Challenges with alliances

Alliance Pitfalls that Challenge Your Strategic Alliance Success (3032 Words)

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Ed Rigsbee, top speaker on Strategic Alliance Success

Alliance Pitfalls

Caveat Pars, Partners Beware!

Alliance pitfalls, as with any collaborative activity, have its unexpected challenges. Actually, this is probably more so than in traditional adversary relationships. In adversary relationships you must always watch your back. In relationships based on trust or what is perceived as trust, one can be lulled into a false sense of security. While you need to protect yourself from these dangerous situations, you do not want to create them by exhibiting the wrong attitude.

To keep your alliances healthy and free from pitfalls, conflict should be dealt with immediately. This is your best chance for moving forward in any relationship. But, improperly challenged, conflict can be the death sentence to an alliance.

Alliance pitfalls emanate from five core areas:

  1. Values
  2. Goals
  3. Facts
  4. Procedures
  5. Misinformation

Conflict doesn’t have to be a roadblock to a successful alliance if you and your partnering alliance members are willing to resolve the conflict at the core level, in a timely manner. In fact, the resolved conflict can lead to a stronger relationship through improved communication. Unfortunately, conflict that is left unresolved will lead to fatal flaws that will erode the relationship.

Some of the more common areas of conflict in alliance relationships are accessibility, culture clashes, hidden agendas, management tenure, poor communications and unrealistic expectations. Many advocates and consultants for alliances believe that the alliance mortality rate is around 50 percent.

If you wait to build partnering relationships until all the potential pitfalls are unearthed, your industry will pass you by. Others, who you might have considered as possible members for strategic alliances, might be aligned with your competition. Be realistic though, as with a spouse, partnering alliance members don’t change with time. They do not become, who and what, you want them to be. But rather, evolve to whom and what they desire. If you suspect core problems, you probably are accurate in your assessment and the chances for a successful alliance is greatly diminished. Partnering, like marriage, will not change people. What it does do, is to remove the facades, and exposes the good and bad.

Trust in others and the belief that alliance Partnering starts at the top are crucial elements to your success. These two topics are frequent causes for failed Partnering agreements when they’re not followed. Also, in alliance agreements, be cautious of things you can’t see now but may experience later. Little things like the small print in a detailed alliance contract. Don’t let your enthusiasm cloud your judgment.

Just because you’re working with a company of integrity, it doesn’t mean they will look out for you. Even in a Partnering relationship, you are still accountable for your own success and well-being. Make sure your bottom-line expectations take into account that servicing the partnering agreement is going to require extra resources. Be certain of everybody’s alliance partnering goals. Here are examples of potential Partnering pitfalls. Be aware of them before you enter an agreement. Your chances for success will increase.

Alliance Pitfalls at Timex:

Unanticipated alliance pitfalls for example, caused Timex forfeited $60 million in lost revenue and learned about the challenges of Partnering overseas. You could say it took a licking and kept on ticking. After 18 months of frustration, Timex wanted out of the partnership it created in India. It all started a decade ago when it was illegal to export watches into India. Timex wanted into the market and proceeded to select a local watchmaker as its partner. Unfortunately Timex should have spent more time on due diligence and asked around a bit more about the partner to be. Timex assumed it could dominate the relationship and have the Indian manufacturer carry out its manufacturing needs on cue.

Was Timex surprised? The head of Timex’s joint venture in India, Robert Werner was quoted in a Los Angeles Times article as stating, “Until its Indian joint venture, Timex had been accustomed to owning companies outright, and its problems in India were a learning experience for many at Timex.” He said It took Timex six months of negotiations and an undisclosed settlement before the company could rid itself of the partner.

Today, Timex is happily partnered with Indian watchmaker Titan Industries, which is a subsidiary of Tata Group, one of the largest corporations in India. The Timex-Tata joint venture went to market in late 1992 and in its first year sold 400,000 watches. Two years later annual sales leaped to 1.9 million watches.

Alliance Pitfalls at Donnelly Corporation:

Founded in 1905, Donnelly Corporation started as a glass mirror manufacturer and supplier for the turn-of-the-century (1900) furniture industry. Today, through joint ventures and strategic alliances, they have operations in 12 countries. With net sales in 1998 of over $763 million (13.7% increase over 1997), they are successfully Partnering around the globe.

Dwane Baumgardner, chairman & CEO at Donnelly feels strongly about what it takes for Partnering to work. When we visited at their Holland, Michigan headquarters he said to me about Unanticipated alliance pitfalls, “If you have management that is not operating on the basic believe, that it has to start at the top, those beliefs have to be held and permeated throughout the organization. For example, with employees (approximately 5,500 in 1999), if you have to believe your people can be trusted, that they want to work together in a supportive and cooperative fashion. The same must be true with another company; you have to believe when you form a strategic alliance that they will operate with the same motive that you operate. If you don’t have those beliefs, I think you’re going to run into problems.”

Values Based Alliance Pitfalls

In looking at the alliance pitfalls issue of values, frequently partners of an alliance will have core values that are conflicting. This is especially a problem with issues like trust and integrity. Corporate culture clashes; employee turf protection, and resistance of certain employees to new ideas can wreak havoc on your efforts to maintain a prosperous alliance.

When one of the alliances partners does not completely embrace the principles of Partnering, big challenges occur. This can include top-level executives or even supervisory and functional employees in departments, divisions or regions within a Partnering organization. As an example, DuPont believes that if a contractor is looking just to maximize his profits, on just one job, then Partnering with that contractor is not for DuPont because they know there will be problems in the relationship.

Because the dynamics of alliance relationships are constantly changing, inflexibility of partners can kill an alliance quickly. Each member must be willing to give a little, especially in times of change for a Partnering agreement to work. Just as devastating is a partner making a Partnering commitment, and having a hidden agenda that would be destructive to the alliance. Not quite as bad is a partner deciding they don’t want to follow through, or one that does not have the capability to fulfill their commitment.

Supplier relationships can become challenging, especially when business is great. Suppliers can make the relationship mistake of conveniently forgetting about the loyalty of smaller long-term customers, and snubbing them for the larger orders. This is short-term profitability and long-term disaster. When those large order companies go out of business or are consolidated, the supplier could be left without any customers.

Complacency of either partner is an insidious relationship-killer. Continuously ask your alliance partner questions in a way that encourages them to relate performance problems and shortcomings. Ask, “What haven’t we done lately?” And ask, “What is it you really need from us?”

Dependency on your alliance partner can put your business at a similar risk. If you become the weak link in the alliance and your alliance relationship no longer delivers value to your partner, more than not, they will discontinue the alliance.

