What's in it for me? WIFM

There was a recent question posted on an alliances discussion board asking how do you get sales teams in your key partnerships to work in harmony?

This is a question worth asking, since in my experience, this is where alliances most often fall down. The only way to validate your joint selling proposition is to sell your first customer, and the only way to get to the customer is to get your two sales teams collaborating.

How?

Fundamentally you have to address "WIFM" (what's in it for me?) for each sales team. Will selling with this partner get me access to decision-makers? Increase my deal size? Facilitate upsell/cross sell? Will I make money through and be rewarded for collaboration? The tops down "you will sell it cuz management says so" only gets you passive aggressive compliance. There must be something in it for the sales guy or gal, and that something is usually money, but could also be prestige, props, career leverage, etc. 

Identifying the WIFM for each sales organization, developing a clear sales engagement process, and focusing on both as a central part of your alliance strategy is critical if you want to get sales traction. As we used to say at IBM - nothing happens until you sell something!

The Truth and Track Shoes



I had a recent conversation with a Global Alliance Manager who manages our partnership with a company that happens to be both our biggest partner and our biggest competitor. You can imagine what her days are like.

She told me that a story had been circulating that this partner "poached" one of our people and for this reason, one of our country managers had issued a "cease and desist" order to his team to "stop all strategic work" with this partner.

Of course, this edict was issued pre-fact finding mission. Turns out that the employee had posted for the job. There was no poaching. Oh, and that we'd recently hired 5 folks in this country from this partner, so apparently we'd been doing some "poaching" of our own. Oops. Never mind. Literally a lie traveled around the world before the truth got its track shoes on.

It occurs to me that when we talk about managing co-opetition, mostly we talk about operational considerations (ensuring we have proper firewalls, managing and protecting IP, etc. etc.)..

Seems to me that the biggest hurdle, and the thing that requires the most vigilant focus, is managing the rumor mill, lowering the emotional temperature by applying liberal doses of fact and overall paranoia management. Now that is a full time job.

Are you a "Straight A" student?

I attended a recent webinar hosted by Vantage Partners entitled "Managing Difficult Alliance Conversations".

Stu Kliman was the speaker and he encouraged alliance managers to move from "positional bargaining", where the role of the alliance manager is to claim maximum value from a fixed pie - to "joint problem solving", where the role of the alliance manager is to work together to create and distribute value.

Sound good in theory, why is this so difficult to do in practice?

The ladder of inference
Stu talked about the concept of "partisan perceptions". We each form perceptions based on the data we access (or that we choose to filter). Imagine you have a ladder and you sit it in a pool of data. You then "move up the ladder" by forming conclusions and a point of view based on where you placed your ladder. Imagine that your partner is doing the same thing. Two parties, two different ladders, two different perspectives on the seemingly same situation.

Psychological studies have shown that we each have an operating principle that partisan perceptions exist in "other people", but not in us!

Alliance management is all about managing differences and these differences contribute greatly to partisan perceptions. For example, you partner with a company that that has complementary skills or products. Because of differences in your cultures and business models, they see you as slow and bureaucratic, you see them as arrogant and imprudent. Partisan differences abound.

The best way to break this logjam is to make sure that you are striking a balance between advocacy and intimacy in your alliance conversations.

Advocacy vs. intimacy
Advocacy involves advocating for your position. It's a completely self-centered perspective. Intimacy involves "learning through dialog" - assuming that you are not in possession of all the facts, and engaging in an open conversation with your partner to understand their perspective.

Learning through dialog requires an authentic, genuine curiosity to understand the partner's ladder of inference. You have to climb down from your ladder, see where your partner has planted his ladder, and climb up his ladder of inference to truly understand things from his perspective.

Stu invited us to think about our last difficult alliance conversation and then to "script" the conversation by writing down the dialog (what we said, what they said). He asked us to put an "A" next to statements that we made that were all about advocacy and an "I" next to statements that were about intimacy. Not surprisingly most of us had a lot of "A's" on our paper!

Don't be a "Straight A" student!
When parties get stuck in alliance discussions, it's usually because they were "straight A students" solely focused on advocacy!

Next time you have to have a difficult alliance conversation, make sure you "check your ladder". This is one of the few times in your life when you want to avoid being a straight A student.

