Most organizations on’t focus on internal partnering. However, those of size employ alliance managers to facilitate their external strategic alliances. When it is, generally it is the HR department that is charged with the task of improving interdepartmental relationships. And, too frequently, HR does not have the authority to do what needs to be done.
Recently, I was doing work for a manufacturer of considerable size. They desired alliance instruction for both external and internal applications. After some investigation, it became clear to me that there were two elements within the culture of the manufacturer that stood between where they were, and where they wanted to be.
Two Impediments to Successful Alliance Development
The first impediment was deeply ingrained into the organization’s DNA. It was the “Good Old Boy” dynamic. This is quite common in organizations that have been around for some time. It is human nature to want to work with people, with whom one is comfortable—regardless of the fact that there might be someone newer to the organization that is better equipped to perform particular tasks.
Second is the method of compensation for division head executive vice presidents. If the EVP is rewarded solely on the performance of his or her division, there is a strong disincentive to cooperate, much less collaborate, with other divisions or business units.
Good Ol’ Boys Don’t Collaborate
A hugely valuable element of alliances is the differences that partners bring to the table. These differences are generally apparent in the core competencies of an organization, division, or person. It is the differences that create value, not the similarities. However, when we leave decisions to the sole domain of the “Good ‘ol Boys,” they are less concerned with developing total organizational value than they are in working with persons with whom they are comfortable. Desire for comfort first, clouds their judgment in selecting others that can deliver innovative value. The result is organizational lethargy and discontentment in the ranks.
Division Heads that Can’t Partner
Where’s the incentive to build collaborative internal relationships between business units if the sole measurement for success is single unit performance and profitability? Who’s going to give a rat’s behind about the performance of other business units in an organization unless there is some sort of financial consequences? When there is no interrelationship, there is no motivation to collaborate.
What’s a CEO to Do?
In my opinion, the first step is to rearrange the financial motivation of business unit heads. Sure, part of their compensation should be related directly to their division or business unit, and a large part should be tied into the organization’s total performance and profitability. Now there is true motivation for internal partnering and alliance building.
Now, dismantling the “Good Old Boys” network is a bit trickier. While you, the CEO, have a great desire not to micromanage, you none-the-less have to put policies into place to better assure the very best person is put into new positions of authority. Otherwise, you will have a constant turnstile of executives coming and going. If persons that are truly qualified to climb the corporate ladder only see the boss’ buddies getting the promotions, they will not last long. Hence, the brain drain will be alive and well in your organization.
Policies to thwart the “Good Old Boys” include those that help justify promotions. Your organization, written or not, has desirable qualities that are preferred in supervisors, middle managers, division heads and EVPs. But, do you have measurement vehicles that help the truly qualified to rise above the rest? These personnel measurement vehicles “urge” the Good Old Boys to select the correct person for the promotion over just those with whom executives are most comfortable. Comfort or performance, the choice is yours.
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Ultimately in real leadership, regardless of our situation as leader, manager, supervisor, or employee, we are all looking for a return on our investment (ROI). If you invest a few moments reading this article, I guarantee you a return. You will receive at least one idea that you can implement immediately.
Real Leadership Influencers
Like you, I have put in countless hours of windshield time listening to leadership and employee motivation gurus on cassette tape, then CD, and currently MP3. Unlike you perhaps; I personally know many of these influencers. Like you, I have attended numerous conferences, sat in on a myriad of keynotes, seminars, and workshops. Unlike you perhaps; I have also been the speaker at many of these, around the globe, meetings.
I believe there are a number of ageless truths that are applicable to anyone who attempts to successfully lead others. Good ideas are ageless, while continually emerging flavor-of-the-month leadership and management strategies fade without concern or impunity.
Have you ever wondered who influences the influencers? In my 30+ years of serving the world marketplace as an author, consultant, facilitator, keynoter, and seminar leader, there have been many that have left their indelible mark on me. I’ll talk about some of them as we progress. Before that I’d like to share with you some of the ideas that form the foundation of my work.
“Perception; the conversation I have with myself about you, is my reality.”
“Focus on getting things done rather than to obsess on being right.”
“Make your relationship bank deposits before you attempt to take withdrawals.”
At just about every public presentation I give, I make the above points. I believe these to be immutable truths for anyone that leads, manages, or follows.
“Perception; the conversation I have with myself about you, is my reality.”
Have you ever wished you could be a fly on the wall and listen to what your team, boss, or employees say about you? Be honest now—sure you have. Regardless of how you see yourself, it is how others see you determine how they feel about you. This can be a disastrous dynamic for any leader. This dynamic applies to partners, investors, suppliers, customers, and employees. In all situations a leader must know how he or she is perceived. This will frequently be either the deal maker or the deal breaker.
My good friend of over 20 years, Dr. Terry Paulson, is the author of several books on Real Leadership. One of his books, The Optimism Advantage, frequently shares the following idea with his audiences and is an idea for which I’ll always remember him. “If someone calls you a horse’s rear end (ass), ignore them. However, if several people call you a horse’s rear end (ass), perhaps it’s time for you to buy a saddle?” It is good to be honest with yourself.
For years I have used a quotation from Sun Tzu, author of, The Art of War; written about 2,500 years ago. I have found this quotation to be applicable in many situations and for many persons.
“If you know the enemy and you know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
For just about every real leadership or management situation, challenge, or conflict you can simply take out “enemy” and insert the person, group, or situation and the quotation makes perfect sense and is a sure strategy for your success. It’s old, and it just works.
I realize your next thought might be, “Thanks Ed, but how to I get to know my ‘enemy’ or insert here: person, group, or situation?” I have two ideas for you that have continually prove successful for my clients.
Real Leadership Relationship Value Updates
This is something that I synthesized from years of interviewing successful alliance leaders—the idea of extracting from others how they feel about a particular business relationship. This is real leadership. Many large companies go to extraordinary lengths to gain, process, and understand this relationship perception information; you can do it much more simply. Many organizations will do something similar with their customers or suppliers and the term that is generally used is scorecard or report card. You can use this both internally and externally.
For a simple Relationship Value Update there are three necessary elements:
The value you/your company receive from this relationship.
The value you believe I/my company receives from this relationship.
Ideas for relationship improvement.