If you or your alliance partner is not relationship oriented little problems can easily escalate. Then anger comes and the blaming others for your current situation. The not invented here, mentality often exhibited by senior management is a result of low relationship tolerance. Also the lack of commitment to the alliance or innovations developed by alliance partners can easily slay your relationship.

There is the situation where you might lose control of a technology or best practice to an alliance partner who later becomes a competitor. Staples and Office Depot were going to merge but it did not work out. A problem for Office Depot was that Staples learned of an Office Depot best practice during the merger talks. Office Depot was delivering COD to small businesses in the northeast and getting most of the business. After the failed merger, Stapled duplicated Office Depot’s practice and took away Office Depot’s competitive advantage in the area.

Goals Based Alliance Pitfalls

In situations where a customer is the driving force behind a Partnering arrangement, an alliance pitfall is that you can be left holding the bag. Be sure to examine each Partnering proposal in the context of your company’s overall business strategy. This challenge was recently apparent to IBM and it discontinued its alliance with Somerset PowerPC and Motorola, in producing microprocessors for Apple.

When sitting down at the Partnering table a partner might find the relationship seat uncomfortable. It could be that your partner has a different level of emotional and physical comfort, or sometimes it is simply a change in corporate strategy or a restructuring which leads away from a partner’s product and/or technology causing the partners distress. It is important that you know the short and long-term goals of your alliance partner.

When you try to partner with a potential or current customer and have them renege on the promise of purchasing from you, the disloyalty challenges that can occur can be wasteful. Be cautious, as there is also the possibility of your partner being unethical and attempting to capture your technology or trade secrets. This is a difficult area from which to protect yourself, but if you do your due diligence, your chances for success increase.

Facts Based Alliance Pitfalls

Relinquishing some control with the expectation of greater shared returns can be a difficult waiting game and disastrous alliance pitfalls if not managed correctly. Additionally, your resources can get pulled in too many directions based on collective alliance decisions. Be certain you can spare the resources you devote to your alliance. Otherwise you may put the success of your entire operation in harm’s way.

The lack of third-party cooperation can be a true relationship problem. All the primary members of a Partnering agreement will have to give a little for your agreement to work. Worse yet is your partner receiving unfavorable or harmful media coverage. This is because you are usually pulled into the picture and believed guilty by association. Real or perceived, image and reputation are critical to any company’s success.

Be careful in global alliances. Contracts with an overseas market, for instance, often take a long time to finalize. By the time you get going, in the technology industries, your competition may have already gotten started. If you are already behind and you have developed an alliance with a partner organization that is weak and bleeding, they will only bring you down faster and harder.

Procedures Based Alliance Pitfalls

Another alliance pitfall is to underestimate how much time, energy and resources will be necessary to commit to your new alliance. Then not having access to your alliance partner’s employees is an important issue. The closer the planned relationship between the two companies, the greater the importance of the linkages between them. You might find yourself in a situation of a small company Partnering with a large company. A challenge in working together will be that of the representatives, usually top executives of the small can make decisions on the spot. Unfortunately, the employees of the giant must take a proposal up the chain of command. This sometimes slows progress to a snail’s pace.

Culture clash is a frequent Partnering challenge. The failed alliance of IBM and Apple is a typical example. The heralded fall 1991 announcement promising cooperation eventually spawned Taligent Technology and Kaleida Labs. Unfortunately the two could not coexist so the alliances eventually gave way to a quiet winter 1995-1996 breakup.

Putting all your alliance relationship eggs in the basket of only one executive or manager is not a smart idea. The management tenure of your alliance contact can signal success or failure. If you have a one-person relationship, what happens if they get promoted out of the area, fired or even die? You are out of luck. Build relationships with several key contacts in the organization of your alliance partner.

What if your partner’s internal or external rewards structure interferes with the success of the alliance? This could apply to employees, customers or suppliers. If you are a supply partner and your partner has traditional rewards for their buyers, the buyers will only be interested in concessions and cost reductions. On the flip side, sellers usually offer rewards for sales performance and this also can be challenging in making a relationship work.

There certainly is a difficulty in communicating across various time zones. Solving problems quickly when your Partnering factory is located halfway around the world is hard enough, but when also speak a different language, that just makes it more of a formidable task.

Inertia, not having the emotional ownership in getting started is a true pitfall. Add this to chaos, seeing too many alliance choices and ways to create an alliance, some never do get started. The two sides of the sword are, if you wait for everything to be perfect, they never will. And if you do not put enough energy into an intelligent choice, your alliance could be doomed from its inception.

Misinformation Based Alliance Pitfalls

You could easily be guilty of underestimating the complexity of coordinating and integrating corporate resources, and overestimating your partner’s abilities to achieve the end result. The alliance pitfall of self-doubt and not believing you have the skills and tools to create an alliance can crop up here.

Eventually, alliance success depends on management’s abilities, skills, commitment, aspirations and passions in assembling the pieces of the puzzle. When unequal dependence in a relationship occurs, the partner with the least dependence could be less likely to compromise and put energy into the relationship.

Meanings assigned to words by different cultures can cause serious alliance success pitfalls. In one culture quick delivery could mean one day and in another it could mean one month. This opens the can of worms often referred to as unrealistic expectations of a partner’s capabilities. The areas commonly include technology, research, production skills, marketing might, and financial backing.

We also have the unexpected inefficiencies or poor management practices of a partner that can be the demise of a well-intended alliance plan. Also at risk is the area of developing an alliance with multiple partners, who later become rivals to one another. This puts a serious strain on the integrity of the remaining alliance.

Now that you’ve had a view of Partnering from the downside, don’t let these hurdles stop you. Be clear on what alliance partnering is not. It is not instant gratification, nor a quick fix.  It is not a flavor of the month management strategy. Strategic alliances are separate entities that have come together to solve their individual problems in a way that serves the whole mutually. It is sharing core competencies that overlap and create synergies. The struggle is a necessary part of any relationship that is valuable and lasting.

To reduce the effects of Partnering pitfalls, David Elliott, senior vice president and chief administrative officer at Technicolor in Hollywood, CA shared his thoughts with me. “If a partner fails to meet their responsibilities, a clear agenda is necessary that both sides are operating from. When the agendas are different or conflicted—that’s a problem.” He went on to say, “We don’t have partnering horror stories because we include an exit strategy, before going into the relationship.”

Elliott’s advice for others entering into partnering relationships is to do your homework, know the agenda of all partners in the relationship and measure against it. If after doing your homework you’re still not completely sold on partnering with a company, start small. Begin your alliance by partnering with another for a simple or small promotion and get your feet wet. If you do stumble, then having the ability to regenerate after a fall is crucial, especially if you or a partner simply make a mistake.