Stu indicated that the recording of the webinar should be on their website shortly. You can check for it on Vantage Partner's website.

How can you tell if an alliance will succeed?

I saw this question posed on the ASAP (Association of Strategic Alliances Professionals) LinkedIn group, and it generated quite an active discussion!

With alliance success rates hovering at at less than 50%, it's a good question to contemplate. How can we as alliance managers identify predictive behaviors or dynamics that might be clear indicators that a potential new alliance will fail (or that an existing alliance is headed for trouble)?

In the book "Getting Partnering Right" by Rackham, Friedman and Ruff, the authors did extensive research in order to answer the question - "what makes partnerships successful?" They found that in successful partnerships, there were always three consistent elements:  Vision, Impact and Intimacy.

If even one of the three elements is missing, the alliance will ultimately fail, or fall well short of expectations. This book was published way back in 1994, and yet as I look back on the alliances I've either managed or observed over the years, for every one that failed, I was always able to identify the missing element(s) that were at the root of the failure.

Something to think about if you're managing an existing alliance or embarking upon a new one. I've talked about trust in previous blog posts. A few thoughts about Shared Vision and Market Impact in upcoming blog posts..

Cheers...

Are you serious?

How do you know whether or not your dealing with a partner that takes partnering seriously?

6 signs that the company is serious about partnering:

1. They staff their alliance organization with true alliance professionals. I worked for an exec at IBM who was serious about hiring the best and brightest (and firing those who weren't). He didn't want "Statue of Liberty people" - ('send me your tired, your poor, your huddled masses') on his team.  It was his slang for the mediocre. Is your partner's alliance organization staffed with alliance professionals who are passionate about alliance formation and execution? 
2. They provide professional development and training to their alliance staff. See 1.
3. They have a mature and sophisticated sales organization with "partner mindset" A company that's serious about partnering hires salespeople with experience collaborating with partners to identify new opportunities and then incents them appropriately. 
4. Their CEO walks the walk. Alliance strategy should be part and parcel of the business strategy. The CEO should not only talk about the importance of alliances at internal company meetings, but also to customers, and the press and analyst communities. 
5. They've got a full time alliance executive. Or if it's a relatively small company, a designated exec with alliance responsibility. I think that when your company gets to a certain size you need a DEDICATED alliance executive. If the company is serious about alliances, and they've built a portfolio of partners and planning on building more, there really should be an exec that's focused on alliance strategy and execution. Doing it right is not a part-time pursuit.
6. They inspect what they expect. Companies that are serious about generating results from their alliances are serious about measuring and managing alliances. They establish alliance business plans with goals and objectives. They manage their alliances portfolio against a set of performance criteria. If the company is inspecting what they expect as it relates to alliances, they're likely serious about it.

What say you?

Channel Managers vs. Strategic Alliance Managers

Recently there was a discussion thread on the ASAP (Association of Strategic Alliances) LinkedIn Group about the differences between folks who manage channel partners vs. folks who manage alliances. In my experience, Alliance Managers that are successful managing channel/reseller partnerships (typically called Business Development Managers) generally have a sales background. Channel relationships, by design, are more tactical relationships. The basic job here is blocking and tackling, managing the sales cycle, tracking pipeline, managing sales conflicts etc.

Alliance Managers covering strategic relationships, where joint collaboration and innovation are the raison d'etre of the alliance, need a different skill set. The ability to think strategically, high emotional intelligence, and an entrepreneurial mindset, are all key attributes of successful strategic alliance managers.


Both jobs require people with fundamental sales skills, it's really a question of degree. I believe Channel Managers need to have stronger skills in this area, but Strategic Alliance Managers also must have very good sales skills, and not just because of the amount of internal selling the job entails! SAMs need to have a clear understanding of the selling process and sales engagement process in order to successfully build and execute initiatives with the Partner. At IBM we used to say "nothing happens until you sell something" - all the great strategy work in the world is meaningless unless it can be translated into a selling proposition that two sales teams can assimilate and sell!! 


