distribution channel, they are thought of as part
of the organization's sales success. Again, siloed thinking. Partners are capable of much
more especially if they are a large corporation.
5. Short-Term Compensation Plan:
How are alliance successes rewarded? If bonuses are tied to
quarterly revenues, results will be short-term tactical opportunistic approaches. Alliance
managers will find partners who have the near-term deal even if partnering with another
company will bring greater opportunity later. If executive bonuses are not tied to
alliance performance, there will not be any executive involvement or support.
To keep pace with today's realities, alliance management
needs to become a horizontal, broad-based approach as much as it is a vertical
"function." It needs to be corporate-wide competency embedded in all employees
that collaborate with outside firms. Employees must learn partnering concepts and apply it
to their day-to-day business.
Our research and work with leading global clients found
that leading-edge alliance organizations take a corporate-wide approach. They operate
cross-functionally and serve as an enabler for the rest of the corporation. Although
day-to-day alliance activities are managed in business units and functions, the
corporate-wide alliance function serves as a center of expertise and resource for the rest
of the corporation.
Eight Ways Leading-Edge Strategic Alliance Organizations
Deliver Significant Innovation, Value Creation and Growth
1. Alliances act as an "enablement" group,
similar to M&A to support the rest of the corporation as the "go to" experts
for structuring relationships.
2. Alliances are considered a strategic function. They work
hand-in-hand with M&A and strategy groups by serving as a vanguard on the latest
techniques and strategic opportunities; they act as a third pillar for corporate growth in
addition to M&A and organic R&D. They strategically identify opportunities in
addition to implementing strategy.
3. Alliances provide training and materials that enable the
rest of the organization to partner effectively.
4. Alliances provide governance and policy pertaining to
partnering investment thresholds and corporate standards for partnering.
5. Alliances measure and reward work across functions
instead of in a silo
6. Alliances manage a portfolio of partner investments.
They determine which partners deserve incremental investment and those that need to
sunset.
7. Alliances directly manage and negotiate major
relationships that cross business units and are considered strategic.
8. Alliances manage volume partner programs that enable
critical mass on a platform
How many of these best practices does your organization
follow? Follow these best practices and you will create an effective strategic alliance
and partnering group that enables your organization to create and deliver new offerings,
and achieve new market penetration. Rather than enabling a narrow professional team you
are equipping your entire organization to work with partners and generate growth across
the board. |
