Corporate alliances are growing in number – by about 25% a year – and account for up to a third of revenues and value at many companies. Yet some 60% to 70% of them fail. What is going wrong? Because alliances involve interdependence between companies that may be competitors and may also have vastly different operating styles and cultures, they demand more care and handling than other business arrangements. The authors have developed five principles – based on their two decades of work with alliances – to complement the conventional advice on alliance management: (1) Focus less on defining the business plan and more on how you and your partner will work together. (2) Develop metrics pegged not only to alliance goals but also to performance in working toward them. (3) Instead of trying to eliminate differences, leverage them to create value. (4) Go beyond formal systems and structures to enable and encourage collaborative behavior. (5) Be as diligent in managing your internal stakeholders as you are in managing the relationship with your partner.
Companies that have adopted these principles have radically improved their alliance success rate. These companies have learned that the conventional advice is not so much wrong as incomplete. The five simple rules can help fill in the blanks.