- Donna Peek

The Wonderful World of Disney

I heard Michael Eisner (former CEO of Disney) interviewed on the Diane Rehm show on NPR today talking about his new book – “Working Together: Why Great Partnerships Succeed”. The book is about business partnerships on a personal level (ie. Warren Buffet’s partnership with his #2, Eisner’s partnership with his #2, etc. etc.), but from what he described, it would have applicability to partnerships between companies.

He has high regard for Frank Wells, former President of Disney, and attributes Disney's success to their 10 year business partnership. (Frank Wells died tragically in a helicopter accident in 1994).

It was an interesting interview of a man that is either viewed as an icon or pariah depending on your perspective. It got me thinking about the recent Mark Hurd/HP/Oracle high drama. Hurd's departure from HP and the ensuing escalating rhetoric from both HP and Oracle executives, has caused a serious rift in their longstanding alliance relationship. As a result, both SAP and IBM are swooping in for the kill, both with PR and sales campaigns targeting Oracle-Sun and HP customers. This debacle is a perfect example of how a strategic alliance can go from asset to liability in 60 seconds. Ellison and Hurd have a long standing friendship (they play tennis together).. It will be interesting to see if that personal friendship will allow them to forge a successful business partnership, like the ones Eisner profiles in his book... Might not have a Disney ending..


- Donna Peek

More on Trust - How do alliance managers build trust?

As I've mentioned on previous blog posts, building trust is critical to forming and maintaining positive alliance relationships. In this post, I'll describe a few techniques I use to build trust with my partner.

Do my homework! 
Before that very first meeting or conference call, I do my homework. I learn everything I can about the partner and think through the partnering possibilities: What are their issues and challenges? What is their company culture? How are they viewed in the market? What are they afraid of? What can we do for them? What can they help us with? What kind of partnering proposition makes sense? 
When I come to that first meeting prepared, the partner trusts that I'm a professional and I'm taking these discussions seriously.

Document goals and objectives
As the discussions progress, I make sure that I get joint agreement on the 3-way value proposition - (what's in it for them? what's in it for my company? what's in it for the customer?)... so that we are all anchored in what we're trying to accomplish. I find this very useful in keeping us on the same page and focused in our discussions. As we go through the contract negotiation process and beyond, I work with the partner on developing the joint business plan, where we document our mutual goals and objectives. Knowing where we're going, and working together to get there, really helps to build trust.

Set expectations early and often
I lay out the internal decision making process for the partner. Here's who we'll have to get involved, here's the business case we'll have to make, here's who has to say yes, etc etc., so that they know the lay of the land and there are no surprises. As Seth Godin, best selling author and marketing guru says, 'Someone needs to say, "here's how we do things around here," and then they they have to tell the truth. '


Get the executive sponsors together
Just as it's important for me to build a good working relationship with my counterpart, I try to find ways to facilitate relationship building between the two executive sponsors (mine and the partner's). It's much easier for sponsors to work together to resolve disputes and work through intractable obstacles to success when they know and trust each other.

Build the governance plan = > communications plan
The scope and complexity of the determines how formal the governance plan needs to be, but at a minimum, I make sure that we set expectations regarding the formal and informal communications plan and that we understand the process for dealing with disputes. Effective communications at all levels are the best tool we have as alliance managers to build and maintain trust.

As an Alliance Manager, I play a key role in building a framework for trust in the alliance relationship!

How do you build trust in an alliance relationship?

I've done a few posts on the topic of trust because it is so critical in cementing a successful partnership. Trust takes time to build, but it can be destroyed in an instant. We all know how powerful trust is, but what can we do as alliance managers to lay a foundation for trust?

Everything we need to know about building trust we learned in kindergarten:

Lying is bad. 
It would seem to go without saying, but being honest with our partners goes a long way in building trust. Sometimes when we have bad news, the tendency we have is to avoid the truth, or worse, shade the truth. The partner wants to focus on the retail sector and your retail sales director wants to work with another partner. Or the partner wants me to kick in $2M to a matching market development fund and my finance guy says we can only do $1M. Or, or or... pick your bad news. I tell the partner the bad news early. I worked with an exec who used to use the phrase "go ugly early" - meaning if you've got bad news, get it out of the way early. Nothing builds trust faster than being honest about bad news.

If you bully people, they won't like you.
Have you ever had to partner with a company that was much larger than yours? Or that had a dominant market position? Did they let you know it? When you throw your weight around without any sensitivity for the needs and concerns of your partner, they'll feel taken advantage of.

