5 Keys To Creating Successful Strategic Alliances
Did you eat any fresh corn on the cob last weekend? Or cool down with a Frappacino? Sneezing from allergies this summer? Maybe you considered packing up the kids or grandkids and making a summer visit to one of The Walt Disney Co. ‘s properties worldwide?
Then, knowingly or not, you have benefited from a successful strategic alliance. Despite Bill Robinson’s comments in an earlier column (see: Why Strategic Alliances Don’t Work), trust has little to do with creating a profitable alliance. Companies have proven that they can forge successful partnerships with those they don’t trust and with which they compete.
How? By following through on a disciplined approach:
1. Select The Proper Partners For The Intended Goals
An alliance between Seattle-based Starbucks and Purchase, N.Y.-based Pepsico created the popular coffee-flavored drink, Frappacino. The relationship moved Starbucks into the bottled-beverage market while PepsiCo gained an innovative product with a well-branded partner. Each met their strategic and operational goals. A perfect match.
2. Share The Right Information
You don’t have to trust your partner in order to share information with them. You just have to decide what not to share. An alliance could involve intricate interweaving of intellectual property from different research and development labs owned by multiple partners. Many pharmaceutical companies have marketing alliances. Eli Lilly and Takeda Chemical Industries of Osaka, Japan, have joined together to develop a drug for the treatment of type-2 diabetes. Philadelphia-based GlaxoSmithKline and Elbion of Radebeul, Germany, have recently announced an alliance–the results of which will clear up your stuffy sinuses. Companies have proven that they can have successful alliances with those they don’t trust and with whom they compete. The real issue is follow-through. Did their partner do what they said they would? If so, even without trust, the alliance can succeed. Kraft ‘s Maxwell House brand and Starbucks–direct competitors–created an alliance for Starbucks to place its coffee into supermarkets. Starbucks benefited from Maxwell House’s extensive network of shelf space in major chains nationwide, while Maxwell House profited from customer desire for Starbucks-branded coffee.
3. Negotiate A Deal That Includes Risk And Benefit Analysis (Not Necessarily Equal) For All Sides.
Some companies have changed strategies to focus on alliances as key revenue generators. Currently 30% of IBM ‘s $86 billion in revenue comes from a wide variety of alliances. IBM is able to succeed on this scope because they have a process, structure, approach, metrics and a strategic commitment to make alliances work from the highest levels in the company. IBM changed strategies a few years ago and embraced alliances, seeing them as the best way to offer their customers the most valuable and appropriate solutions to their needs–not just the IBM-created option. In some instances, they decided to partner rather than compete with certain independent software vendors. IBM’s alliance with San Mateo, Calif.-based Siebel to jointly develop, market and sell integrated e-business solutions included also Siebel’s choice of IBM’s DB2 Universal Database as the company’s primary development platform and the decision to port Siebel’s e-business applications to the AS/400e server platform. The latter is significant because IBM has more than 200,000 loyal customers using AS/400e technology. This global strategic alliance has been extended to midmarket companies and continues to grow as opportunities for new markets and products evolve.
Read entire article by Larraine Segil on Forbes.com