The method for use is: (a) put these three elements to paper, and the other person or organization to do the same. (b) Complete your update independent of the other. (c) Transmit or mail to the other, as the other also transmits theirs to you. (d) After each has reviewed, then have a face to face meeting to discuss differences and strategies for improvement. (e) Do this quarterly if possible. If you need even more help, you can find a long-form Relationship Value Update on page 72 of my book titled, Developing Strategic Alliances.
Real Leadership Using the 3 on 3
I learned this real leadership idea from Patricia Fripp back in the 1980s and have used it and taught it—and many have reported back their success in using it. To find out what another thinks, simply ask them. The process is as follows:
Have this meeting in a neutral environment.
Ask the person to share with you three things, which they do not care for about the way you (manage them, work for them, sell to them, buy from them, etc.)
Your only comment to each thing they share with you is, “Thank you.” You do not justify or explain yourself. You may ask a question if you do not understand what they are saying or need additional information to better understand. Remember, all you say is, “Thank you.”
After they share the three negative, ask them to share three positive things—things they like about the way you (manage them, work for them, sell to them, buy from them, etc.) Again, all you say is, “Thank you.”
At the end of your meeting tell the person that you’ll get back with them in a week or two, whatever works best, and you will have some ideas on how to use the information that they gave you.
No matter what—have that second meeting in the prescribed passage of time, no longer. Tell them what you have put in place, changed, implemented, etc. Letting the other person know what you have done with their information goes a long way to improve the conversation they have with themselves about you, and your business relationship.
“Focus on getting things done rather than to obsess on being right.”
Would you like to better motivate the people around you? Great; real leadership means giving up the idea that you always have to me right. For years, in just about all my public presentations, I have been conducting a simple exercise. If you are willing, let’s do it:
Understand this, in human conflict, humans operate from one of two emotional places; dug in on their position or trying to understand the other.
Think about a recent argument that you had; at home, at work, wherever.
See the other person in that argument, were they being difficult and unreasonable?
See yourself, were you operating from a place of being right…or from trying to understand the other?
If you said you were being right, I believe you. If you said that you were tiring to understand the other, I have one question. How could you of been trying to understand if you were arguing?
Real Leadership in Generational and Cultural Issues
We are living in an interesting time; an uncertain economy, low unemployment, and huge generational differences among workers. Sounds like a perfect storm. Really, it is a perfect opportunity—an opportunity to move forward by getting off the idea of being right and embracing the idea of understanding the generational and cultural issues of the persons with which you work, lead or follow. If you are a baby boomer, as are many of today’s business leaders, the GenX and the GenY most likely do drive you a bit crazy.
The GenX folks saw their parents get shafted during the “rightsizing” movement of the 90s. It is difficult for them to believe you when you tell them to keep their nose to the grindstone and they will have a bright future with your company. The GenY folks grew up with technology in such a way that it is ingrained into their personality DNA. You cannot BS them, they have the technological capability to effectively “check” whatever you say.
Now throw into the mix, the ever-increasing number of Hispanic immigrants in America and Islamic immigrants worldwide and you are dealing with a huge paradigm shift. The real leadership reality is simple; you do not know people like you think you know people. For the traditional white, black, and Asian Americans dealing with Hispanic employees I highly suggest my good friend, Carlos Conejo’s book titled, Motivating Hispanic Employees. This is the best, bar none, book available today on motivating Hispanic employees.
“Make your relationship bank deposits before you attempt to take withdrawals.”
Our world has givers and takers. Giving and taking needs a balance; to take someone has to give and to give, someone has to receive. While there is really nothing wrong with taking, in a business environment you will build quality relationships faster if you give before you try to take. Real leadership is understanding that giving is a relationship bank deposit and taking is a withdrawal.
My long-time friend, Robert B. Tucker, is the author of several books on innovation. In many of his keynotes and seminars he explains that real leadership is about how to take an idea to the point of implementation or production. He uses the analogy of a conveyer belt carrying your idea but continually on the left and right of the belt are influences trying to knock your idea off the belt. You cannot just place it on the belt and expect it to get where it needs to go. He says that you have to be diligent in protecting your idea to get it to that point of implementation or production. I call this, making your relationship bank deposits. Withdrawals come later—not the other way around.
For years I have used a Ziggy cartoon in my seminars to make the point of relationship bank deposits first. Visualize Ziggy with a dejected look on his face, standing next to the bank teller. She has just handed him back his withdrawal slip with a “REJECT” stamped on it. The caption states, “…Try not to think of it as overdrawn…we prefer to think of it as underdeposited…”
If you want to receive, and who in business doesn’t want a return on their investment, probably the best book available to help you make the smart and most effective “deposits” is Influence: The Psychology of Persuasion by Robert B. Cialdini, Ph.D. In his book he covers: weapons of influence; reciprocation; commitment and consistency; social proof; liking; authority; and scarcity—detailing for you how to use each tool to influence others, or as I would put it, making relationship bank deposits.
Don’t Eat the Marshmallow…Yet! This book written by my friend of many years, Dr. Joachim de Posada, is awesome. The book about the benefit of delayed gratification, what I would also call; relationship bank deposits first. While the book has sold millions of copies internationally, Joachim has also traveled the world giving lectures based on the ideas. The concept of delayed gratification is one that is embraced throughout the world. I highly suggest you too consider delaying the gratification of relationship bank withdrawals until after you make your deposits.
I could write volumes about the people, books, and ideas that have influenced me but what I believe might be important to you are the ideas I gleaned and have influenced me to attempt to influence you about real leadership. Before you jump to the newest flavor-of-the-month leadership strategy, first take stock of what you already know but might not have used lately. Look at what used to work and ask why you no longer use it. New ideas are just fine, yet be mindful of what has proven to be successful in the past. Wishing you the best of success…
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What better time to grind up sacred cows into hamburger than during an economic downturn? Why; because the sacred cow protectors in your organization are experiencing lowered resistance when times are not so good. It is much more difficult for them defend their pet projects, products, and services that have reached their sunset when placed under the tight economic microscope.
Sacred Cow Defenders
Upper level decision makers pay especially close attention to questionable activities in an economic downturn, organizational restructuring, or during a merger. If you have even a faint indication that you might be a sacred cow protector, this is the time to realize that everyone will be attacking your pet sacred cow. Ask yourself if this cow is worth your career or might it be time to let go?
