AUTHORS: Jan Twombly and Jeff Shuman

Maybe it is starting to sink in. Just maybe it is starting to be understood. The ways and the depth with which we connect with others, connect our organizations, and share data, knowledge, and experience are driving business, societal, and personal value. This means managing external collaborative relationships well – a.k.a. partnerships and alliances – makes a difference in the outcomes we get!

Here are two recent studies that see the light: 

• Data Sharing and Analytics Drive Success with IoT, an MIT Sloan Research Report (September 2016) finds that “Creating business value from the IoT depends as much on the maintenance of relationships … that require dedicated resources and management attention … as on the development and maintenance of IoT devices.” “Managing the increasing number and depth of relationships that come with IoT projects may present as great a challenge as managing the growing technical infrastructure.” (emphasis added) 
• 6th State of Alliance Study: Social Capital & Alliance Performance, Association of Strategic Alliance Professionals (ASAP) (as previewed at the 2016 ASAP Biopharma Conference, September 2016) finds that the “frequency and quality of interaction between firms,” closely followed by “shared goals, organizational norms, executive alignment, and work systems” are what drive partnering success.

The ASAP study says managing partner relationships well is essential and the MIT study not only says it is essential, it also says it is a “great challenge.”

Our experiences consulting to companies for whom partnering is core to their strategies plus working our own alliances over the years, echo these findings. But what neither study addresses – which we believe to be critical – is that developing the capability to successfully partner – from strategy through execution – is no longer the job of a single function. It is an organizational capability and imperative for success today as business becomes more digital, more connected.

Seasoned alliance professionals will say this is nothing really new. True.

What is new is the proliferation of external relationships that must be collaborative to achieve their objectives. Partnering is ubiquitous. It is everywhere in an organization. The speed, scale, and scope of it are unprecedented.

Research and development, engineering, manufacturing, marketing, and sales all have external partners. Sometimes the same partner crosses functions from co-development, get-to-market activities to co-commercialization, go-to-market activities. Sometimes there are specific partners within each discreet activity. The number of permutations and what must be coordinated is mind-boggling.

There are many partnering models, too. Relationships range from loose and barely collaborative where just a little bit of coordination and exchange of information is required to very tightly coupled, where all types of resources are leveraged and shared for a common purpose. The latter is best thought of as an entity unto itself. Of course, all such partnerships exist within the strategies, cultures, structures, and work processes of two or more firms.

Increasingly, getting a complex product or solution to a customer requires many partners that must be coordinated through and within an ecosystem. A different network or instancing of partners may be required for a different geography or distinct customer situation.

Unfamiliar business models, such as those based on outcomes – think hours of maintenance-free operation, number of rail passengers delivered on time, months or years a disease does not progress – are also upending traditional partnering models. It shifts them from sequential value chain reseller models and asset-based licensing models to less certain arrangements – that could be wildly more profitable – or not. They also potentially stretch out the timeframe for recouping upfront investment. A successful ecosystem requires maximizing value for all participants.

Managing these relationships as a coordinated whole, focused on delivering value to the customer and all relevant partners is exceedingly complex, as the MIT study alludes. And as the ASAP study suggests, success depends on structuring the relationships to best achieve their objectives, rallying around a unifying purpose, establishing an appropriate operating and governance model, and providing the optimal frequency of interaction of all sorts – from executives to rote and automated information exchange – depending on the degree of collaboration required.

This is the work of alliance professionals, but alliance professionals cannot be everywhere. Building the ability to partner everywhere must be a core focus of senior management, driven through a coordinated and enterprise wide capability building program with champions for key initiatives and multiple projects in all areas of the business where partnering is critical. It must be acknowledged that managing relationships is often part of every senior job – and even when it is not, staff at all levels need skills to engage with external partners.

This is not a niche project that gets shunted aside for “more pressing matters.” It is a significant organizational change initiative that is essential to connect and integrate the ecosystem with the enterprise. But not one that rides alone. Digital transformation, becoming customer obsessed, or taking advantage of Fourth Industrial Age technologies such as the IoT can’t be done without partnering.

However your company is preparing for this new age, learning to partner well within the ecosystem is integral to the success of those efforts.