Having knowledge of the alliance unknown should keep you from becoming immobilized and waiting for opportunities that could easily pass you by. Sure, there are some risks, but to lessen the effects, do your homework, know the agenda of all partners in the relationship and measure against it. If after doing your homework you’re still not completely sold on an alliance relationship with a company, start small. Begin your alliance by Partnering with another for a simple or small promotion and get your feet wet.

If you do stumble, having the ability to regenerate after a fall is crucial, especially if you or a partner simply makes a mistake. Be careful when events and circumstances are not what you hoped or planned for.  You might go to a place of apathy.  If you remain in a toxic mind-set, you’ll wait and wait for things to get better before you move into action. The trouble is that things rarely get better until you propel yourself into a state of activity.

To be successful at partnering you must commit to functioning at a higher level. A level that will allow you to stretch your comfort zone and then commit to moving into action. Without these two issues in concert, you might not get started or restart when necessary.

Once you get back in the action, you can go after small wins to reestablish your confidence to take risks in pursuit of an even larger prize. The key to overcoming alliance pitfalls is to not wait for all to be perfect before you commence.  It’s okay to subscribe to the idea of: ready, shoot, aim. Do though; take the time to adjust your aim after you begin. Be like a commercial airline pilot and course correct regularly. Keep your future focus on the partnering journey. Keep it improving. Be decisive, and show the qualities of a leader in your industry. You will be rewarded.

Cooperation

And You Expected Synergy? (374 words)

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Ed Rigsbee, top speaker on CollaborationSeems like every time you pick up The Wall Street Journal, your own industry’s publications or your daily newspaper—there you see it. You read about another merger or acquisition. Why are they doing this you question? The usual answer is synergy. If you are looking at a possible merger or acquisition, decide early on your synergistic expectations.

Be clear on what you seek, resulting from your merger or acquisition. What end-results do you believe are possible? How do you intend to create the axiomatic equation of one plus one equals three? To help you improve your chances of successfully blending organizations, I have listed are several areas that you should explore.

  • Economies of scale for cost savings in procurement, management, manufacturing and distribution.
  • Do you want to encourage entrepreneurship, initiative and risk taking on a local, regional, national or global level? Do you want collaboration among the units? Or do you want a traditionally hierarchical organization?
  • How do you intend to create and deliver innovative value-added services?
  • Will you take a broad marketing approach or focus on markets requiring distinctive competencies?
  • How will you achieve continuous improvement?
  • Will your new size and strength encourage you to pursue additional strategic acquisitions?
  • What about staff considerations? How do you keep the employees that possess the intellectual knowledge and skills critical to success? Employees from both companies will be concerned about job security. Additional considerations will be to help surviving employees understand why they were selected to remain. Some of these surviving employees will have guilt issues to deal with. They could have issues with why certain employees were not kept on that they thought were doing a good job. Communication is important here as executive search headhunters firms could be contacting your remaining employees. If they do not have an understanding of their value, they could be seduced into a new position elsewhere; leaving the merged company empty handed in some areas.
  • What incentives and rewards will be put into place as motivation for retained employees?
  • Even the name of your new merged organization is important. This will identify your marketplace position and inform all of your new identify. Create your new early in the process.
PartnerShift-How to Profit from the Partnering Trend

PartnerShift—How to Profit from the Partnering Trend (1471 words)

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Ed Rigsbee, top speaker on partneringWe need banking, but do we need banks? We need groceries but do we need supermarkets? We need services and consumables but do we need to receive these things in traditional ways? Do we need your organization?

The answer is: Only if your business truly creates value in the process of helping others to get the stuff they need, want and desire. At my seminars, when I ask business owners what their product is—unfortunately, the answer is usually WRONG! Wal-Mart has done an excellent job of disintermediating those that Sam Walton believed did not add enough value to the chain. What about your customers and suppliers? What do they say about you?

My research indicates that for you to cost effectively achieve world-class levels of production, distribution and services, you must adapt Total Organizational Partnering. I realize partnering is a term that has been grossly abused over the last decade, none-the-less; it is what you must achieve.

Partnering is an idea that is loosely used to describe anything from teamwork to alliances to contractual partnerships. Partnering, as I define it, is the process of two or more entities coming together for the purpose of creating synergistic solutions to their mutual challenges. Again, I recommend you adopt Total Organizational Partnering as your business strategy.

Partnering is not a flavor-of-the-month management strategy to be hastily adopted and then as quickly abandoned, rather a long-term strategy for success. Partnering is not instant gratification! To adopt Total Organizational Partnering, you’ll need to understand the Partnering Pentad Model. A pentad is simply the name given to a group of five. The Partnering Pentad represents the five key areas of your business. In each of the five areas you must develop outrageously successful relationship (alliance) strategies. It is the quality of these relationships that hold all the areas together. Once in place, you’ll have Total Organizational Partnering.

  1. Strategic External Alliances is the area of your business where you develop alliances with outside entities for activities where you have core competencies that complement one another. For many, these include buying/marketing groups and targeted specialty alliances for software/technology development. By sharing core strengths, tow or more can create an environment of synergy yielding all involved more than the some total of their collective contributions. Land mines to watch out for are core values of alliance members being too different; circles of interest overlap being too little, and continual management change of one or more alliance partners.
  2. Supplier Alliances is the area that many organizations are most concerned—no supplier, certainly no customer. Just-in-time delivery (JIT) and electronic data interchange (EDI) ordering have become commonplace today. Eventually, you will have these relationships both up and down the supply chain—providing you are still in business. Frequently, what I here from suppliers about their customers is, “They’re talking marriage but acting one night stand.” Not long ago I delivered an opening keynote presentation to an association of industrial distributors. Unfortunately, upon visiting the web site of one of that industry’s major suppliers, I noticed that very few of their distributors had hyperlinks to the distributors’ own web sites. I call that incredibly stupid—missed opportunity. To successfully compete in the world of B2B e-commerce, you must adopt alliances. The biggest land mine in this area is to neglect reviewing the quality of the relationship and exploring areas for improvement. What is it that you do that your suppliers cannot? Which of your activities actually adds value to your suppliers’ efforts and desire to get their goods to the end user?
  3. Customer Alliances weigh heavy in determining your total volume and profitability. In this area, you must be externally driven. Your customers will consider you an important vendor as long as they feel they’re receiving good value. Value-added is a term that much is being written about. Integrator, Applied Distributors, is now documenting their value-added services with their customers. Agriculture and food processing conglomerate, Cargill has moved to value-based purchasing. They measure the total value proposition of their suppliers rather than just buy on price alone. You must be value driven rather than product driven to understand what your customers want. What they perceive as value is their reality. The important land mine to watch out for is short-term thinking on your part when making customer relationship decisions.
  4. Employee Alliances to many, is a non-issue. Meaning, they don’t. What motivated the WWII generation is different from what motivates baby boomers and is different from what motivates the GenXers. Just because something motivates you, it doesn’t necessarily mean it will motivate those of a different generation than yours. If you want your employees to have an ownership in your business—even though they don’t have a legal ownership and to hold sacred the business as you do—you must empower your employees.  Empowering means giving them the authority and encouraging them to accept the responsibility to do the job. Then acknowledge their successes and failures in an environment of safety—one where you encourage and reward risk taking. The major land mine to watch out for is the Ego Trap, yours of course. To give power, you must be a powerful person, one who possesses personal power rather than power simply acquired from your position. Permission cards and employee recognition certificates are a great start. More on these ideas are available at https://rigsbee.com/business-growth-through-strategic-alliances/ 
  5. Owners or CEOs as the Optimal Partner is the final and in many ways the most important leg of the pentad star. Not the most important from the perspective that all revolves around you, but that of having a culture of true partnering. True partnering start at the top. You must lead the charge and show by your actions, more than your words, that Total Organizational Partnering is truly your preferred and accepted business strategy. The critical land mine here is when you arrogantly believe that you are at the center of the pentad and that all the alliances should revolve around you. The coveted center of the pentad star is reserved for all the relationships that bind the separate legs.