To help you work through the process of either defending or letting go, consider the following:
Why should this cow continue?
Who cares most about this cow?
Why do they protect it?
Which market or stakeholder segments does the cow still serve?
Is this cow still profitable?
Is this cow worth the organizational resources necessary to sustain it?
Has this cow reached its sunset?
Cow Grinders
This is the moment for which you’ve been waiting—to rid your organization of that outdated, resource sucking albatross that has, in your opinion, been dragging everyone down. While this is a good time to bring out the meat grinder, you’d better be smart about your actions. This is not the time to pretend you are a bull in a china shop but rather take a methodical approach to getting that cow into the grinder.
First, you must remain aware of the fact that most sacred cow protectors have their identify and self-worth complexly entwined with the cow that they protect so ferociously—a bit like a momma bear protecting her cub. And you do not want to get between them.
Broaching the Subject
How do you help an iron-clad mind to open up? Perhaps oil and leverage will do the trick?
The oil relates to the idea of slipperiness verses friction. Their iron-clad mind is the friction and you become the oil that helps movement. Your job is to help the protector see that there might be new or better ideas, products and services that might possibly, maybe, perhaps serve the market or stakeholders better than the currently protected cow.
Leverage relates to an outside object or force that allows ease of movement for heavy or stuck objects. Needless to say, the stuck or heavy object is the cow protector. The outside force could be higher authority or replacement product/service. Higher authority needs no explanation. Replacement however is formidable subject. Where or what could the cow protector use as an alternate crutch for channeling their passion? Figure that out and you have both oil and leverage available to help you, to help the protector move toward something better.
Grinding Cows in For Profit Organizations
We’ve always done it, our customers expect it, and so we should continue to do it. This is an area that can be overcome by numbers, metrics or measurements. It is difficult for a person or department to defend something that can be proven to no longer be performing.
The “not invented here” attitude can be a challenge when offering alternatives to the cow you want to grind. Leading the cow protectors to their own discovery of a replacement generally works well. The price you, the cow grinder, must be willing to pay is to relinquish an ego boost and the credit for being the cow grinder.
Sacred cow profitability always decreases with commoditization. For most things there is a season. Even sacred cows that are only approaching their sunset must be examined closely. The challenge is in letting too many old cows run the pasture. If in your organization there are a number of cows that are nearing their end of usefulness, all your organizations resources are being allotted to refreshing and keeping alive old cows rather than allowing innovation and discovery of new and profitable, non-commodity products and services to take their place. You can swim with the sharks in highly competitive regions or head for the open waters of innovation and creativity.
Long-term equity is bestowed upon those that have participated through volunteerism for years. These folks also enjoy chronological credibility. Going up against this cronyism is wrought with landmines, especially for the younger, innovative, and excited members. The most critical challenge that faces non-profits today is honoring members with this long-term equity while simultaneously defending the emergence of youthful exuberance. Can they both co-exist—I believe so.
Changing member needs and desires compounds the above conundrum. This is an area where paid non-profit staff and the volunteer leadership must work toward mutually beneficial programs, services and long-term strategic plans to gradually turn the page to a new era. The need for this phenomenon generally occurs every decade or two. As an example, many organizations are now discovering that the sacred cow golf tournament that has always taken place before the convention can no longer sustain itself financially. The old timers defend it with all the oomph and gusto they can muster but the newer functionaries in the industry could really care less. Perhaps the tournament’s sunset has arrived?
Non-profits must be keenly aware of the current and emerging competition from non-traditional sectors. There might be products or services your organization has provided to its members since the dawning of time. And, there might now be for-profit companies that provide the same, or better, products or services faster, cheaper, and offering more choice than your non-profit could ever achieve. Might it be time to grind that cow?
So what’s a reasonable person to do? If you are a cow protector, be certain it is worth protecting. If you are a cow grinder, be sure that cow’s sunset has arrived. Grinding cows simply for pleasure or self-adulation is not an acceptable reason to flick the switch and start the grinder. The magic for your organization is for the leaders to have the wisdom in understanding and recognizing the difference.
The key to safeguarding your organization’s future…is to research, embrace, and maximize…your member ROI.
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Trust is defined as confidence, reliance or resting of the mind on the integrity, veracity, justice, friendship, or other sound principle of another person or thing. It’s also the glue that binds an organization together. Just think what you could accomplish with your spouse, business partner, alliance partner, supplier, customer or employee if you absolutely trusted one another.
In the mid-1970s, when I worked in Yosemite National Park, I took up rock climbing. This is a sport in which one quickly builds trust with their climbing buddy. In the hands of my buddy resided my lifeline, a rope that came from around his waist, threaded through a carabineer that was attached to the rock face and tied at the other end to me. While climbing, when I slipped off a rock face and started to plunge, it was my climbing buddy that locked the safety rope tight around his waist, keeping me alive. He determined if I went crashing several hundred or thousand feet onto the granite below or if I were to just dangle in the air a few feet from where I fell. In outrageously successful alliance relationships, you must be able to trust your partner with your business lifeline.
In any Partnering alliance, trust is necessary to move from inertia to action. Trust is that wonderful, mystical and cherished virtue hoped for and shared among practitioners of the Partnering Paradigm. In trust, you’re continually putting yourself at risk. While most would prefer to drink from an emptied wine rather than hemlock bottle, it is the process of taking risks that is necessary to build outrageously successful relationships. At times you are certain to be disappointed, but hopefully these disappointments will be few, compared to the availability of beneficial experiences.
Trust is fragile and not to be mistreated. Jamie Clarke and Alan Hobson are adventurers. On their third attempt (1998), they conquered the summit of Mt. Everest. Prior that trip, they authored a book, The Power of Passion: Achieve Your Own Everests, about their earlier expeditions. A relationship-devastating situation occurred around fundamental expedition leadership and goal decisions that were overlooked before embarking on their 1994 odyssey. Each was dug in, and Jamie made a decision to fill a leadership void that Alan was unwilling to fill. About this Alan later wrote, “the most important element in any relationship—trust. Once trust is lost in any relationship, it is like a mirror struck by a stone. The glass shatters. Although all the tiny pieces can be glued back into position, the mirror always shows the cracks. They run deep and numerous.”
