The Strategic Alliances Fieldbook

The Art of Agile Alliances

Gavin Booth, Mike Nevin, Jim Whitehurst

• Publisher: Routledge
• Year: 2022
• ISBN:
  9781000580419
• Edition: 1
• Topic: Business
• Subtopic: Business Development
• Index: Business

The Strategic Alliances Fieldbook: The Art of Agile Alliances is for technology and professional services practitioners and executives seeking faster value from their partnerships as traditional alliances are changing rapidly in form and tempo.

Digitising customer channels and internal operations has been a long-running initiative for most companies, and the global COVID-19 pandemic has accelerated the urgency and budgets associated with the digital transformations that technology and professional services companies support. The Strategic Alliances Fieldbook compiles a century of the authors' experience of leading joint businesses to solve the problem of how to go fast and avoid common issues that delay alliances. The reader will get a detailed analysis of professional services companies and technology companies and how the dynamics of their collective culture and operating model are shaped when working in partnership. The book provides a 'Blueprint': a library of methods that includes 15 templates which can be applied to accelerate any alliance. The book also includes 19 case studies to illustrate real-life situations.

This book is particularly relevant to executives involved in partnership initiatives, specifically in professional services and technology firms, and can be read in conjunction with The Strategic Alliance Handbook by Mike Nevin.

1 The Evolving Dynamics of Alliances

DOI: 10.4324/9781003226765-1

1.1 Introduction

Business to business (B2B) partnerships, or alliances as they are commonly known in the high-tech business sector, have existed for more than 30 years between technology and professional services (PS) companies. They were initially transaction focused and used to create sales channels for technology firms. Over the last 20 years, they have become more sophisticated by providing a broader range of jointly built offerings to the market. Now the increasing pace of technology adoption and rapid proliferation of technology companies is driving new dynamics. Alliances are an established driver of many billions of dollars in client value and revenue but need to react faster to changes in the market and client demand. This chapter outlines the key themes of these changing dynamics as an introduction to alliances.

There is no doubt that many aspects of alliances and alliance formation and management have changed over the last 20 years, but one thing appears to have remained constant and that is the close correlation between the quality of the relationship and the commercial value that it delivers.

This aspect was one of the main reasons we decided to write this book, to explore the following conundrum: ‘How do organisations create and develop meaningful and value-added alliance relationships with complementary (and sometime competing) companies more quickly than was previously the case’?

This advanced type of alliance is what we in the book are calling agile alliances. In the context in which we use the term, we do not simply mean quick to form and deliver commercial returns; we also mean flexible and stable in construction and cost-effective in terms of effort expended to derive appropriate value.

There are multiple drivers for this need for agility in alliances, not least the ever-increasing digitisation and automation of alliance activities and processes. But the paradox which lies at the heart of considering this question is that some critical success factors (CSFs) in alliances identified over 20 years ago still pertain to this day. Things like trust, senior executive support, alliance vision, governance, operational protocols, collaborative behaviour in individuals and organisations. All these things are just as important now as they were 20 years ago.

The difference today is that these things need to be created and developed at incredible speed to capture market opportunities that are becoming increasingly fleeting. Gone are the days when a strategic alliance could be 18 months in the making with the promise of a stable business environment that offered 3–5 years’ worth of valuable return. Nowadays, strategic alliances must be created quickly and in response to imminent economic or societal threat. If nothing else, the lightning-fast development of respirators in the UK as a response to the COVID-19 pandemic taught us that if the threat was large enough, diverse organisations could put aside their individual priorities and working processes to deliver results which would have been unthinkable in ‘normal’ times.

Alliances in business have existed for almost as long as business itself. But the development of structured thinking into the theory and practice of consistent alliance formation and management dates back to the latter half of the 20th century, specifically the final decade of that century, 1990–2000.

It was at this point that companies as large as Microsoft and General Motors concluded that they could not ‘go it alone’ in providing an end-to-end combination of products and services to satisfy all their customer needs.

See, for example, the front page story in the New York Times, 16 January 2000, in which the chairman and chief executive officer (CEO) of the General Motors Corporation said that the company (then the world’s largest corporation) would rely more on partnerships:

‘IN POLICY SHIFT, G.M. WILL RELY ON ALLIANCES’.

‘Our approach is to develop long-term relationships with other companies that offer a unique advantage to the General Motors group […]’, said John F. Smith Jr. ‘This alliance strategy is our major thrust, and it is clearly a different approach to growth than most people have associated with [GM]’.

Or the example of Microsoft who grasped somewhat quicker than other technology firms that partnering was essential to success. In April 1998, Bill Gates addressed 500 executives of elite technology companies in Silicon Valley and said:

‘Microsoft can’t make it alone, but together anything is possible’.

And don’t forget that this was a radical business strategy departure for these companies who had for years enjoyed success in convincing customers that buying from a single supplier was the safe and sensible thing to do. How many of us, I wonder, remember the phrase ‘you never get fired for buying IBM stuff’, which was common at that time, or some of the marketing slogans of the time that advocated a ‘soup to nuts’ provision of products and services.

Indeed, one could argue that the success that Apple has enjoyed is based on the refusal of Steve Jobs to outsource aspects of his products to alliance partners and rather construct every aspect of their creation himself.

Consequently, alliance literature in the sense of structured research or model building is sparse until post-1990. One of the early pioneers in this area was Robert Porter-Lynch, who was writing about the value creation capabilities of alliances throughout the 1980s and 1990s. See, for example, his following output:

• The Practical Guide to Joint Ventures and Corporate Alliances: How to Form, How to Organize, How to Operate – 5 July 1989.
• Business Alliances Guide: The Hidden Competitive Weapon – 22 February 1993.