Globalization is the primary driver behind Partnering Alliances. Large multinational companies are building alliance relationships to gobble up market shares in every conceivable industry and location. Large families of businesses are competing against one another. As such, smaller organizations feel the pressure and the Partnering trend becomes monkeys see, monkeys do. A secondary driver is based on the fact that organizations generally adopt a new paradigm based on the recommendations of others. Change evolves through one’s witnessing the success of others. Organizations and leaders with strong reputations within an industry or economy have immense influence over their contemporaries.

While I have witnessed many companies profit handsomely from alliance relationships, I have also seen them scramble to get on the partnering bandwagon with little regard for the quality of partners they select. Admirable businesses like Timex have discovered that the wrong partner can cost millions of dollars. Creating successful Partnering Alliances that will pay off in terms of increased market share, know-how or earnings diversification is no easy chore.

Today, consolidations and rollups are of great concern to many. In an issue of Industrial Distribution, Bill Wade stated, “The basic premise couldn’t be any simpler. Take a highly fragmented industry—like distribution—facing technological change, customer upheaval or chronic financing difficulties. Add in a few well-healed foreign firms or, worse, a couple of previously unknown competitors from outside the business. Since the industry leaders are probably family-run businesses with limited succession strategies, the next step to protect profit and continue growth is clear: consolidate.”

A consolidation or rollup, as it’s frequently called, generally occurs when an organization or individual with deep pockets sets out to buy several small companies in a fragmented industry and rein them in under a new or collective pennant. Does this sound familiar? In 1997 the National Association of Wholesale-Distributors reported that 42 of the 54 industries they studied had been significantly affected by consolidation. Frequently a professional management and buying strength create economies of scale that allows the consolidator to pluck the low hanging fruit in the industry. They will invest significantly in systems to eliminate the duplication of effort and inefficiencies that exist within the industry being consolidated.

If your organization is sick and bleeding, this plan will not deliver the quick results you most likely desire. As I stated, this is not a quick fix. If you lead a healthy organization, your best strategy to remain profitable and independent is Total Organizational Partnering. To protect against being disintermediated, stable and incremental improvement in all five pentad areas will deliver the most successful long-term results. Total Organizational Partnering will assist you in becoming a world-class distributor—one that adds value to the chain and understands logistics.

Solving Alliance Conflict

Conflict Management & Resolution for Your Partnering Success (679 words)

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Ed Rigsbee, top speaker on Solving Alliance ConflictIn times of conflict you can take one of two positions. First the position is that of having your heels dug in and believing you are RIGHT. The second position is where you care enough to understand what is motivating the other person’s behavior. My recommendation, as you might have guessed, is the second.

Just to make a point, I’d like you to think back to the last argument you had with your spouse, parent, child, a friend or in a business situation. Do you see yourself in the argument? Now, I ask you which position did you take?“ The first,” you say? I thought so. If you had taken the position of trying to understand the other’s position, there most likely would not have been an argument. We humans are not perfect. As such, we sometimes we fall into our stuff. At these times we are not the best people we could be. But, it is the person who recognizes that they are in their stuff and makes a new behavior decision that makes a good partner.

You might be thinking, “Thanks for the info, Ed, but why do I have to always be the person who makes the change, the person who makes it works? Why can’t it be the other guy once in a while?” My answer to you is simply that you are the one who figured it out first. Get out of your stuff and, as Nike says, JUST DO IT®.Listed below are some additional tactics to help you resolve conflict.

  • Evaluate your, and your partner’s, conflict management styles. Understanding each other is a great start.
  • Identify and plan strategies to deal with non-productive behaviors before they crop up.
  • Give positive feedback as often as possible so the relationship does not take on a negative tone through only fire fighting interactions.
  • Confront problem situations at once rather than waiting for the situation to escalate.
  • Invite comments from all stakeholders early in every project, especially your alliance partners.
  • Consider using humor and maybe even humility in certain situations.
  • Encourage dissent at a time and place that serves all involved.
  • Review the value of the alliance relationship. Determine how much your circles of interest overlap. Ask if winning this battle will get you closer to an OSR, or further away from it.
  • When you hear something you don’t like, repeat it back in an informational way. See if the message you received was the same as it was intended. Misunderstanding is the root of much conflict.
  • Know your buttons and don’t allow them to be pushed. You have control in this area.
  • Completely listen to what the other guy has to say before you open your mouth. Remember the adage, Listen twice before speaking once. That’s why God gave you two ears and only one mouth.
  • Remember the principle of saving face. In some societies, it is a matter of life or death. Fortunately, or unfortunately, depending on how you look at it, this is not usually the situation in North America.
  • Keep your ego in check. Be clear on the difference between high self-esteem and high ego. One serves and one does not. Need I say more?
  • Appoint a devil’s advocate and allow them to be involved in projects from the start, all the way through completion. Their job is to be a pain in the neck. It’s not that they are just picking on a certain person or position. This keeps people from taking a dissenting opinion personally.
  • Keep the consequences of your decisions in mind.
  • Value the opinion of others. Focus on the clarity of the water, not the spring from which it flows.

I understand that building Outrageously Successful Relationships can be difficult at times. My best advise for you: Know the value of your relationships. Know where you want the relationships to go and stay on course. Accept that quality Partnering just takes time and effort. Accept that there isn’t any magic–just dedicated implementation.

