Monday
Jun082015

Suddenly, Partnering is New Again

Over the years partnering has gone through many cycles, falling in and out of favor but still somehow, never really being considered a strategy of choice, unless a company was born with it as part of its core business model. In most traditional companies, senior leaders would only partner if there was no other alternative, rarely providing the resources to fully execute the opportunity.

But something is changing now that feels different to those of us who have lived through many of these cycles. Together with Alliancesphere, our partner in the SMART Partnering Alliance, we are seeing and experiencing a marked shift in attitude – and in action – across multiple industries.

Three trends are emerging and converging:

Trend number 1 – An enterprise wide rethinking of partnering activity

For some time now, it has been common to see partnering activity – and alliance functions – broken up and incorporated into business units, franchises, and/or geographies. While that ties alliances more closely to the businesses, it doesn’t encourage managing the portfolio of partners as a whole to optimize resources or strategically leveraging partners across businesses – even when a single partner has multiple relationships with one company.

Now the trend appears to be that companies are reconsidering a corporate partnering and alliance function – usually reporting through corporate development, strategy or directly to the CEO. This function isn’t taking control from the business units, as earlier iterations of corporate functions often attempted. Now, it is charged with developing a corporate partnering strategy that is a component of overall corporate strategy. It has responsibility for a select set of strategic activities, such as owning the alliance development process and building an organizational capability for partnering by among other things, creating a consistent end-to-end partnering process that integrates as seamlessly as possible with non-partnered business processes. And it develops and manages a very select set of partners that are engaged with multiple business units, sometimes in pursuit of new businesses or to develop new technical competencies.

Trend number 2 – Changing leadership and changing leadership attitudes

Alliance executives appear to be getting the ear of more senior executives. Perhaps it is because CEOs and other senior leaders see admired companies making bold partnering bets – think IBM and Apple or Twitter; Abbvie and Calico (a Google-backed life sciences startup). Disney is teaming with Cornell University and Carnegie Mellon University in a research project aimed at making ‘cuddly toys’ using 3D printers (imagine how many cuddly toys Disney sells in a year). PwC’s 2015 Global CEO survey found that 51% of CEOs intend to enter into a strategic alliance this year, up from 44% in 2014. More than half are considering partnering with other industries, academia and competitors. Seventy-five percent say they have to partner with customers.

We aren’t fully there yet in attitude – it is still often seen as a gap filler, not a way to create new opportunities and address critical risks. But perhaps we are closing in on a tipping point when partnering will be not an afterthought or “consolation prize,” as our partner Lorin Coles describes the traditional mindset. Instead, it will be an equally valid strategy as build or buy.

The other aspect of this trend is that when companies are reorganizing (as many of them are) or standing up an alliance capability for the first time, the efforts are being led by younger executives on a fast track. Companies are putting their best and brightest in charge of their partnering efforts – and these individuals do not have the history of where partnering has been, so they are taking a clean sheet of paper and creating what is needed for today’s world. From our perspective, it is refreshing. And when these folks are staffing their organizations, they are looking for leaders – people that have the potential to run a business.

Trend number 3 – Greater use of innovative partnering models

Technological, regulatory and market changes have forced companies to develop new business models and thus a variety of different partnering models in many industries. We’ve seen a number of asset swaps, partnering as a prelude to acquisition, carve-outs, JVs with one of the equity owners also having a strategic alliance with the JV, transferring entire franchises, while retaining IP rights and economic interest, to name a few. Additionally, we see multiple collaboration models within a single alliance, people being seconded to a partner and creative uses of market development funds.

Increasingly, it takes multiple partners to produce a single solution for a customer. Companies are shaping and orchestrating their ecosystems, working to establish or maintain the trusted advisor relationship with their customers. In some instances this requires that all involved agree on a common business model and governance structure; in other instances it is the orchestrator organizing a series of one-to-one relationships to provide the complete solution.

The trends we are experiencing are encouraging and exciting, ushering in a wave of innovation that will deliver value to customers, companies and employees and provide a new chapter in the development of the art and science of alliances. Suddenly, partnering is new again. And it is SMART – Strategic, Measurable, Agile, Resourced and Total.

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