Trust building is a journey rather than a destination. Foster the following behaviors in yourself and look for them in your potential partner(s).
Twenty Trust Building Behaviors
Tell the truth.
Deliver on your promises and expectations of others.
Walk your talk and act with credibility.
Exhibit authenticity and sincerity.
Be a positive roll model.
Welcome responsibility.
Avoid offering excuses.
Present an ethical image.
No Bull!
Avoid gossiping.
Use duct tape on your mouth when necessary.
Be open; inform ahead if you cannot meet deadlines.
Help others to look good.
Treat everybody with respect and dignity.
Be consistent in how you treat others.
Recognize and reinforce performance on others.
Communicate clearly, say what you mean and mean what you say.
Break down barriers by giving everybody a voice.
Be respectful of time, yours and others’.
Follow up regularly and offer helpful recommendations through relationship value updates.
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“Almost all of our relationships begin and most of them continue as forms of mutual exploitation, a mental or physical barter, to be terminated when one or both parties run out of goods.” -W.H. Auden
Reasons and Benefits of Developing Strategic Alliances
The reasons for developing strategic alliances become apparent when you understand the benefits. This applies to businesses and organizations of all sizes. Your reason for developing an alliance could be for research, production, marketing, distribution, or management. Your increased capability for success through alliance relationships will encourage your continued embracing of the practice. The same holds true, regardless of whether you enter strategic alliances as an individual or organization. Many of the benefits create high value for different segments of the distribution chain rather than all the segments.
I’m not going to specifically tell you which benefits from developing strategic alliances relate to manufacturers, wholesale distributors, retailers and service organizations. The reason is that I do not want you to limit yourself. As I regularly share in my seminars, innovation can be creating a new wheel or adapting another’s idea to your situation. What’s in it for you? Maybe everything listed below or maybe only a few benefits. How much benefit you receive will be a function of your self-imposed limits, or hopefully a lack them.
In developing strategic alliances, you are only limited to the quality of your alliance relationships and your imagination—be limitless! There are seven general areas in which you can profit from building alliances. They are as follows:
Products
Access
Operations
Technology
Strategic Growth
Organization
Finance
Your core strengths may lend you to develop alliances in only a few areas, and that is just fine. Or, you may desire to develop alliances in many areas over time. Work hard to develop Outrageously Successful Relationships (OSRs) in all your alliances. Following, you will discover what’s in it for you, if you develop the right alliance, with the right people. You will also discover quite a number of strategic alliance examples.
Developing Strategic Alliances for Technological Sophistication
An exchange of technology to compliment your core strengths shores up your core weakness and improves production capabilities to better serve customers. An example of this type of alliance is the alliance of Kinko’s Service Corp. of Ventura (now FedEx copy centers) and Xerox Engineering Systems to establish a nationwide network for faxing large-format documents. This service is especially valuable to architects, contractors and advertising agencies. Kinko’s gets a revenue boost and Xerox gets additional placement and unit sales.
Technical hotlines and on-site technical support are regularly available from suppliers with whom you’ve developed alliances.
To receive a technological contribution or possibly a technological edge in your industry like the alliance between IBM and Apple to develop a new computer operating system that allows both hardware formats to communicate, or like Nynex Corp. and Philips Electronics who joined to develop screen telephones for residential use.
Developing Strategic Alliances for Training
Learning curve commitment. Cost savings are passed along as experience is gained in producing a new product, and discounts are available on start-up products to encourage early sales.
Better sales and technical training for your employees is an important benefit in partnering with your suppliers. More manufacturers and distributors are developing training programs for dealers. Guggenheim Dental, a dental supply distributor inHawthorne , CA is now regularly offering training programs for their top customers. Recently, at a seminar I delivered for the National Nutritional Foods Association, I suggested to the retailers that they only buy their nutritional supplements from suppliers that offer training videos. This is an added benefit in the seller/buyer relationship.
Developing Strategic Alliances to Increase Market Share
Co-branding such as snack manufacturers who are now mixing two nationally known names and logos on a single product. Examples of this are Betty Crockers’ Soda-Licious, soda pop fruit snacks, made with 7UP and 7UP Cherry. Also, is the popular milk chocolate-covered Pretzel Flipz by Nestlé featuring Rold Gold pretzels.
Access to new markets both domestic and international. Copeland Corporation joined with the largest compressor manufacturer inIndia , Kirloskar, to bring air conditioning to a growing middle class.
You will find that partnering can provide the benefit of positioning for future needs not yet known to you or your industry. An example, a lead-user firm is one whose present needs will reflect its segment’s needs in future months or years. Through partnering, one company can assist another in leapfrogging current industry leaders. Cooperating with newer firms more willing to pursue a riskier development strategy to gain market shares does this. This strategy can aid companies, large and small, in more rapidly and efficiently reaching their collective goals.
Additional business to justify operating a production facility. In developing strategic alliances with competitors, you might do the production for both. This is similar to retailers that have a store brand developed by the recognized national brand manufacturer.
Opportunity to develop a private labeling or branding identity. American Dental Cooperative in Nashville has been successful in this area as has Power Heavy Duty in the heavy-duty truck repair industry.
Sales lead and help in procuring new business. Brian Potts, a VP at 3M recently made this offer to his strategic building service contractor customers at their CEO retreat in Mexico . He detailed how other 3M divisions are most likely are selling the customers that the contractors seek and how they could take advantage of those already established relationships.
Opportunity to expand business with new or related product innovations and service offerings. Later in the book I’ll tell you about how Helen Chavez at La Tapatia Tortilleria did this.
Preferred supplier status as Steelcase in Grand Rapids , MI , awards to suppliers that have proven their performance abilities.
Reduce direct competition as the Sun/IBM alliance has attempted in creating the Java operating system to keep Microsoft at bay.
To gain market share, Lexus and Coach, the New York-headquartered manufacturer of fine leather products teamed up in an exclusive partnership to produce the Limited Lexus ES 300 Coach Edition.
Geographic expansion is what happened to Ronald Fink’s West Palm Beach , FL company, RGF Environmental Group, following a trip to Asia with other local CEOs and Ray Reddish, a senior management analyst at Florida ’s commerce department. Within 18 months of his trip he had hired 14 new employees just to handle his Pacific Rim business. Some states aggressively partner with local manufacturers to expand exporting there by increasing state revenue.