Keeping Alliance alive and healthy

Keeping Your Alliance Alive & Healthy (892 words)

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Ed Rigsbee, top speaker on strategic alliance successIf every fool wore a crown, we should all be kings. -Welsh Proverb

Let the sword decide after stratagem has failed. -Arabic Proverb

I have heard it said that in an ideal marriage one partner is blind and the other deaf. There may be some wisdom in this old saying. To keep your strategic alliance alive and healthy, each must overlook some of their partner’s misgivings. This chapter, if you heed the advice, will help you to avoid many of the relationship challenges. It will help you keep your alliance relationships on the smooth road to success.

Regardless of how you view the world, (the glass is half-full or half-empty), if you enter into a strategic alliance relationship you must focus on survival of the alliance in good times as well as bad. It can be mutually expensive, in costs, time and emotions to break up an alliance. Your goal is to build Outrageously Successful Relationships (OSRs) with your alliance partners.  If you build relationships that are so successful, neither would ever consider breaking them up.

Your Total Value Package (TVP) that you offer your partner, and your partner offers you, is crucial to the alliance success. When you understand what, your partner needs, and then give it to them, you in return can also ask for extra value.  The best way to do this is through regular Relationship Value Updates (RVUs).  Quarterly RVUs are preferred, but semiannually are acceptable if you are serious about building OSRs.

The idea here is to limit the negative conversations you, or your partner, have about one another when expectations are not met. Unfortunately, unrealistic expectations are common in alliance relationships. Think for just a minute, would you, about the worst boss you’ve ever had. See him or her having one of their famous temper tantrums. You know what I’m talking about, when their face turned bright red and the veins in their neck popped out. See them in your mind’s eye. Now! Here’s the question, is there a chance that boss could have been a decent human being? Your answer, is the conversation you are having with yourself about them. Who knows?  Maybe they were just taught old X Theory management (where one treats their employees like mindless idiots) when they were young and it stayed with them. Your alliance partner and their organization have regular conversations with themselves about you and your organization. You can limit the damage and take care of things early with RVUs.

The most effective way to administer RVUs is for you, and your partner, to (hopefully quarterly) complete the RVU and send it to the other. For alliances of larger organizations and/or with several departments involved, each department should do the same. This will help both sides to understand the conversations that their partners are having with themselves about them. Additionally, when you realize that some of the things you are doing for your partner create high-level value for them and it costs you little, you may be inclined to do more of that. Conversely, when you realize that some of the things you are doing for your partner creates little value for them and costs you a bundle, you’ll quickly cut back in that area.

Relationship Value Update (short form)

1.  The value I believe my company has received from our strategic alliance:

2.  The value I believe you have received from our strategic alliance:

3.  Improvement action steps we plan to take to improve our performance in our alliance relationship.

4.  Improvement action steps we would like to see you take to improve our alliance relationship.

Relationship Value Update (long form)

  1. The value I believe my company has received from our strategic alliance:
  2. Have helped my company’s core competency.
  3. Have created valuable synergies for my company.
  4. Have helped us reduce costs.
  5. Have helped us in reducing duplication of effort.
  6. Innovations discovered with your help.
  7. New markets you have helped us to access.
  8. Competitive situations (both established and emerging competitors) you have helped us to overcome.
  9. Other valuable benefits we have received.
  10. The value I believe you have received from our strategic alliance:
  11. How we have helped your company’s core competency.
  12. How we have created valuable synergies for your company.
  13. How we have helped you reduce your costs.
  14. How we have helped you in reducing duplication of effort.
  15. Innovations we have discovered for you and/or helped you with.
  16. New markets we have helped you to access.
  17. Competitive situations (established and emerging competitors) we have helped you to overcome.
  18. Other valuable benefits we have delivered.
  19. Improvement action steps we plan to take to improve our performance in our alliance relationship.
  1. Improvement action steps we would like to see you take to improve our alliance relationship.

 

In addition to sharing regular value updates with your alliance partner(s), each adhering to a Partnering Code of Conduct will lessen the need for conflict resolution strategies.

 Partnering Code of Conduct

  1. Be the kind of partner with whom, you’d like to partner.
  2. Ethics and morals are important.
  3. Respect others, their beliefs, customs and policies.
  4. Think as a member of both your alliance and your industry.
  5. When in doubt, don’t!

Strategic Alliance Top 10 Strategies

Ten Tips to Developing Outrageously Successful Alliance Relationships (129 words) 

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  1. Behave toward your alliance partner the way you want them to behave toward you.Ed Rigsbee, top speaker on Strategic Alliance Success
  2. It’s more important to be a good alliance partner and get things done, then to obsess on being right.
  3. Make relationship bank deposits before you try to make a withdrawal.
  4. Regularly share relationship value updates with your alliance partner.
  5. Know what your partner needs.
  6. Be clear about what you want from your alliance relationship and what you are willing to give to it.
  7. Be committed, always show your confidence and passion toward your alliance.
  8. Do more for your alliance partner than you promised, exceed their expectations.
  9. Resolve conflict immediately.
  10. You can’t partner with an organization or individual that doesn’t want to be a good partner.
Getting along

In Bed With the Enemy: How to Successfully Partner With Your Competition (1318 Words)

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Ed Rigsbee, top speaker on partnering with competitorsStrategic alliances are today commonplace among large corporations. The advantages allow these companies to successfully compete in the global marketplace. Powerful synergies are the outcropping of these alliances. Smaller companies can derive the same advantages through alliance relationships. In this article, I will focus on what I call Synergistic Partnering Alliances where competitors can realize great value by building relationships of integrity with one another.

To begin, you must search for the perfect mate. How do you find competitors with whom who can successfully become a synergistic alliance partner? First, talk to your suppliers. They already have a great deal of experience with your competitors. They also have a good handle on the integrity or lack there of. Also, your trade associations can be quite helpful. The board members and staffers are usually knowledgeable about the players in your industry. Other possibilities are your local chambers of commerce and the better business bureau.

The key is to find a partner with the same core values as you. This will make life together better. Ask IBM and Apple why their alliance did not work out. If you can find anyone that will tell the truth, they will most likely blame the fact that the cultures of the two companies were too different. A significant point in selecting a partner is to keep in mind that your alliance will only be as strong as its weakest link. What I mean to say is that you want a winner, not a looser on your team. Do not build an alliance with a needy person or organization, especially if they/it that cannot make it on their own. Trust me—you will regret it if you do.