Say you're sorry when you make a mistake.
Sometimes despite our best efforts, we make a mistake. We forget to engage a key stakeholder. We neglect to inform the partner about an important change in policy or personnel. Or maybe we didn't actually make a mistake, but our partner feels aggrieved. In either case, a genuine, heartfelt apology will go a long way to restoring or building trust.


Say what you mean and mean what you say.
This is a bit of a corollary to the first rule, but being clear in your communications with the partner is critical. I can recall many a kerfluffle that I unnecessarily caused by being loose with an email or phone conversation.


Some more tactical/practical thoughts on building trust in the next blog post...

Random thought on lucite blocks

If you have to enshrine your company's core values on a lucite block in order to remind your employees of what they are, they can't be all that "core" can they? I'm just sayin'.

A Tale of Two Islands - A Profile in Building Trust

Picking back up the blogging mantle after several weeks enjoy the lazy hazy days of summer.

During my vacation break, I heard a story on the National Public Radio program "This American Life" that really brought home to me the power of trust.

The program contrasted the approaches of two different countries - Jamaica and Barbados - in dealing with similar financial crises. Barbados emerged from their crisis a much stronger nation - median income is currently twice that of Jamaica's, and its literacy rate of 95% is four times better than Jamaica's. By every economic and socioeconomic measure, Barbados is significantly outperforming Jamaica. Why? Primarily, because during a time of crisis, Barbados chose to use trust as the fundamental lynchpin of their economic recovery strategy and in so doing - reinvented their approach to running the country.

Here's what happened. In the early 90's, oil prices skyrocketed and threw the world into a global recession. This created a real foreign currency crisis for Barbados. Essentially they did not have enough foreign currency to pay for imported goods and wound up having to borrow significant money from the IMF. Barbados' leaders "chose trust" and established a partnership between business, workers and the government to build an economic recovery plan based on shared sacrifice.

Business and the unions, previously adversaries, learned to trust each other, and their close collaboration essentially saved the country. Together they did extraordinary things - labor took an 8% across the board pay cut. Business collaborated with labor and government to make sure that layoffs did not affect both breadwinners of the same family. The results of this partnership were astounding - within 5 years, Barbados paid off their loan to the IMF, wages reached pre-crisis levels. And most importantly, the collaboration established between government, business and labor - still endures and forever changed Barbados' governance model.

Jamaica, and it pains me to say this since I am of Jamaican ancestry, had a very different response when faced with the same crisis in the early 70s.  The Jamaican Prime Minister did not build trust between rich and poor, business and labor. He made autocratic decisions and famously said in a speech that if Jamaicans didn't like what he was doing "there were five flights a day leaving for Miami".  As a result, thousands of middle class Jamaicans (including many of my relatives) left the country. This crippled the economy and Jamaica has never fully recovered. In fact,  now 50 cents of every $ the government collects is spent on paying down interest on IMF debts.

Tony Wolcott, Executive Director of the Barbados Employers Confederation, sums up the bottom line: "Trust is the key factor in the whole cohesion of the social partnership we've got here."

Such is the power of not only a partnership mindset, but of building trust. 

More on how to build trust in future blog posts.

Trust me!

I was recently advising an alliance manager who was desparately trying to manage expectations with a new partner in the face of a sales manager who is fond of "gentleman's agreements". The sales manager's logic was that he "trusted" the partner and therefore the parties "didn't need to have anything in writing".

Here's the problem with that logic. Is there a time and a place for "handshake" agreements? Yes. Is that time when you are establishing a partnership with a new partner. Decidedly no.

In these scenarios, I am very wary of parties who do not want to put things in writing, especially when the rationale is essentially "trust me". This is not trust. It's "faux trust" - bet hedging masquerading as trust - and a sign of someone who does not want to commit.

Here's why. In my experience, when you embark upon a collaborative initiative on a handshake, when things go either very well or very badly, people tend to get situational amnesia. When things go badly, people normally start heading for the exits. On their way out the door, sometimes they also try to shift blame for the failure to the other party. When things go swimmingly well, sometimes greed ensues, and one party will seek to cut the other party out of the action. That's why being committed to the venture (you both either sink or swim together) is an important success factor.