Create marketing synergism to the consumer through cross promotion like Blockbuster and Dominos did. Blockbuster held a promotion that required a customer to rent three movies and in return receive a $10 savings book for Dominos Pizza. Both partners received increased traffic through the joint promotion. This can easily be done at the local level between, as an example, the drug store and the dry cleaners.
Barriers to market entry by a new player. This protects the current players as with GTE and Pacific Bell in Los Angeles . They partnered to serve UCLA in a method that closed an opportunity to a new provider attempting to enter their market.
Marketing assistance to support order volume for products as when a small company develops an alliance with a large company.
Developing Strategic Alliances for Improved Customer Service
Improved attitude toward customer service. This starts from top management on down the chain of command. Many manufacturers are partnering with their dealers and retailers. When the dealer makes a long-term buying commitment to the manufacturer, the manufacturer helps the dealer in customer service tools and training.
Improved customer loyalty was developed by United Airlines through their alliance with Starbucks. United now serves Starbucks gourmet coffee to their passengers at 30, 000 feet. And they do it in cups bearing the logos of both companies.
Improved product offering becomes possible through alliance buying cooperatives. Additional product lines become available to the members because of the cooperative’s buying strength.
Barnett Gershen, CEO of Associated Building Services in Houston builds alliances with his customers through his quarterly review method. Once a quarter he sits down with his customers and asks for a grade or score as to the quality of service his company delivered. He then looks for tactics and strategies to improve his service.
Through alliance relationships, many businesses have found strategies to provide better and quicker customer service while keeping their costs manageable. Look for companies that have a similar customer base to yours and enter into a discussion about how to work together.
The computer and electronics industries have profited greatly from alliance relationships. Innovation has become commonplace for firms that have chosen to work together. The University of Toronto ’s Innovations Foundation signed an agreement with Northway Explorations Ltd. and Polyphalt, a private Ontario , Canada company, to deliver polymer-modified asphalt materials technology for longer lasting roads to the commercial market.
To differentiate oneself from the competition. Steelcase’s alliance with Peerless Lighting, located in Berkeley , California , offers state-of-the-art office lighting. The relationship has brought Steelcase an additional $15 to $35 million in annual furniture sales. Also, they received additional dollars from the light fixture billings.
Developing Strategic Alliances for Cost Savings
In manufacturing elements of your product or entire product that could be built in plants (owned by others or in joint venture) with up to date technology, cost savings can be great. Sharing resources, or outsourcing, rather than owning and operating a manufacturing plant, will allow a synergistic partnering agreement allows you concentrate on your core strengths. This is the idea behind the Donnelly Corporation and their venture with Applied Films Laboratory, Inc. for manufacturing and supplying the world market in display coated glass for liquid crystal displays (LCDs).
In distribution, access to orders that can be economically and efficiently produced also that generates reasonable profit through alliance relationships.
Shared locations such as Bank of America and many other banks across the country are that are locating branch offices in suburban supermarkets. They are saving resources while simplifying the lives of their consumers by reducing the amount of their consumers— daily running around.
Wal-Mart has a partnering alliance with Ronald McDonald, in their recently completed Wal-Mart store in Oxnard , California . Proudly displayed, are signs on the store’s entrance doors announcing, McDonald’s inside and a life-size plastic Ronald, who sits inside on a bench to greet customers. Stores within stores have become commonplace through alliance relationships.
Developing Strategic Alliances for Financial Stability
Partnering in a poor economy or recession makes good sense especially, when sales are flat and prices are deflating. Continental Airlines accessed optical industry consumers by partnering with Swan Optical, Inc., an industry supplier, to increase business through an air travel discount certificate program for purchasers of optical frames supplied by Swan.
Access to capital is a primary reason for smaller organizations developing alliances with larger ones. An example on a huge scale was when Chrysler went to the U.S. Government seeking loan guarantees. On a smaller scale, Bruce Bendoff, CEO of Craftsman Custom Fabricators, Inc., Schiller Park, IL, a 275-employee sheet-metal bending company learned how to grow through trusting a corporate behemoth—Motorola.
Achieving economies of scale is possible in alliance relationships when partners share facilities, equipment and employees.
Prompt payment per agreed terms is a standard in customer/supplier alliance relationships.
More potential profit is generally the outcropping of shared resources.
Alliance relationships allow partners to share the financial risks associated with developing new products and entering into new markets.
Developing Strategic Alliances for Buying Parity with Giants
Working together, American Dental Cooperative members, dental distributors are successfully purchasing goods in parity with the two giants in their industry.
Additional discounts and services for in depth marketing and technical expertise. Win/win pricing becomes possible in long-term buyer/seller alliance relationships.
Developing Strategic Alliances for Supply Chain Improvements
Just-in-time inventory purchasing and supplying as exemplified by the famous relationship between Wal-Mart and Procter & Gamble. Home Depot and Dell Computers have also built powerful alliances with their suppliers for cost saving just-in-time inventory.
Additional supply chain improvement areas available through strategic alliance relationships:
Management of supply channel conflict
On-time product delivery
Prompt response to complaints
Greater consistency in parts, supplies, semi-assembled, and completed products
Detailed agreement as to handling of product problems and customer complaints
Improved supply chain productivity
Specific (quarterly, yearly, etc.) volume commitments
Key contacts that are dedicated to your account
Improved supplier loyalty
Prompt response to quote requests and price problems
Confidentiality of shared business strategy
Developing Strategic Alliances for Productivity Increases
Productivity increases are also achieved through partnering alliances. In a three-year study of Brown & Root/Braun’s alliance with Union Carbide Corp., Danbury , Conn. , B&R/B concluded from 18 projects that productivity on partnering jobs was about 16% to 17% better than previous levels.
The Arizona and California Departments of Transportation have so successfully discovered that the partnering approach benefits many industries’ experience, especially, the construction industry, by eliminating the tangle of claims, litigation, and adversarial relationships through a concept of cooperation throughout the life of a project. Identifying potential relationship hazards early was another benefit. Bench marking (companies sharing information on what they do best), especially in the aerospace industry, has shown increased productivity and decreased costs across the board.