Next, you must court your future alliance partner to start building a relationship. Assisting your future synergistic alliance partner to have an emotional ownership in the partnering paradigm will be your primary mission at this point. Intellectually, your partner can see and realize the benefits of a synergistic relationship but the fear of losing control might block their emotional ownership to a commitment. Without their emotional ownership, not buy-in, any commitment made will have been done on a shaky foundation.

Now, they might be experiencing the getting married jitters. You must successfully deal with the fears and issues in synergistic alliance partnering with competitors. Sensitivity and understanding of your potential partner’s situation are crucial at this juncture. Talk about the up side and the down sides to your intended alliance. Talk about how you might deal with the relationship if things do not work out. Plan an exit strategy. Getting fears and issues out on the table rather than hiding them in the dark will serve all involved extremely well.

Where are you going to live?

The question is about your individual and combined marketing areas. Also, talk about new buying habits and information recovery systems. You will need to track new information to detect the value gained in the alliance. Selecting the alliance marketing area, geographically and service/product mix is no easy task. You will need to pay close attention to the small and large details alike. Might you share warehousing or delivery facilities or possibly even employees to overcome personnel challenges?

Who is Going to Do the Chores?

Alliance partner responsibilities and activities make the relationship a success or failure. Too often this is the area where unrealistic expectations of one another rear themselves. Be clear, commit it to writing, who will be doing what. The palest ink is better than the most powerful memory. It is too easy to forget your commitments in six months, a year or a decade later. Regular value updates on the alliance relationship will be very helpful. Too often we keep issues to ourselves and the issues fester like a splinter. This is not the way to build a successful relationship. The relationship value updates should consist of expectations (met and missed) and profitability targets. This information will assist you in determining to upgrade, downgrade or maintain the relationship as is.

Time to tie the knot

The synergistic alliance partnering agreement should be in writing. It should contain detailed explanations of activities, expectations and responsibilities of each partner. This document will be your guiding light or road map for your successful alliance relationship. When in question, you will refer to the “Partnering Charter.” Now that you are in a relationship, it will be necessary to make regular relationship bank deposits of physical and emotional energy. Always meet your partner more than half way. By giving more than half, a robust synergy follows and so much more is possible by working in concert than singularly.

Surviving under the sheets?

Yes! Being in an alliance relationship is much like being married. Once the synergistic partnering alliance is in place it becomes essential to learn how to become successful cohabitants.  While each of you is responsible for your own success, you now must consider how your actions will affect your partner’s business. Be aware of the things you do and how your actions might create a need for your partner to change their strategic plan. Confer before you act. After all, you are in bed together. To get space, you must give it first.

When your partner takes all the covers

This is not much fun. To Successfully deal with the regular and normal issues and challenges of the relationship, you must get past the “Denial Syndrome.” Denial is an insidious situation that generally results in personal destruction. The expression, putting your head in the sand like an ostrich is applicable to denial. The problem with putting your head in the sand is that you leave your posterior undefended. Too often in conflict, one finds it easier to ignore than confront. A confrontation does not have to be a knock down drag out affair, especially if you selected your partner well. Open communication is the key element in dealing with missing covers, or anything else. Remember, if you steal your partner’s sheets today, they might take yours when you are cold and in need.

We must go to the marriage counselor

When relationship roadblocks occur, it may be necessary to seek third party counsel for mediation. In this situation, authenticity and openness are meaningful. Since you took the time to choose well, it is usually worth the time, energy and expense necessary to rebuild the partnering bridge. Mediation is becoming a popular method for resolving conflict and it will be easier than you might think to find a qualified mediator. In this process of reconciliation, focus on the reasons for selecting your partner and the benefits you hoped to receive rather than the anger, rage or hurt feelings.

Oh no, divorce!

You truly tried but it did not work out. For a myriad of reasons, this sometimes happens. No reason to feel like a failure or declare that you’ll never again be in a relationship. In dealing with separation issues, be the bigger person and again meet your partner more than half way. Otherwise the rage and anger will fester and you will become immobilized. If there is “community property” dispose of it fairly or offer to buy out your partner. Either work it out, or take court ordered pennies on the dollar. Only outsiders win in this situation.

We did it, and look at the profits

Yes, success is my hope for you and your partner. Enjoying the journey with your alliance partner and looking for additional opportunities is what make all the work worth the energy. Maybe your alliance will simply be a buying consortium. Perhaps it will be an alliance to serve a large multi regional customer. It could be to share a pool of employees or an advertising coop. What ever you select, have fun in your partnering journey. Enjoy the process and the rewards. And I assure you, build your alliance correctly, and there will be rewards.

Generate Sales Leads

Generate Sales Leads for Your Clients through Cross-Pollination (442 words)

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Ed Rigsbee, top speaker on Sales LeadsToday’s business-to-business, products and services, dealer/distributor can unfortunately by seen by many as simply a commodity—easily replaced by another. If you allow your customers to have that perception of you, it is your own fault. But why might so many people think you are simply a commodity? It is because you have not provided any value to your clients beyond that which your competitor delivers. It’s time for your creativity to kick in. It is time to do something different.

One twist to make a huge difference in their perception of you is to deliver fresh business to their doorstep. You might be wondering what in the world you can do to generate leads for your clientele? It is called cross-pollination, and it will work for you, and your clients.

Contact a few of your current clients and suggest this cross-pollination idea—an idea of client base sharing—you act as the intermediary. Select clients that see the world as more than a zero-sum game. Select people that understand the value of partnering to create more. Another words, don’t try this with losers.

Current clients give you a list of their customers; for discussion, let’s say a list of 500 names, addresses and e-mails (best in a Microsoft Ecxel file). In turn, for sharing that list with the “cooperative,” you give them 1,000 new names in return. Where did you get the 1,000 names? You get them from other current clients that are also willing to participate.

Just to make it simple, let’s say that 10 of your customers each gave you a list of 500 names, that is a total of 5,000 names. Your job, and the unique value you deliver would be to give each of those 10 clients back, a list of 1,000 names. The names would come from others that are also current clients that do not compete directly with one another and have a customer base with similar needs.

An example might be an insurance company client getting 1,000 names that came from both a title company (500 names) and a real estate company (500 names). The insurance company definitely does not compete with the title company or the real estate company but the end users of the title company’s and real estate company’s services most likely have a need for insurance. This way, everybody wins—it’s cross-pollination.

This idea is a bit of work for you, but will deliver loyalty from your customers for being smart enough to put this idea into action. Each of the 10 participating clients will get a fresh list of prospects and leads for their contribution to the “cross-pollination cooperative.”

Alliance Synergy

Making Your Alliances Work—Competent Collaborations (1482 words)

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Ed Rigsbee, top speaker on collaborationCompetent collaborations…is the synergy worth the energy?