My advice to the alliance manager - if the venture is worth the time to do, it's worth the time to document. Depending on the situation you may not need a formal contract, but at a minimum, you should document the expectations, roles and responsibilities of both parties, and most importantly, what happens if expectations are not met. You should also make sure that ALL the stakeholders that are impacted by the joint plan are informed of the plan and expectations and that they sign off on those expectations!

When you take the time to put things in writing you are saying to the partner, I respect your time and investment in this project and I trust that our odds of mutual success will be much better if we have clarity around our joint gameplan and the expectations for execution.

"Bad deals don't last"

Trust has been a big topic in the news lately - Facebook's questionable privacy policies, UK Google Earth gathering personal information from people's computer's via their unprotected wifi networks. (As if me leaving my front door open gives you the right to enter my home and steal my television set! Not.)

It got me thinking about the importance of building and maintaining trust in alliance relationships. Too many organizations don't get it when it comes to the currency of trust.

I recall working for an internet startup where the CTO and founder would brag about "screwing the partner over", as if this was something to brag about! I'd commiserate with our VP of Sales, who was fond of saying "Bad deals, don't last". He was absolutely right. You may be able to get a partner in a tight spot where they feel compelled to accept a deal in the short term that is not in their long term interests. Ultimately, however, I don't care what kind of contract you put in place, if a deal is not good for one partner, they will find a way out. One way or the other. So you may win in the short run, but you will lose in the long run. Not only with this partner, but your reputation in the partner community will suffer - and then good luck finding ANY company that will partner with you!

For more on this topic, check out this white paper by Robert Porter Lynch (Chairman Emeritus of the Association of Strategic Alliance Professionals) and Paul Lawrence (Professor Emeritus of Organization Behavior, Harvard Business School) - Building a System of Trust for Strategic Alliances.

I'll share more thoughts on this topic in a future blog post.

AMFM - Always Maintain Forward Motion

I read an article in the Sunday Parade magazine a few months ago about an entrepreneur who's daily mantra was "AMFM" - Always Maintain Forward Motion. I loved that! That mantra was so applicable to our partner efforts that I adopted it as our divisional slogan for 2010..

We have been implementing formal processes for qualification, development and field execution of partner initiatives for the last 2 years and one thing we've learned is that momentum is your friend. When partner initiatives stagnate, particularly in the qualification phase, it's typically symptomatic of a project that has waning sponsorship or waning enthusiasm (either internally or within the partner organization).

Partner initiatives tend to be like produce, they go bad when they sit around for long periods of time.

So what we encourage the alliance managers to do now is carpe diem! If you've got sponsorship and a well qualified idea, execute quickly. The market moves quickly, and your sponsors and stakeholders might lose interest and get distracted by the next new "shiny thing" if things get stalled and bogged down.

Always Maintain Forward Motion - or as my nephew would say - "Keep it movin'"!

Breaking Up is Hard to Do - Part III

So what about when you've come to the point where you feel you need to invoke the exit clause and end the alliance?

It's certainly not a good feeling. I've been there. I was VP of Business Development for a startup. One of the co-founders had entered into an agreement with another company that seemed good on paper, but was just not making business sense for us. We were expending a lot of precious technical resources on the project with absolutely no hope of a return.

The CEO asked me to "fix it". Great. The first thing I did was read the contract and pray that there was a well written exit clause. Luckily, our corporate counsel, who I eventually developed a great partnership with for future alliance work, had written a very good contract with an exit clause that provided me with the right level of flexibility.

The second step for me was to organize my thoughts and think about the matter from the business partner's perspective. I knew he was not going to be happy. Were there any mitigating circumstances? Was there a way to leave the door open to working together down the road in a more mutually beneficial endeavor? Was I on solid ground in invoking the exit clause? How could I articulate our position in a dispassionate way and in so doing remove the sting?

The third step? After reviewing my thinking and game-plan with our corporate counsel , I wrote a succinct letter to our business partner's CEO, informing him of our desire and intent to terminate the agreement (required per the contract). I followed up with a phone call asking for a face to face meeting with him.

