Purpose of This Article - To help alliance executives to design, develop and deploy effective and efficient alliance programs.
Reading Time - Six Minutes
This article identifies:
Ten questions to ask when considering an alliance program.
Ten lessons learned, and
Ten resources you can use to be more successful
Ten Questions to Ask
What's the difference between an Alliance Program and a Partner Program? - Typically a partner program contains multiple types of partnerships with multiple levels of 'business intimacy' between the contributing companies. An alliance program however, focuses on those collaborative relationships which are typically large, complex, important, multi country and involve a high level of active collaboration or commitment from both / all parties. It's important to know the difference but its equally important to know how will the twin programs integrate?
How does our alliance strategy support our general business strategy? - In our research over the last 20 years we have seen multiple instances in which the alliance programs did not adequately support the stated business strategy. If the connection is not 'tight' and obvious then people will come to question the relevance of the alliance program and the contribution it makes to the business.
What level of business do we want to achieve through indirect means? - The accepted formula for business growth is: Build, Buy, Ally. The build route includes direct selling, the buy route is obviously mergers and acquisitions. The ally route is concerned with strategic alliances. Obviously the more business that a company is looking to achieve through alliances the greater the range, scope and complexity of the alliance program concerned.
What is our alliance program blueprint? - There is a difference between Ready, Aim , Fire and Ready, Fire, Aim! In other words you should design your program first before building it. It sounds like the very essence of common sense but you would be surprised by the number of companies that chase opportunities rather than allow their alliance strategy to suggest opportunity targets. If you don't have a design how will you know if and when you have completed building?
How does our alliance performance match that of our close competitors? - It's not always easy to know the key performance metrics of your close competitors; and the simple reason for that is that many if not most companies don't know the key metrics of their own alliance programs! You should be clear in measuring such things as, cost value ratio, alliance ROI, revenue contribution, cost of alliance sales, partner commitment, and market impact. In short you should build an alliance balanced scorecard to measure the effectiveness of your alliance programs. The scorecard should have a balanced set of five different dimensions these are: Commercial, Technical, Strategic, Cultural and Operational aspects. Once built you can use such a scorecard to measure your performance against your close competitors.
What is our degree of corporate alliance capability? - Alliances are not the responsibility of the alliance function or department alone. Success requires that all company employees understand the basics of collaboration and seek to use collaboration techniques both internally and externally. Consequently, companies need to measure the degree of collaboration as a corporate capability and should seek to increase organisational capability as a matter of strategic urgency.
How will the program be managed? - The question of alliance program governance is a multi faceted one. It includes such sub questions as: Who will be the program manager? Will there be an alliance steering group to whom the manager reports? What degree of authority will the steering group have to fashion alliance strategy? How will each alliance be governed individually and What types of alliances should we have and how many in each category?
How mature do we need to be as an organisation before an alliance program becomes a necessity? - Many organisations feel that they are too 'immature' to consider developing a 'fit for purpose' alliance program. Instead they pursue an opportunistic strategy of focusing on individual alliances in isolation of each other. The result is wasted effort, higher costs and lack of governance and control over alliance generally. Oh! and of course the individual performance of the alliances are lower than would be the case if they were integrated into a coherent program. ABP believes it is never too soon to be thinking about the key aspects of an alliance program and how it will operate. That is not to say of course that the program you start with will not develop, grow and mature over time. Of course it will, but everybody has to start somewhere.
Are there any existing alliance program designs that we can use as a template because they are similar in nature to our needs? - The answer of course is yes! The old adage that 'Success Leaves Clues' has never been more true than it is in this area. One only has to know where to look for them and the development of a program from an existing and previously successful structure will massively reduce the amount of time necessary to build the program you want. Much better to take an existing example and 'tweak' it by 20% rather than build one from scratch.
What are the critical success factors in building 'fit for purpose' alliance programs? - ABP has spent 20 years collecting data on the subject of business to business alliances. We have benchmarked over 800 alliances and alliance programs in that time. Further than that we have collated all that data into an accessible database that allows our clients to build their own alliance programs using previously proven best practices. The results of using this 'open framework' (which we call Alliance Excellence) show that alliance programs created in such a way are far more effective and efficient than ones which have been built using proprietary knowledge.
Ten Lessons Learned:
Alliance best practices exist and a number of them have proved so effective in delivering business to business collaboration results that they can be viewed as 'Common Success Factors' (CSFs).
Alliances that contain some of these CSFs perform better than those that don't.
The more CSFs in an alliance the more successful (commercially) it is.
The better the CSFs perform the more value is created.
Choosing the right CSFs at the right time is what ABP defines as alliance effectiveness (doing the right things).
Improving the performance of the CSFs is what ABP defines as alliance efficiency (doing the right things right).
An alliance best practice program is a series of actions designed to achieve the twin goals of alliance effectiveness and efficiency in the most cost effective way.
Alliance best practice programs typically have three main stages: 1. Design, 2. Develop and 3. Deploy.
Alliance Best Practice Ltd (the company) has researched and examined multiple alliance best practice programs during the last 20 years and has developed an open and non proprietary version called VST (Vision, Skills and Trust).
An increasing number of organisations are now integrating aspects of VST into their own alliance and partnering programs.
Ten Tools You Can Use?
ABP has provided a wide range of resources to help alliance executives to answer the ten key questions for themselves. All the following tools are available from the ABP website at www.alliancebestpractice.com
A list of the previously identified 52 best practices in strategic alliances.
A report identifying all 52 best practices and explaining why they are important and how they impact alliance performance.
An alliance benchmark questionnaire that executives can use to assess the current level of alliance best practice usage in individual alliances.
An alliance readiness assessment tool that can be used to assess the current level of alliance maturity in organisations.
An Alliance Excellence template blueprint for executives to use when developing their own alliance best practice programs.
An alliance capability assessment tool which enables organisations to measure the current level of partnering capability.
An alliance maturity model which organisations use to judge the current maturity level of individual alliances.
A partner ecosystem maturity model which allows alliance and partnership managers of all levels to judge current levels of maturity in their partner ecosystem and also to understand what they can do to move to the next level.
An alliance business case builder, for those individuals and organisations that want to convince senior executive teams of the commercial value of building such programs.
How to implement an alliance best practice program. A briefing sheet for anyone interested in building and implementing their own alliance best practice program.