The reason I ask this question is because, developing successful and profitable alliances is rarely easy. If it were, everyone would be doing it successfully. Many alliance consultants, and myself included, have determined that about 50% of the alliances created in the United States fail for one reason or another.

The reasons that you may select to enter into alliance relationships are varied, and generally based on need and competencies. The need side is usually represented in areas where we may consider ourselves or our organization to be lacking or weak. The competency side is the opposite, the strengths that we have to share. An ideal alliance situation is with a person or organization that exhibits competency in our weaker areas and weakness or need in our personal and/or organization’s areas of competency. This is where our circles of interest strongly overlap—where we have the greatest chance to be of service to one another.

To be successful in building competent collaborations, at least a sprinkling of the following six personal qualities should be encompassed within you and your alliance partners: Curious, Vision, Communication, Leadership, Organize, and Compassion. Let’s look at these individually.

Collaboration Curious. While you’ve undoubtedly heard is said many times, “Curiosity killed the cat.” We’re not cats. We’re business people searching for leading-edge methods for which we desire to improve our capabilities and hopefully our profits. Curious means you are open to new, and frequently, unsuspected opportunities. You must be curious to alliance possibility in order to simply get started.

Vivid Vision. Where is it, which you want your alliance to help you reach? What synergistic goals do you visualize being possible? Simply developing an alliance because it appears the trendy thing to do is hardly a reason to put forth the effort. Additionally in the area of vision, you must be able to see into the future and not become dependent upon your alliance partner—doing this will make you weak. On the other side, if you become too independent, you will no longer be desirable ac an alliance partner to others. Your vision needs to be to work toward that proverbial, and many times elusive, sweet spot where you become interdependent and develop time effective synergies.

Compelling Communication. Through my research, I have discovered that the leading reason for alliance failure is communication. While communication does cover a number of issues and situations, this is the key area for which I’d suggest you focus greatly.

A great example of the need for quality communication is the fact that Eli Lilly, the pharmaceutical giant, writes into many of their alliance agreements a mandatory quarterly face-to-face meeting of the principals from each company in the alliance. While the Lilly executives sometimes complain they do not have the time for these meetings, the meetings are contractually mandatory. Generally there is a social dinner the evening before the meeting where many of the current issues and problems get brought out in the open in a non-threatening manner.

Following the 911 attacks and resulting travel challenges, some of the Lilly alliance executives tried fulfilling these contractual obligations via videoconferencing. It seemed to work well and continued substituting videoconferencing for the mandatory face-to-face meetings. It did not take long for alliance problems to start magnifying. As soon as they went back to the live face-to-face meetings, they started again solving challenges before they ever became alliance relationship problems.

Living Leadership. In order for your alliances to be successful, you must exhibit at least a modicum of leadership qualities. I did not say dictatorship! Here, more than in any other area, your willingness to focus on getting things done, rather than to obsess on being right will determine alliance success. In a corporate environment, the paradigm of partnering must start at the top. The executive must drive the philosophy through both word and deed. Even if you are a single person practice, you must be an alliance champion throughout all the areas of your business.

Outrageously Organized. Your ability to organize, in the form of alliance structure, procedure and process will have a huge impact on the ultimate implementation and longevity of your alliance relationships. Continuing with Lilly, their alliance implementation process is so sophisticated that they measure (Lilly Web) the perceptions of all of the key players in their alliances—Lilly players and those of their alliance partners. The perceptions that they measure are basically what everybody thinks about one another. This allows Lilly to course correct when they discover that Lilly’s, and their alliance partners’ perceptions of the performance of one another is distorted or out of balance.

Careful Compassion. As you meander through the process of alliance development and implementation, you need to have compassion, and even tolerance, for the foibles of others. This quality will allow you to maintain your sanity in what can sometimes seem like alliance insanity. As you develop alliance relationships, sometimes your alliance partner might, in your opinion, let you down. Since not everybody happens to be as bright as you are; an alliance success secret is to give your alliance partner a break once in a while—especially if your expectations are a bit unrealistic.

Relationship Glue, Relationship Value Updates. For years, I have told my alliance clients, that if they would just complete a Relationship Value Update(RVU) for one another as little as twice yearly, they could head off a number of relationship killer situations. Some have, and succeed but unfortunately many have not and have failed. While using this tool does not guarantee success, but it sure makes alliance success more likely. There is the long form in my book, Developing Strategic Alliances, (to access this and other helpful additional information from Ed Rigsbee at no charge, please visit www.rigsbee.com/downloadaccess.htm).

Here, I’ll share with you my short form. I believe this RVU if used diligently, will make a lasting difference for you as you go through your alliance implementation process.

Below, you will find the three key questions for both you and your alliance partner to answer IN WRITING about the value of your alliance with one another. Then mail your answers to the other. Then each of you can review the information in the privacy of your own office—it’s much better this way. Doing this is far less threatening than is a face-to-face value meeting—that can be done later. Now each of you can quietly read the RVU and hopefully better understand the others’ perspective on the success of the alliance and the value it does, or does not, deliver. This tactic is your best help for avoiding perception challenge issues and dealing with small issues before they get out of hand.

  • The value I’m getting from the relationship.
  • The Value I think you are receiving.
  • Your suggested improvement strategies

Contracts. Written agreements, whatever you call them, are crucial in the success of an alliance. No matter how trusting and loyal each alliance partner operates toward the other—in time people forget their promises. Sometimes they even come to believe they promised something other than they actually did. You have heard it said by any number of professional speakers, “The palest ink is far better than the most retentive memory.” I have found this platitude to be quite accurate. By putting to paper your expectations of one another, along with promises and listing who is responsible for what, you both will have a living document to use as an alliance relationship guide. This guide, contract or agreement, whatever the name, can naturally be adjusted at any time based on new information, market conditions and/or changed alliance partner commitment levels.

In the final analysis, I can honestly tell you that alliance relationships, for a myriad of reasons, can be extremely profitable for all involved. The key is to determine if the synergy is worth the energy. If it were not, why in the world would you want to proceed? But, if you believe the synergy is worth your energy, you can open the door to a new world of business possibilities. With partners that share their complementary core competencies, things can be done that you may never have imagined possible in your career. A truth that I have discovered in my years of alliance consulting, most people are in such a big hurry to build their alliance that they over look the most important alliance issue—pick your partners well. Skip the necessary due diligence, and you’ll be crying about conflict resolution and exit agreements rather than focusing on the opportunities and possibilities.

My Alliance Partner Quiz will help you to get a fighting start in selecting your alliance partners. You may also access this at no charge, please visit www.rigsbee.com/downloadaccess.htm.