When I met him in the lobby and walked him into a conference room, I'm not going to lie, I was nervous. He was clearly not happy. But I have to say, at the end of the meeting, we shook hands and he said "I'm not happy with the outcome, but I understand your position and I respect how you've handled this". Whew! Thankfully, we were able to exit out of an unprofitable partnership while still preserving our relationship with the partner (and our reputation in the partner community!).

Next time you're negotiating a new partnership agreement, imagine the conversation you'd want to have with the partner in the event things don't work out and you found yourself in that conference room. Thinking about that conversation should help you plan for a positive exit

Find your "Avis" - They'll Try Harder!

When choosing a partner, the conventional wisdom holds that you should pick the #1 player, the proverbial 800 lb gorilla - the Hertz of the industry. But in my experience, sometimes the guy who is #2 (or even #3 or #4) is often hungrier and therefore more willing to take risks and put more on the table - in short - more like Avis and willing to try harder.

Have you ever tried courting the market leader? How long did it take to get them to return your phone call? Ugh. Since they're #1, they are getting a lot of phone calls. They are probably the media darling and getting lots of press as well, and that combined with years of success sometimes breeds a certain amount of arrogance. I know I always have to "gird my loins" when making those calls, and the pressure is really on to have an exceptionally strong partnering proposal and compelling case. And even then, you might not get their attention.

When there's a #1 player that I really do want to win over, sometimes what's worked better for me is to go after the #2 or #3 player in the market. They are typically much easier to approach and they're hungry (they want to be #1!). They are usually more willing to take risks and try new approaches to gain marketshare over the larger players. So, as a result, they sometimes are more fertile ground for exploratory partnership discussions. Additionally, if you win them over and the two of you can build some success together over a period of time, you will be in a stronger negotiating position once (or if) you approach the #1 player.

Food for thought..

Breaking Up is Hard to Do - Part II

So what should you think about including in the exit clause? You'll probably want to ask yourself a few questions...

• What circumstances should trigger either party invoking the exit clause? What would need to happen for your company to want out?
• What kind of notice should each party be required to give?
• What about Intellectual Property (IP) - what happens to any jointly developed assets?
• How will customer support be handled in the event of a breakup of the alliance? (typically covered in a "wind down" clause).
• Should there be any penalties for termination (or contract breaches)?

Think about the worse case scenario and what you would want to see happen, especially as it relates to any joint customers or prospects. Having this discussion during the initial contract negotiations is sure to save you potential headaches in the event that things don't work out the way everyone planned...

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!

The Alliance Conversation - featuring yours truly

Simoons & Company, an alliance consulting organization based in the Netherlands, recently had me as a featured guest for the latest installment of their podcast series - The Alliance Conversation. You can check out the podcast at the link below!

Alliance Conversation with Donna Peek

Step 8: Create an Alliance Plan

Before you uncork the Champagne bottle, realize that after the alliance agreement has been signed your work has just begun. You now need to work with your new partner to develop an alliance plan that outlines partnership goals/objectives, action plans, rules of engagement, and checkpoints , and you will need to assign an alliance manager to manage the relationship and execute on the plan.

Step 7: Negotiate Partnership Agreement

The negotiation process effectively starts when you make your initial call to the partner prospect and you should be continually establishing your value in all your interactions, up through and including the negotiation process. Before you start drafting contracts, first sit down with your business sponsors and gain agreement on general business terms. Make sure that everyone is on the same page before you engage your respective attorneys.

Step 6: Conduct Due Diligence

In this step both you and the partner prospect will be evaluating the "fit."

Technical fit: This will typically involve technical product walthroughs by your respective product teams. In these sessions, you are both trying to find out if the product is "real and ready".

Marketing fit: What are the products' strengths and weaknesses relative to the market needs? How do we complement each other? What are the areas of potential competitive conflict? How will customers view the value this partnership?

Cultural fit: Don't give this process the short shrift. Talk to the prospect's current partners. Talk to analysts or experts that follow your market. You are trying to get a sense for what this company would be like to do business with.

Go back and look at your Partner Selection Criteria in Step 2. Validate any of the assumptions you may have made about this partner prospect.

Finally, you will need to layout the business case for the partnership. Based on what you find out during the due diligence process, what investments will be required to make the partnership work?

