What makes a good strategic alliance? In fact, let’s not settle for good, what makes a great strategic alliance?
Like marriage, strategic alliances require commitment
Strategic alliances involve a deeply important relational aspect and parallels are often drawn with marriage. In this context, a successful strategic alliance is said to go through several similar stages [1]:
- Courtship – this is where you meet your partner, find some attraction to each other and over time you develop an element of compatibility.
- Engagement – after the courtship stage you draw up plans for a long term ‘alliance’ and set some dates in the diary for making this relationship more formal.
- Housekeeping – you decide on the rules that you will use for your ‘alliance’.
- Mechanics – obviously there is a need for mechanisms to be agreed in order to bridge any differences between you as the ‘alliance’ develops and grows.
- Accommodation – both you and your partner might have to give a little in order for the alliance to smoothly progress and develop.
However, the marriage metaphor is probably a little too simplistic when applied to organisations. We all know that organisations are far more complex and contain many different internal and external relationships. Yet, one thing for sure is, like a marriage or partnership it takes lots of learning to get good at both developing and delivering a great strategic alliance.
Learning and agreeing how you will work together is central to success
So learning to collaborate is an essential part of developing and delivering strategic alliances. Doing so may require learning to take place in, and over a number of integrated areas [1]:
- Strategic integration – two organisations may well have their own detailed strategies. However, a strategic alliance will require its own strategy which may well have to integrate elements of their overall strategies.
- Tactical integration – as with the above, tactics for the strategic alliance may well have to integrate with previous tactics, as well as design new ones for the alliance.
- Operational integration – All too often strategic alliances fail because the parties forget that they may have completely different operational systems and expectations. Not to mention that their operational goals and objectives may differ significantly. Reaching understanding on operational integration specific to the strategic alliance is therefore essential to success.
- Interpersonal integration – deciding who takes responsibility for the day-to-day management of the different elements of the strategic alliance provides clarity so that the management of the staff working on the alliance can progress without any major confusion. Sometimes this may not be problematic, and on other occasions this may require staff to be seconded into a project. This may therefore result in staff involvement in more than one role/organisation; a point that highlights the importance of the final need for integration;
- Cultural integration – those forming a strategic alliance have to understand that they may be doing so with organisations that possess very different cultures. An awareness of this and an ability to integrate or create new cultures around the alliance will greatly increase its ability to succeed.
Most of the points of integration outlined above require a high degree of openness and trust to ensure the sharing of information, thoughts, feelings and learnings between those organisations collaborating. Also, as we have discussed in previous blogs, learning how to successfully delegate becomes an important factor as the organisation and its strategic alliances grow and gain in complexity.
What role do you need and want to play in developing and delivering an alliance?
Integrated systems, processes, knowledge and learning, what we might call the ‘analytical’ tools, are important for a successful strategic alliance, but so are ‘relational’ tools.
Relationships are of central importance to strategic alliances. For many smaller firms and their entrepreneurs the development of a strategic alliance is likely to involve a leadership transition delivering element of a ‘functional/operational specialist’ with very good knowledge of the product and service as well as a ‘strategic specialist’; a whole new skill to be mastered.
Networks may become increasingly important to support your development, and that of your organisation; but what types of networks are best? Being able to distinguish between networks that concentrate on ‘strategic’, ‘operational’, and ‘personal’ support is a good start [2] as you may need to draw on all of these resources, at different times. (to read more about how ambitious business owners undergo some of these developments we would suggest you connect with a series of blogs that emerged from a Network session on ‘the foundations of success in working together’)
What are the key obstacles to building an effective strategic alliance?
During our latest BIG network session investigating strategic alliances we asked the participants to reflect on a strategic alliance (past, present and future) and discuss the key issues that it raised. Some common themes began to emerge.
- ‘strategic’ alliances: there was recognition amongst our community of business owners of approaching alliances from the point of view that “we just need to make it work”. They spoke of often failing to act strategically, and concluded that many of their alliances are probably not strategic.
- every alliance is different: emphasis and importance was placed on the desire for different things from different alliance partners. So a common, repeatable approach to alliances was not always possible – every alliance is likely to be different.
- know when the alliance is delivering, and when it is not: being able to assess progress, through metrics, was found to be a difficult issue to deal with in practice. “when do you stop”? “what level of resource do you invest”? These were all questions that the participants were struggling with.
- openness is important to building relationships: the importance of opening yourself up and sharing information on the ‘why’ and ‘how’ was raised. Yet, just as important, participants mentioned that it was always a difficult balancing act to decided just how much information to share and how open to be?
What can we do to maximize our chances of building successful strategic alliances?
So we know that strategy is important, but as Hughes and Weiss [3] note, if you want your strategic alliance to be successful:
- focus as much on the relational points of ‘how do we work together’ and make this strategic.
- develop metrics pegged to the goals of, and the progress of, the strategic alliance.
- leverage differences in the organisation, rather than see them as negatives to be overcome.
- go beyond formal organisational and management structures and encourage collaborative behaviours throughout the strategic alliance.
- spend as much time on the management of internal stakeholders as external stakeholders
Make a difference (MAD) challenge:
We’ve got into a habit of challenging you, the reader, to reflect on the contents of our blogs for your own context. We truly believe that learning and development comes through practice and experimentation.
Having read this blog, we would challenge you to take some time to look at the strategic alliance you both have, and also desire. Using the principles above, analyse these strategic alliances, and ask:
- How will you work together?
- How will you track performance and progress?
- How will you make the most of difference?
- What structures are required to manage the alliance?
- Who will take responsibility for which parts?
And then think about:
- Which of the questions were easy and difficult to answer?
- Why was this?
- What role do your organisational values play in building relationships with others?
References
[1] Kanter R M, (1994). Collaborative Advantage: The art of alliances. Harvard Business Review. July-August.
[2] Iberra H & Hunter M, (2007). How leaders create and use networks. Harvard Business Review. January.
[3] Hughes J & Weiss J, (2007). Simple rules for making alliances work. Harvard Business Review. November.
About us
The BIG Network provides a space for ambitious owner-managers to explore, challenge and resolve issues that are central to the sustainable success of their organisations. The Network is led by its members and is prefaced on openness and honesty, mutual respect and confidentiality.
For further information on the BIG Network contact Dr Simon Raby on 01227 824740 or S.O.Raby@kent.ac.uk