Good luck in building your synergistic alliances.

Rigsbee Steps to Successful Alliance Development

Strategic Alliance Development Process (1199 words)

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Ed Rigsbee, top speaker on Strategic Alliance Development

Rigsbee Alliance Development Process

A solid alliance development process will minimize alliance failure. While successful alliances require work and process, the benefits justify the effort. To improve your organization’s performance, production and profitability you must do more than just fix a problem. You must burrow deeper and change the system (culture). The following steps will help you to evaluate your system before you embark on your strategic alliance journey:

  1. Monitor

  2. Educate

  3. Select Alliance Type

  4. Organize

  5. Agreement

  6. Implementation

  7. Maintenance

Alliance Development Process: Monitor

Study organizational needs through self-analysis. Observe, and identify your areas for desired improvement. Develop an organizational evaluation method to be completed by your customers, suppliers, employees and management. This will help you to inventory your core strengths and weaknesses. Which strengths might be valuable to a potential alliance partner? What weaknesses do you want to shore-up?

Alliance Development Process: Educate

  • Identify other industries that have embraced Partnering. Study the individual companies that have been successful in building alliances. Study what worked and what did not. If Partnering was not successful, learn and understand why not.
  • What will it take to change your organization?
  • What are the potential obstacles? Is your culture open or closed? Changing a closed culture organization will be much more difficult than one that is open.
  • Has collaboration worked in the past?
  • What competencies do you desire in an alliance partner?
  • What kinds of (or reasons for) strategic alliances would best work with your culture and/or fulfill your growth needs?
  • What criteria will you use to select alliance partners?
  • What new training programs will be necessary to help you with your shift to Partnering?

Alliance Development Process: Select Alliance Type

This is the critical step in the alliance development process—all your future efforts will be built on this foundation. Learn about those companies you consider as Partnering candidates. Ask yourself and your management teams these questions: What are their strengths and weaknesses? What affect would they have on our business? Be sure that the company cultures and core strengths are complementary. Can the people who will make the alliance work get along? What is the growth opportunity, short and long-term? Select alliance partners, with knowledge, understanding and commitment. You can only partner with a person or organization that wants to partner. It would be a serious mistake to think otherwise.

Search for the strongest material for your Partnering foundation, the best possible partner. Customer-oriented culture is critical to the success of the partnering alliance. The greater the sophistication of a company and its officers, the more likely the company will enter into. Embrace long-term thinking. Strategic alliances are rarely a quick fix, but rather a sound long-term business strategy. Target companies, large or small, that can aid you in rapidly and efficiently, reaching the goals of research, technology, production and marketing.

Another element to consider is the focus of the individuals involved. Be certain their focus of the Partnering relationship is strategic to the individuals’ goals. Be clear about your and your partner’s critical driving forces that pull each into an alliance arrangement. Can the two organizations work together at the daily operation level? Even though there might be an exceptional strategic fit, the two organizations must compatible on an ongoing operational level.

Outrageously successful alliance relationships take time to develop. Over the last decade too many alliance relationships have failed due to the quickness of selection. Research and due diligence must come first. Selecting your alliance partner well reduces the chance you’ll need to exercise your exit agreement.

Alliance Development Process: Organize

Once you’ve selected your potential alliance partner short list, you can establish mutual goals. You can agree to who gives and gets what, when, where, and how. Mutual performance measuring instruments can be developed. It is time for identifying, understanding, and putting together the possibilities for an alliance. Internal and external personnel should be involved in developing not only your alliance structure, but also your road map as well.

The success of the blending of cultures is pivotal to a successful alliance development process, take great pains to ensure this achievement. Access is crucial—emphasize the importance of understanding and access to each alliance members’ staff. Create a convenient communication system for all partners especially decision-makers. Plan procedures to keep relationships between key people of partnering companies open and constantly alive.

Make sure that all levels of both organizations share the partnering attitude. Stress strong information systems and share information constantly. Agree on pricing with your partners and delete income accounts (accounting practices) that have nothing to do with your business or the real price of your goods and services—things that only make a singular department look successful.

Look into the future, plan for the long-term relationship and encourage strategies that will sustain the relationship through to its conclusion. Phasing in the partnering relationship could be a preferred strategy, as this method will allow partners to have a get acquainted time. This can assist in the identification of reaching milestones, successfully or identify the need to reassess before moving on to a higher level in the relationship. Maybe even institute a pilot program at this point.

Alliance Development Process: Agreement

This is the agreement, handshake or contract. Most who have been down this path would strongly urge that your strategic alliance agreement be committed to paper. For the safety of all concerned, the agreement will be so much clearer six months or two years later. Sometimes people forget what they agreed to or, even worse, they have been transferred to a completely different division thousands of miles away.

The agreement should spell out conflict, dispute resolution, exit strategies, and steps to facilitate the alliance development process. Be ready for it and the conflict can be resolved timely and amiably. Have an agreed-upon set of procedures in place that will help resolve the issues that arise. Inevitably, there will be a need for a mechanism to handle things like price increase discussions, inability to ship and dispute resolutions.

Develop a clear agreement on what your goals are and make sure they are measurable. Have a formal mechanism for alliance members to identify the goals, milestones, and turning points crucial to the success of the relationship. Devise an evaluation that will measure both implementation and performance. The Partnering agreement should establish the terms and conditions under which partners will resolve questions of opportunity, accountability and risk. The final agreement should be reviewed and agreed upon by all parties involved or affected. Check with your national trade or professional association, they may have already developed a standard agreement for you. Alternatively, to reduce development costs, pick up a copy of Developing Strategic Alliances which has an extensive general issues checklist to review before you meet with the lawyers.

Alliance Development Process: Implementation

This is the kick-off of the alliance and kick-off parties are common. Generally, most of the persons from both or all companies that are involved in the alliance will attend. This humanizes the organizations and the people working on the alliance. The difficult work of merging hardware, software, systems, policies and all the elements that differ among the alliance partners from development to production to distribution. This is a deal-maker, or breaker, step in the alliance development process.

Alliance Development Process: Maintenance

Regularly review your mutual goals and performance. Regularly meet with alliance partners to evaluate the status of your relationship. Should the alliance be upgraded, maintained, or downgraded? Should new goals (short and long-term) and performance expectations be established? Are new measurement systems available?

It has been said that in an ideal marriage one partner is blind and the other deaf. To keep your strategic alliance alive and healthy, each partner must overlook some of their partner’s misgivings. At the same time, each must keep an open line of communication to minimize conflict and relationship meltdown. The best way to do this is through regular Relationship Value Updates (RVUs). Quarterly RVUs are preferred, but semiannually can be acceptable.