Breaking Up is Hard to Do

According to the 2009 State of Alliance Management Survey of 430 companies, alliances success rates are improving, but still less than optimal at a reported 57% . Our goal as alliance managers is to increase our success rates and make sure that our alliances are successful. However, sometimes no matter what you do, an alliance may come to an end - often for reasons completely out of your control - market forces, a company strategy change, pressures from a down economy, among other factors, can all conspire to precipitate a break up.

Breaking up is indeed hard to do, but it doesn't have to be excessively painful, and it can be done in a way that preserves the relationship and keeps the door open for future joint endeavors.

How?

Well, this might seem counter-intuitive, but the best time to plan for the break up is during the "coming together" process. Why? Because that is typically the time of the greatest goodwill. Both parties want things to work, both are operating in good faith. Both parties are relatively positive and happy. That's the perfect time to have the "exit clause" discussion. You are more likely to discuss sticky separation issues sans the emotion.

Next up - what should the exit clause contain?

The "Barney Hug" Alliance

Hi, there. For my family's spring break vacation this year, we went to Costa Rica! You will often hear Ticos (folks from Costa Rica) using the term "tuanis" (too-ahn-ees). It means "cool" or everything is wonderful. Which brings me to the topic for this week!

This week's topic is something that as Alliance Managers we have all encountered at one time or another - the dreaded "Barney Hug Alliance " or BHA. "Barney Hug Alliance" is my catchphrase for those vacuous "I love you, You love me" (queue the music) partnerships. You know the type - they start with a flowery joint press release extolling the virtues of the partnership and hyping all the great things the partners are "gonna" do together. A virtual lovefest of goodwill. Six months later, 1 year later, 2 years later - nothing... All you hear are crickets chirping. The partnership seems to have just evaporated into the ethers.

How and why does this happen? Here's how to tell if you might be headed for (or in) a BHA:

1. No real resources committed to business plan execution. You've issued the press release, now it's time to get down to brass tacks. If you are having difficulty getting the partner to the table to build out an execution plan, that's a sign that the partnership is not a priority. If you don't get this fixed, you might be headed for a BHA!
2. No sales sponsor. The field sales organization is where the rubber meets the road in partnerships. Sales executives should have a seat at the table in the partnership discussions. If you have been sitting in the exploratory joint meetings and you don't see any sales people in the room, be very afraid. If there are no sales executives clamoring for the partnership and willing to apply sales energy to promoting the joint solution, the partnership is going to go nowhere fast! Which brings me to the next sign...
3. No customer validation. There's nothing like a joint customer to validate the value proposition of the partnership. A partnership with no customer validation is a big red flag. What sounds nice on paper, doesn't always translate with customers. Until you have some customer validation (preferably a win!), step away from the press release..
4. Your partner is a start-up. Not all start-ups are guilty of this, but having worked as the Business Development exec for several start-ups, I can say that there is incredible pressure to announce a partnership with a major established player in the market. Such an announcement often has a material impact on the start-up's valuation. Additionally, many startups (and many established companies!) underestimate the time, effort and investment required to develop and execute a successful alliance. So they may enter into the relationship with the best of intentions, but simply not be able to execute effectively.

So there you have it. Watch for these signs and save yourself from a "dolor de jupa" (headache) down the road!