Putting some pleasure and fun back into business. Jim Eisenhart, president of Ventura Consulting Group, Inc., Ventura , California, says that the big benefit of partnering is it puts pleasure and fun back into the construction business. He says people are now open to partnering because they recognize the limits of old adversarial paradigms.
Some additional productivity increases that are available through strategic alliance relationships:
Market intelligence relating to new products, processes, and competitive technologies and markets.
Market forecasts for large orders to allow intelligent production schedules
Improved product quality
Improved working relationships
Improved communications through structure to promote operating efficiencies
Improvement of products/services
Sharing of information
Improved culture and business philosophy
Recognition, award and/or reward system for meeting and/or exceeding established goals
Reduced Paperwork
Ultimately the benefit to developing strategic alliances with others is for solutions through mutually beneficial efforts. Together you can solve your problems, those of your customers’ suppliers’ and employees’. Be sure you know what it is that you are want to get out of each of your alliance efforts! It’s rare that a company can be all things to all people. Working in cooperation with others is the solution. Adopting the paradigm of strategic alliances will get you much closer to your goals than without these valuable relationships. Finally, and decisively important, when a company embraces the philosophy of strategic alliances, the result will be improvement in quality, productivity and profitability. And yes, this is done through cooperation and collaboration.
“Togetherness, for me, means teamwork. It makes us reflect how completely dependent we are upon one another in our social and commercial life. The more diversified our labors and interests have become in the modern world, the more surely need to integrate our efforts to justify our individual selves and our civilization.” -Walt Disney
https://rigsbee.com/wp-content/uploads/2016/12/rigsbee_research_logo-300x112.jpg00Edrigsbeehttps://rigsbee.com/wp-content/uploads/2016/12/rigsbee_research_logo-300x112.jpgEdrigsbee2016-09-15 19:10:352023-01-29 20:58:10Developing Strategic Alliances–What’s In It for Me? (2513 words)
There are basically three levels of buyer/seller relationships. The first and most common relationship level is Adversarial. This is the traditional win-relinquish relationship where you, the buyer, squeeze your supplier for the very last bit of a discount. You are determined to get the last drop! You are not focused on the cost of doing business with one another, just what you believe to be the lowest cost. This is a transactional only relationship.
Next is the Barometric relationship. In a Barometric buyer/seller relationship you are always checking the atmospheric pressure. This relationship is still being monitored and measured closely. Generally you have not yet developed a high level of trust with one another. It could be a single source relationship, but with a short length contract. While this relationship can grow and flourish, it can also sour quickly. Few people thrive with others constantly peaking over their shoulder. In this type of relationship, each side must still engage in CYA (cover your assets).
The highest-level buyer/seller relationship is Complementary. This level is where true integral Partnering takes place. At this level the visions and values of each overlap with one another. There is a true alignment of values in place. Each understands the needs of their alliance partner and works hard to help their partner get what they need while likewise serving their own organization.
Value-based purchasing,
Sole-source relationships,
Vendor Managed Inventorying (VMI),
Just-in-time (JIT) shipments are made successful through trust and
Electronic Data Interchange (EDI) at this relationship level.
Complementary Contractor/Distributor Relationship
An example of Complementary buyer/seller Partnering is the relationship Universal Systems developed with Graybar through Graybar’s local branch. Universal is an electrical contracting company and Graybar is a distributor of electrical supplies.
In 1996, Gene Dennis, President at Universal Systems realized his company had a problem. His supply inventory was out of control. Through the assistance of Parviz (Perry) Daneshgari, Dennis set out to make a change. Daneshgari is president at MCA, (an implementation company in Michigan), an adjunct professor of automotive engineering science at the University of Michigan-Dearborn and Oakland University’s School of Management and the author of The Chase, (1998, Black Forest Press, San Diego, CA) a business novel about process implementation. Dennis decided he wanted to be a construction company without owning and handling any material. This was a lofty goal as traditionally the stocking of electrical supplies was a cornerstone of the business.
He needed a supply partner. His choices were a local supplier and Graybar, a national supplier with a branch in his community. He leaned toward the local supplier until he showed up at their place of business unannounced. “We were held hostage,” said Dennis (Electrical Contractor Magazine, July 1998). The problem was that the president was not in and the employees didn’t know what to do so they put Dennis and his team in a conference room. In contract, when he showed up at Graybar unannounced and the branch manager was out, all the employees knew about Universal looking for a supply partner. The staff at Graybar showed him and his team around at once. Upon closer inspection, Dennis learned that Graybar’s on-time deliveries had been 29 percent higher than their competitor. Graybar was selected for the sole-source arrangement.
Graybar agreed to take ownership of Universal’s existing in-site inventory. An on-site inventory was maintained and orders were placed via Graybar’s EDI system and invoices were generated from Graybar’s St Louis headquarters monthly. Universal realized approximately $60,000 the first year through eliminating delivery trucks, inventorying and other personnel savings. Graybar offered additional benefits as the relationship progressed. Before the partnership, Universal had to pay extra for shipping their frequent emergency orders. In the partnership Graybar maintains a standard list of commodity items at the local branch and if they don’t have it, Graybar pays the shipping.
What’s in it for Graybar? “Instead of wondering how to get the order, now we sit in on job meetings, try to find ways we can help, and look for cost and process savings,” says Jim Estis, a local Graybar account representative (Electrical Contractor Magazine, July 1998). Chatting with Dennis late October 1999, he said, “Partnership is covering the backside of each other—each looks out for one another.”
The following are Daneshgari’s steps to form a vendor partnership and criteria for selection, which Universal Systems used. Dennis and Daneshgari outlined these when they presented their success story at the 97th Annual National Electrical Contractors Convention in Las Vegas, Nevada, October 1998.
Steps to form a partnership:
Develop a scope of work.
Send out requests for proposal and interview potential vendors.
Review proposals.
Create a short list.
Make unannounced tour of vendors’ facilities.
Evaluate finalists.
Selection.
Negotiate an agreement with your selected vendor.
Criteria for Vendor Selection:
Purchase existing stock at retail value.
Establish a branch at Universal Systems.
Have an inventory management system.
Work toward continuous improvement process.
Use EDI for billing.
Have a delivery process.
Use periodic evaluation process.
