Over the past several months we have thought a lot about a question that is both challenging and imperative:
How can alliance managers more directly and more successfully improve partnering outcomes?
We’ve long worked to enhance and increase the impact of alliance professionals, but thinking back, the criticality of the question was crystalized upon reading ASAP’s The Fourth State of Alliance Management Study published in 2012. In a section titled What’s Next?, the authors noted that “The Study has shown a substantial increase in investments in alliance management tools. Portfolio success rates, however, appear to have reached their limit.” That “limit” is the 53% portfolio success rate reported by the study. The authors state the obvious: “Success rates are relatively stable over time” despite the increased investments in alliance management tools. The authors include alliance mangers as one of those tools.
One of the troubling aspects of this situation is that reliance on collaborations/partnerships/alliances as a key pillar of strategy is exploding – not just in the early adopters of biopharma, high-tech and telecom, but in financial services, healthcare, construction, media, consumer goods… You get the point. They are an essential strategy in today’s fast-paced, resource constrained world.
As the study authors point out, no one knows if a 53% success rate is the right number, the wrong number, or what the number should be. And of course, success, like value, is in the eyes of the beholder. But it seems to us that it isn’t good enough to sustain a management discipline and specialty that claims to be the experts at driving the success of partnering.
So, back to the question. What can alliance professionals do in order to realize a step-function improvement in partnering outcomes? Or stated slightly differently: How can alliance managers have a greater impact on outcomes they don’t control? Is it even possible? And if it is, how is it credibly measured and accepted by the business leaders that are the customers of alliance management?
These are important questions because if the ASAP Study is right, that success rates have leveled off, then it’s entirely reasonable to expect to see decreases in investments in support of the profession – and that is not an acceptable turn of events!
We don’t pretend these are easy questions or that there is any one answer. Numerous approaches exist and it is absolutely wrong to say that every company has a 53% success rate. On the contrary, we know several companies that consider either all or nearly all of their alliances to be successful and their alliance management teams get an appropriate share of the credit. However, if the 4th State of Alliance Management Study is correct, these companies are outliers, as averages are averages.
Nonetheless, in our work across industries and with companies from the US, Europe and Japan, we have come to a two part hypothesis about why alliances aren’t more successful and what alliance professionals can do about it:
First – despite all the talk about embedding capability throughout the organization, partnering is still an afterthought. It is a “bolted-on” activity, not “baked in” to the fabric of companies. It isn’t currently part of corporate strategy in most companies. It is safe to say that most companies don’t have an explicit partnering strategy.
That needs to change. An explicit partnering strategy should be embedded in overall corporate strategy. It may bubble up from the business units, but the CSO must harmonize it and ensure that there is accountability for execution. Additionally, the Chief Strategy Officer (CSO) should enable a strategic partnering function. The corporate strategic partnering function manages partners that cross business units and is a “Center for Excellence” resource for the business units. Finally, the CSO should also ensure that business unit plans are allocating sufficient resources to developing the ability to succeed at partnering. A strategy is meaningless if it can’t be properly implemented.
Secondly, the lens through which many alliance managers see their jobs must change. As the ASAP Study reported, there are 36 alliance mechanisms – tools, functions, and processes in use today. This is a significant increase from the first study in 2002, yet the success rates are flat, so clearly the answer is not in tools and processes.
We have come to believe that the second component of the problem lies with the way in which alliance managers perceive their jobs and organize their activities.
If you are an alliance manager, ask yourself:
Are my activities dictated by the flow of governance meetings or quarterly sales goals?
Do I spend much of my time reacting to problems?
How much time do I spend leading the alliance team to think differently, considering the implications of decisions, challenging executives who aren’t aligned, and considering how to leverage macro-trends in the industry to create greater value?
We believe that for alliance managers to have more direct and impactful influence on partnering outcomes a new focus, a new lens on the job is required. If the CSO has to ensure an explicit partnering strategy exists and commensurate capability is developed, the core focus of the job must be that which is strategic.
Accordingly, we propose re-orienting the job away from implementing a toolbox and embracing a strategic partner management foundation. It is a model in which risk is managed and value created by implementing four building blocks within the context of a company’s strategy, culture and ecosystem. Those building blocks are:
Purposeful Leadership Proactively utilizing expertise about the industry, partner(s) and company to consider the implications of action and inaction and challenge the status quo to mitigate risk and realize value
Collaborative Engagement Aligning internal and external stakeholders by communicating effectively, using relationship currencies to influence actions and bridging boundaries and differences
Agile Governance Strategizing and planning, decision making, problem solving and accountability that keeps the partnership focused and able to take advantage of opportunities and respond to challenges
Measurable Outcomes A regimen of measuring the quality of partnering processes, vitality and outcomes, together with a view of the portfolio and impact of the partner management function provides for ongoing improvement
The alliance management toolbox fits underneath this foundation, but it is the way in which we think about the job, prioritize efforts, measure and communicate results that has the potential to galvanize the alliance management profession and create a step change in partnering outcomes at a critical juncture in business and for the profession.
We welcome your thoughts about our hypothesis and what you think alliance managers can do to improve partnering outcomes.