Robert was the early inspiration for the founding of an association to improve the quality of alliance management called the Association of Strategic Alliance Professionals (https://www.strategic-alliances.org), which was incorporated in the US in November 1999. Robert helped to establish and increase membership of this not-for-profit association by providing his own time and materials free of charge in its early days of development.

Suddenly, consultants, researchers and practitioners of alliances and alliance management had a focus around which they could congregate. An annual conference quickly followed and the association established itself outside of the US in European countries.

Indeed, that was where two of the current authors first met. Both Mike Nevin and Jim Whitehurst were early presidents in Europe of the newly formed association. Other luminaires worthy of mention in developing alliance thinking at this time included Ard-Pieter de Man, Geert Duysters, Bill Lundberg, Larraine Segil, Gabrielle Saylor, Snehal Desai, Jay Ennesser and Mark Gordon.

Early debates focused on the nature of alliances and a consideration of questions such as:

• What is the difference between an alliance and a partnership?
• How should one measure alliances? Is it all about the money?
• Are there significant differences between alliances in different industry sectors from high-tech to pharmaceutical, for example?
• Is there a common and consistent set of best practices in alliances?
• Are there any alliance formation models, templates or methodologies that practitioners can use?
• Should a certification process be developed to distinguish experienced alliance practitioners from early starters?
• What are the key competencies of alliance managers?
• What are some examples of outstanding alliances and what can we learn from them?

It was to support this fledgling management science and to bring some best practice structure to alliance formation and management that one of the authors (Mike Nevin) started a research and consultancy company specialising in alliances called Alliance Best Practice Ltd (ABP) (https://alliancebestpractice.co.uk/). The following chapters in this book are based largely on the research activities of this company and the development of alliance thinking that the research reveals over the last 20 years.

1.2 The evolving dynamics of partnering

Before considering the changing nature of alliances that has occurred over the last 20 years, it might be useful and clarifying to establish what the authors mean by alliances and how the alliance model differs from, say, a general partnering model. Note that we only cover the most common terms used here; a larger alphabetical list of key terms can be found in Appendix 1 – An Alliance Taxonomy.

• Alliance – A B2B relationship with a high degree of active collaboration between all the parties concerned. The focus and prime purpose of an alliance in the high-tech business sector is the additional or incremental sales of a company’s products or services.
• Partners – External organisations that are neither customers nor suppliers.
• Partnership – A B2B relationship with some form of collaborative interaction. Note that in this book we recognise alliances as a particular type of partnership relationship. Typically, an alliance relationship is a partnership in which there is a high degree of active collaboration and the sales model applied is sell with rather than sell to or sell through.
• Partnering – The act of collaborating in some form with other external organisations. The term can also be used to describe internal interaction inside organisations. Usually, this would be an informal collaboration between different business units.
• Partner Ecosystem – A group of organisations who are partners of a particular company. There may or may not be alliances within the ecosystem. The element that distinguishes a partner ecosystem is the active collaboration between and amongst the contributing companies to develop increased mutual value from clients or customers.

Twenty years ago, a typical alliance between a technology company and a PS firm would have been an ERP (enterprise resource planning) product (think SAP or Oracle) and a consulting and delivery firm (e.g. Accenture or Deloitte). The value of the alliance would have been obvious to customers. There were a limited number of ERP vendors and the product had a long and successful history, so picking to work with a couple of them is relatively straightforward.

Clients don’t carry huge project teams on the payroll who do large implementations every five years, so they will go external for a large proportion of the resource. There are a limited number of consulting firms with the functional and technical skills to implement, and if the client needs global coverage, there are even fewer. This meant that historically the combinations of technology and PS firms that were market relevant were a foregone conclusion, and therefore decision makers considering large investments to develop joint assets, sales go-to-market campaigns and train delivery teams could be relatively confident of the kind of return they would make.

The effectiveness or otherwise of the alliance in question significantly and commercially impacted the success of the implementation programme. Put simply, the better the two companies (PS and Technical) worked together, the better the outcome in terms of delivery on time and lack of disputes regarding outcomes.

The converse was also true of course, which is to say that the more distant and unconnected the two contributing alliance partners, the harder it was to deliver good service to the customer.

The key element that both partners were looking to achieve was alignment between their respective companies with the sole goal of satisfying the joint client or customer.

ABP codified these aspects of interaction as far back as 2002 into the following areas: Commercial, Technical, Strategic, Cultural and Operational (see e.g. The Strategic Alliance Handbook – A Practitioners Guide to Business to Business Collaborations – Mike Nevin, Gower Publishing 2014). In fact, ABP went further and identified several common success factors in each of these areas which, as research showed, led to success, and these were:

Commercial	Technical	Strategic	Cultural	Operational
Co1 Joint business value proposition (BVP)Co2 Due diligenceCo3 Optimum legal/business structureCo4 Alliance AuditCo5 Key metricsCo6 Alliance reward systemCo7 Commercial costCo8 Commercial benefitCo9 Process for negotiationCo10 Expected cost value ratio	T11 Valuation of assetsT12 Partner company market positionT13 Host company market positionT14 Market fit of proposed solutionT15 Product fit with partners offeringsT16 Identified mutual needs in the relationshipT17 Process for team problem-solvingT18 Shared cont...