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'.