mind your business: Digging Deep
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 embarking on your strategic alliance journey:
Analyze
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?
Educate and Contemplate
• 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.
• 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?
Select
This is the critical step—all your future efforts will be built on this foundation. Learn about those companies you consider partnering candidates. Ask yourself and your management teams these questions: What are their strengths and weaknesses? What effect would they have on your business? Are the company cultures and core strengths 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, the best possible partner, for your partnering foundation. 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 a partnership. 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 the critical driving forces that pull you and your partner 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 be compatible on an ongoing operational level.
Organize and Plan
After you've selected your potential alliance partner short list, 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.
How well you can blend cultures is pivotal to the success of any strategic alliance, so take great pains to ensure this achievement. 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 at partnering companies open and 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 time to get acquainted. This can assist in identifying success or the need to reassess before moving on to a higher level in the relationship. Maybe even institute a pilot program at this point.
Charter: Agreement or Contract
This is the agreement, handshake or contract. Most who have been down this path would urge that your strategic alliance agreement be committed to paper. For the safety of all concerned, the agreement will be clearer six months or two years later. Sometimes people forget what they agreed to or, even worse, get transferred to a different division thousands of miles away.
The agreement should spell out conflict and dispute resolution and exit strategies. Have an agreed-upon set of procedures in place that will help resolve 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.
Alliance Follow-up and 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?
To keep your strategic alliance alive and healthy, each partner must overlook some of the other's misgivings. At the same time, each must keep an open line of communication to minimize conflict.
Copyright 2010-2013 Ed Rigsbee
By Ed Rigsbee, CSP, CAE
This article was adapted from Ed Rigsbee's, "PartnerShift—How to Profit from the Partnering Trend." Ed Rigsbee, CSP, CAE, is the president of Rigsbee Research located in the Los Angeles metro area. Rigsbee has authored two additional books on alliance relationships: "Developing Strategic Alliances" and "The Art of Partnering." His articles are frequently published in business magazines worldwide. He travels internationally, sharing his insight on alliance relationships through his consulting and keynote presentations. When you need a speaker on partnering or alliance development, contact Rigsbee through www.rigsbee.com, email ed@rigsbee.com or call (805) 498-5720.
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