Seeing the Big PictureNot long ago, an executive newly appointed to lead the alliance management function for his company—but who had no alliance management experience—asked us, “How do I see what is going on across all of our alliances? I am used to starting my day looking at a dashboard that lets me know what needs my attention.” We had to explain to him that currently, within his company, he would have to manually aggregate individual alliance managers’ monthly reports to get an overall picture. But that need not be the case.
As we’ve been describing in this series of posts, external events coupled with the growth in the number and types of alliances and other collaborations are shining a spotlight on the need to digitize certain aspects of alliance management workflow and administration. If our newly appointed alliance executive had in place a digital alliance management platform, he would have had the ability to aggregate all the alliances in his portfolio—or any relevant subset thereof—into a single dashboard and understand them in relation to one another. It would also help him better appreciate the work of his alliance managers.
Analyzing the Alliance Portfolio
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A portfolio is most simply defined as a grouping of similar, but individually distinct things—like the many different but similar paintings that make up an artist’s portfolio. Any analysis of one must be multi-dimensional to capture the dual, yet inextricably intertwined components of the alliance manager’s job: creating value and managing risk (See Figure 1 – Measuring the Alliance Portfolio). [1] It should include an evaluation of financial and other strategic value each alliance is intended to produce, as well as the time and effort required to address the value eroding complexity, inefficiencies, and risks of working with the specific partner. Each partner is evaluated individually and then aggregated into relevant groupings, or portfolios. When applied at the portfolio level, the opportunities to both create and erode value are magnified by the interrelationships between and among the partners and the projects being conducted with partners.
A company can think about its alliances in just one or in many portfolios. It depends on what groupings are most relevant to its strategy and organization. We recommend that a company starts to think about its alliances from a portfolio perspective by having each alliance management executive consider all of the alliances his or her team manages as a portfolio. Once you gain familiarity with taking a portfolio perspective, it will be easier to aggregate across the enterprise based on strategic objectives.
The analysis is best evaluated and captured in a digital platform which makes it far easier than a manual process to have multiple stakeholders contribute, to take different views on the data, and share the results. A digital platform also frees alliance leaders from focusing on the mechanics and lets both they and individual alliance managers focus on the main aspects of managing a partner portfolio—as an additional strategic dimension beyond the management of individual alliances that includes:
- Assessing the strategic contribution of each alliance within the portfolio and of the portfolio overall
- Leveraging value creating opportunities within the portfolio
- Identifying competitive issues, as well as possible restrictions and risks
- Considering the portfolio implications of new partners
- Identifying systemic management and organizational challenges that are preventing individual alliances from achieving intended value
When all the alliances in a portfolio have been analyzed or profiled, not only do alliance managers know what to manage for in an individual alliance, they also have the ability to aggregate the value represented in the portfolio to determine whether it reflects the value the company’s partnering strategy is intended to create and where gaps remain. Additionally, being able to roll up all the forms of value a company expects to realize through its alliance portfolio allows alliance managers to prioritize their efforts.
Informing Resource Allocation
A key piece of portfolio management is resource allocation. Being able to regularly examine the performance of the portfolio relative to corporate strategy provides guidance on how resources should be allocated. Should more be invested in certain partners or partner types? Maintain status quo? Perhaps transition out of the portfolio or reduce to a low-touch model of management? Today, agility is a highly valued quality. Forward-thinking initiatives are required to transition from legacy business models to new, innovative models. The partner portfolio and the resources allocated to the effort provide a canvas for experimentation and orchestration. With the right strategy and portfolio composition, a company can purposefully invest in its future.
Raising the Profile of Alliance Managers
When one has a digital alliance platform, managing through the lens of the alliance portfolio and not just individual alliances in isolation raises the profile and perceived value of alliance management through easy, consistent, focused reporting and dashboarding. The visibility and transparency this offers gives operational stakeholders and executives the data and information they need to understand the opportunities, challenges and contributions of alliances and alliance managers and thereby how to best leverage the portfolio.
Interested in Learning More?
Download the allianceboard solution overview or contact The Rhythm of Business or allianceboard for a free personalized consultation.
[1] For more on The Rhythm of Business’ value/complexity portfolio methodology, see The Partner Portfolio Manager: Shining the Spotlight on Performance and Value https://rhythmofbusiness.com/insights.php?pid=40