Contract termination clause.
Product warranty and liability.
Maintain property damage insurance.
Aggressive pricing strategy.
Maintain stocking inventory.
Maintain workers’ comprehensive insurance.
Offer single point of contact.
(Used with permission of Parviz (Perry) Daneshgari)
Fuji Photo Film U.S.A, Industrial Imaging Group has the right idea. They are true partners with their distributors. Fuji Photo Film is a manufacturer that supplies the graphic arts industry, supplies for printers. Among the major suppliers to the industry, Fuji is by far the most advanced in building quality relationships with their dealers. Much of the success is attributed to Stan Freimuth, president at Fuji.
The Fuji factor is a model that more manufacturers should embrace and more purchasers should demand of their suppliers. If you were a distributor, wouldn’t you rather have a supplier relationship that could grow and improve over time? This is only possible with the right kind of supplier. The key elements to Fuji’s success are as follows:
Limited number of dealers offering their products to their market. While approached by virtually every non-Fuji dealer (distributor) in 1997 due to industry manufacturer consolidation and pressured to add their preferred dealers by national accounts, Freimuth had to make some hard decisions about his dealer network. He responded, “The net result of all this has been minimal changes to our dealer network. As most of you know, we have pretty tough standards that must be met before we will sign on a dealer. We only want strong, well-run companies who are willing to do business the way that we want to do it, and be complementary to our existing dealers.” (Access Fujifilm Graphic Systems Division newsletter, Fall 1997)
Manufacturing products of the highest quality with zero defects as the norm.
Builds tight relationships with their limited dealer network. In his letter to distributors, Freimuth states, “Last month the Graphic Systems Division hosted the Partnership 98 Conference in Greenville/Greenwood, SC. As many of you already know, this is a meeting where key dealer personnel (whether they be field sales reps, branch managers, electronic imaging reps, etc.) meet and interact with members of the GSD [Graphic Systems Division] management staff. It’s a chance for all of us to listen to each others concerns, get to know each other better and tour our state-of-the-art manufacturing facility in Greenwood.
We have been doing Partnership meetings in one form or another since 1992 and I am still impressed each time by the interaction between our two groups. At that first meeting in 1992 I remember the overriding sense among the attendees that we were all helping to shape something that was completely different in our industry. The concept of a manufacturer/dealer meeting with a free and open exchange of ideas (let alone mutual respect for each other) was unheard of at the time.” (Access Fujifilm Graphic Systems Division newsletter, Spring 1998)
Seeks constructive feedback from their dealers and acts on the ideas shared.
Consistency of leadership; Freimuth has been the president since 1983 when Fuji opened shop in the United States. Other companies in their industry have had numerous changes in leadership during that same time period.
Accessibility; several dealers attested to the fact that they could pick up the telephone and easily reach Freimuth.
Trust; when I asked about building quality relationships with his dealers (Spring 1999), Freimuth said, “It doesn’t come easy, it’s hard work.”
Regardless of the scope of your relationships, work with your suppliers to build Outrageously Successful Relationships. The Complementary relationship level may take longer to develop than you may hope, but the close relationship delivers value. This foundation will allow you to PartnerShift throughout your organization and benefit from your effort.
I recently delivered a “What Suppliers Say About Buyers” partnering presentation to the National Association of Chemical Distributors at their annual meeting. A couple months before the meeting, I visited the convention chair, Pat Marantette, at his Southern California business, E.T. Horn Company, to learn more about the industry. One of the things he told me was that he was more concerned with the relationships with his suppliers than the relationships with his customers. He went on to explain to me that without his suppliers, he was out of business.
In thinking back on the visit, asking how important are suppliers to your business success is an important question. The following is excerpted from my latest book, PartnerShift–How To Profit from the Partnering Trend. I believe you’ll be asking yourself questions in reference to the relationships you enjoy, or do not enjoy, with your suppliers.
At the Building Service Contractors Association International’s 1997 Chief Executive Officer Seminar in Los Cabos, Mexico, one of the suppliers to the industry was assigned to present a presentation based on what the suppliers in general said they did not like about the contractors, their customers, actions. While Rob Kohlhagen, senior market development manager at SC Johnson Professional delivered an exceptional presentation, I’m not sure he ever forgave me for assigning him the task. Admitting the comments came from only one industry, I believe they are universal, as they have applied to most of the industries that I have counseled or studied.
Power manifests through knowledge. It is important to know what your suppliers have to say about you. Completing Relationship Value Updates are important, as they will help you to avoid some of the following problems and open a conduit for communication. Remember, you can learn from another industry’s problems. Below are listed the three general areas of complaint from the contractors’ suppliers. Also there are some of the specific comments offered about the contractors. Their comments point out universal issues that suppliers have with their buyers. Most will apply to your industry. If you explore issues you might have with your own customers, there is a good chance your suppliers could have similar issues with you.
Fear of commitment
“They are not willing to single source but still want our total bundle of value-added resources at no additional cost.”
“They focus on reducing price rather than reducing cost.”
“They like to shop around regularly to satisfy curiosity . . . they are afraid that we will abuse the relationship.”
“They want direct prices but local service.”
Operations level support
“We get commitment from top management but the program gets derailed at the operations level.”
“Top management is reluctant to mandate changes to operations . . . they try to build consensus but it doesn’t happen.”
“Operations people have their ‘personal favorites’, old recipes they swear by that they will do anything
to hold onto (including sabotaging the partnership initiative).”
“The partnership is conceived at the executive level but the lower level departments are never convinced that it is in their best interests too.”
Communication breakdown
“Everyone is so busy we only communicate when there is a need for fire fighting . . . hence the relationship takes on a negative tone over time.”
“We never discuss mutual opportunities . . . it’s always, “How do we fix what isn’t working?’”
“We talked about the importance of communicating at all levels: executive, operations, purchasing, training, risk management and quality assurance but there is no structure established to make it happen . . . so it doesn’t.”
“The chemical supplier cannot partner independently with the building service contractor. There is an interdependence between the chemical and equipment and supply manufacturers but there is no communication link established between us.”
Interdependence is an idea that carries much power. From the Harvard Business Review, July/August 1994, “Active collaboration takes place when companies develop mechanisms, structures, processes, and skills for bridging organizational and interpersonal differences and achieving real value from the partnership. Multiple ties at multiple levels ensure communication, coordination, and control . . . more communication than anyone anticipated is necessary.”