Step 5: Conduct Recruitment Calls

Once you've done your homework, you are now ready for that initial call. Depending on the size of the firm, your target will either be a VP of Business Development, VP of Marketing, or perhaps the company founder or president. Use your friends and family network to identify the right contact and perhaps get an introduction. Send them a copy of your completed partner proposition worksheet and step them through it. You will win points with them simply for being prepared and demonstrating knowledge of their business.

If all goes well, they'll request a follow-up call or visit and the due diligence process will begin.

Step 4: Prepare a Partner Proposition Worksheet

You only get one chance to make a first impression. Don't blow it by indiscriminately calling your targets and "winging it." Approach partner recruitment with the same care and preparation that you would if you were trying to land a marquee customer.

Prepare a "Partner Proposition Worksheet" (http://www.entrepreneurship.org/Resources/Detail/Default.aspx?id=12194) for each partner prospect. Start by thinking through "WIIFT" (what's in it for them). Here you must stand in the target partner's shoes. Why would they want to partner with you? Why do they need to partner with you? What capabilities do you have that they need in order to compete more effectively? Do your homework. Understand the company's goals, objectives, and strategies and what's happening to them in the market. Think through what your combined value proposition would be to customers. Identify a compelling vision for the partnership and articulate the impact of that vision on the marketplace.

Finally, clearly articulate your partnering proposition — what it is that you are proposing that you do together. Be as specific as possible. Perhaps you can even identify a few options.

Step 3: Identify and Prioritize Partner Candidates

From the gaps you identified in your market validation work in Step One, start identifying companies who possess your missing capabilities. Read the trade rags, contact trade associations, search the web, and leverage your investor and advisor networks including your accounting and law firms. Who do the industry analysts say are the important companies in the space you're targeting? Add these companies to your recruitment target list. Using the criteria you identified in Step Two, prioritize your target list to whittle it down to a manageable number of companies to target.

Step 2: Develop Partner Selection Criteria

As with just about anything, if you don't know what you're looking for, how will you know when you've found it? Sit down with your management team and identify the most important criteria for selecting the right partner fit for your business. Areas to consider:

What is the potential for impact? The most important criterion is the potential of an alliance with this target to deliver strategic value to your company. What would be the impact to your competitive position, brand awareness, market acceleration? How quickly could you get traction with this partner in the marketplace?

Are the two companies compatible? This is where your friends and family network and reference calls with existing partners will prove helpful. Is this company's culture and management team compatible with yours, and do you have compatible core competencies?

Are their goals and strategies consistent with yours? The stronger alignment there is between your company goals and the target company's, the greater the likelihood of forging a successful alliance. Identify what the target companies goals and objectives are and determine if they are synergistic with yours.

Is this a good environment for partnering? It's very helpful to know what kind of partnering culture the target organization has. Do they have a good reputation with their partners? Do they demonstrate a commitment to partnering? One of the most effective ways to ferret this out is to talk to one or more of the target company's existing partners and ask them what their experiences have been.

What are the risks with this partnership? Risks of doing? Risks of not doing?

What access can they provide to other potential partners? Companies tend to settle into one or more partner networks. Consider the partners that your target company has. Would any of these companies be desirable targets? Are any of them already on your partner target list?

8 steps to finding the right partner - Step 1

Picking a good alliance partner is a lot like finding the right tennis partner — find the right one you win; pick the wrong one you lose.

Strategic alliances can deliver significant benefits to startups including reducing your time to market, providing to strategic markets and increasing your company valuation to name a few.

But how do you determine who you should partner with? How do you evaluate potential candidates? I recommend an eight-step process for effective alliance partner recruitment.

Step One: Clearly Define and Validate Your Market

The first order of business of any startup.The goal of market validation is to identify your target market — the customers experiencing the most significant pain and who need your solution the most. Through this process you identify the gap between what constitutes a total solution and what minimal functionality you can realistically deliver. That gap represents your partnering roadmap — where you need to partner to deliver the total solution.

This is why market validation is the first order of business for any startup and the first order of business in any strategic alliance strategy. One of the biggest mistakes startups make is trying to build the perfect solution or killer app. You will never have enough capital or resources to ever be able to do this, so focusing on your core competencies is the best approach. Fill the gaps with partners.