Thomas Gale, editor at Modern Distribution Management, has his opinion about the integrity of some customers. From the November 10, 1994 issue, “And while many customers are talking about integrated supply partnerships, there are (and will always be) customers that are ultimately seeking price reductions, playing one distributor off another, without a willingness to explore how a true partnership can save money for the customer while providing a fair profit for the distributor.”
Developing a conduit for communication is not difficult but frequently overlooked in many industries. The Internet makes this even easier. Some industry associations are providing this service through members’ only sections on their web site. More trade and professional associations are helping to create this type of multi-function participant forum, but not enough. This area is a tremendous opportunity for associations to add a very high-level of value for their members. Continue the dialogue with all stakeholders in your business.
https://rigsbee.com/wp-content/uploads/2016/12/rigsbee_research_logo-300x112.jpg00Edrigsbeehttps://rigsbee.com/wp-content/uploads/2016/12/rigsbee_research_logo-300x112.jpgEdrigsbee2016-09-15 18:43:322020-03-24 01:03:47What Suppliers Say About Buyers (850 words)
“What’s in it for me?” This is the old receiving value tape that continually runs in your mind when another person suggests you accept their proposition—both in business and your personal life. While their offer could be any one of an array of possibilities, your tape still plays. Allowing this freewheeling mind tape to control you is weak positioning on your part. You are abdicating your control. Why give others the power to determine the value you need is a particular situation?
The key to receiving usable value from others is to achieve clarity on what creates value for you and/or your enterprise. A good method to determine this is to take inventory of your core or perceived weaknesses. Then decide what products, supplies, tactics, capabilities and services can help you to shore up your limitations. These can be buy/sell transactions, value-added situations and/or alliance relationships.
Armed with clarity in understanding what value is to you, you can filter every offered proposition through your needs window. Look at the total value package being offered. This includes the cost of acquisition, cost of ownership or usage and the value-added services. If services are added or bundled into a package that do not create value for you, do not be fooled into believing the value-added is free. If you are offered something you do not need, do not accept, regardless of how good the deal seems.
Areas in which your enterprise could receive value:
Strategic alliances with competitors
Supplier alliances
Customer alliances
Keep the power to determine what you consider to be value. Rather than say, “What’s in it for me?” a better approach is to know what you want or need and ask for it up front. Asking for what you want on the outset can lead to getting what you want. Getting what you want is much more powerful and valuable than taking what others offer.
Your Possibilities, My Possibilities, Our Possibilities
As you run and hurry from one activity to the other, putting out fires at every turn—have you ever stopped for a moment to consider the possibilities? What possibilities you ask? Is this the life you thought you’d be living? Is this the business you thought you’d be running? Are you working so hard that life is passing you by? Is there another, more effective work paradigm?
Have you recently asked yourself a question something like, “Why am I putting myself through this, really?” If you have, you are doubtlessly being more honest that those who say they have not. The good news is that you are not alone. At the seminars I give, scores of business leaders have privately shared their similar feelings with me.
What’s the answer? I don’t believe there is only one answer but several possibilities from which each person may select. What does this mean to you? It means that on any given day, there are forks in the road and you decide on your preferred road. Unfortunately, most people select what appears to be the easiest road. Then, hidden around the bend, is an incredible mountain to climb one that often appears overwhelming and hopeless. Too often you feel smothered from all the stuff that either you have loaded on your plate or allowed others to heap onto it. Sometimes you just want to get off the carousel of business, or life, and crawl under a rock. Don’t you?
Lonely at the Top
While the view is magnificent, it is also very lonely at the top. Success is sweeter when you have someone with which to share it. Warren Bennis, in his book, Leaders-The Strategies for Taking Charge identified through a number of interviews an important trait among most successful leaders. It was the ability to stay in their marriage-long term. This trait is so crucial because it demonstrates a leader’s ability to work with others, see and honor another person’s point of view and be flexible when things don’t turn out as intended—which is almost all the time.
In my books on partnering and strategic alliances, I continually talk about synergistic possibilities. This is the basic idea of taking one plus one and getting three or more rather than the expected two. In my own life, I catch myself at times simply doing something myself, rather than teaching another how to do the task, thinking it is easier and quicker. In the long run though, that belief eventually proves that I’m taking the wrong path. Working with, and teaching others, takes understanding and patience—unfortunately, too few leaders exhibit these virtues.
As I’m sure you’ve guessed by now, my recommended paradigm or solution to your challenges is partnering—in one form or another. To shrink your daily load, you will want to look at both external and internal partnering alliance possibilities. First, look at the inside possibilities. Can you build stronger alliances with your employees? If you can achieve this, the result will be their accelerated sense of emotional ownership in the success of your business. What a great partnering benefit!
Alliance Possibilities
External alliance relationships include those with your competitors, suppliers, customers and other organizations that can assist in the strengthening of your core weakness areas. This will allow you the time to develop your more profitable core strength areas. Just think about the possibilities available to you if you have strong relationships with the external groups mentioned. Better buying possibilities with your suppliers, increased loyalty among your customer and collaborative possibilities with competitors for marketing, research, delivery and production.
Contrary to what you might have perceived, partnering is not for everybody. Some people just cannot let go. They have a desperate need for control. They cannot see the opportunities available to them. If you are one of those people, you are sentenced to going it alone with an overflowing plate of activities that are better suited for others. You will scrape and struggle, jumping from one crisis to the other. You’ll continually complain about the behavior of others and get more and more frustrated until you end up in the hospital with one some life threatening condition.
For you that are willing to do the front-end work and build alliance relationships, the world is your oyster. Everywhere you look, you will see partnering possibilities. Your challenge is to select your partners well and to first focus on what matters to you and your business the most. Slowly, you will find your plate less loaded with things that others could easily do. You will find time to explore business and personal opportunities rather than spending your precious time just fighting fires. Now is the time to select your path.
Most organizations on’t focus on internal partnering. However, those of size employ alliance managers to facilitate their external strategic alliances. When it is, generally it is the HR department that is charged with the task of improving interdepartmental relationships. And, too frequently, HR does not have the authority to do what needs to be done.
