Strategic Alliances: Collaborating for Growth
"If you think you can go it alone in this global economy, you are highly mistaken."
Jack Welch, Former CEO of General Electric
Increasingly companies of all sizes are learning that going it alone may not be their best path for growth. Across multiple industries and professions, organizations have started to understand that forming strategic alliances allows them to provide their customers with expertise in products and services in more areas than they can actively become experts in themselves.
If you have ever enjoyed a cup of Starbucks coffee while browsing the bookshelves at Barnes and Noble or listened to your personal play list through Spotify while riding in an Uber, you have benefited from a strategic alliance. The shortage of Critical Care ventilators during the start of the Covid pandemic was the genesis for the strategic alliance between GM and Ventec Life Systems.
The past few years have reinforced this option to combine, and unite expertise to expand companies’ reach, to drive growth and to cope with rising competition (traditional and nontraditional competitors) or Black Swan events like the pandemic. A strong focus on alliances rather than traditional mergers and/or acquisitions brings more value and expertise to the table, no matter if your company is a large enterprise or a small founder led start-up and everything in between.
Do not let the size of your organization, the industry you are in, or the markets you serve restrict your willingness to explore opportunities to collaborate for growth.
What is a Strategic Alliance?
A Strategic Alliance is a joint agreement between two or more firms in which:
A common strategy is developed in unison and a win-win attitude is adopted by all parties.
The relationship is reciprocal with each partner prepared to share specific strengths with each other.
Resources, investments, and risks for mutual, rather than individual gain are pooled.
Organizations form alliances for four primary reasons.
Entry into new markets.
Reducing operation and development costs.
Developing and introducing new capabilities.
Speed to market.
How to Build and Maintain a Strategic Alliance
Successful strategic alliances are based upon the same foundations of all great relationships: trust and communication. Strategic alliances will only work long-term if they are developed, implemented, and maintained through the combined strengths of each partner. The relationship must be focused on one thing; providing the best viable solutions for their mutual client.
There are four shared values at the core of all successful Strategic Alliances:
Common Cause: The opportunity addressed is important and valued by both partners and, it is clear that forming the alliance is the best way to successfully handle the opportunity for their customer bases that have common interests.
Belief in Strategy: The belief that the alliance strategy can develop opportunities better than the status quo (The biggest obstacle or objection you will need to overcome with a prospective alliance partner is the status quo.) An appreciation for the compounded reach of two teams working together, which means having access to twice as many prospective customers than if they were working alone.
Resources: Each partner is willing to commit the necessary resources and time. They have the ability to leverage one customer cohort with another.
Willingness to explore opportunities: Alliance partners are willing to take risks together that individually they might not be willing to take. As well as they are willing to work creatively in doing so.
Four Step Process for Building a Strategic Alliance
Step 1: Build Awareness of Yourself
Are you making the right people aware of who you are and what you can do for them?
Building brand awareness is an ongoing process, not a one-time event.
Build your brand as a good partner, one that people search to work with.
Step 2: Identifying, Selecting & Developing Strategic Alliance Partners
Identifying: Build a marketing approach based upon people, not products.
Selecting: Each partner should bring the desired complementary strengths to the alliance.
Developing: Successful problem and/or opportunity definition involves identifying a meaningful intersection of the interests and needs of the alliance partners.
Step 3: Develop Strategy & Build an Implementation Plan – Three Key Principles
Clearly define a strategy and assign responsibilities. The strategy needs to include a documented business plan.
Phase the relationship between the partners. Spell out the steps in an agreed upon and executed "Strategic Alliance Agreement.”
Blend the cultures or the partners. The relationship will not be successful based 100% on the culture of one organization. Commitment to the Strategic Alliance is Essential!
Step 4: Ongoing Management of the Alliance
Alliances do not maintain themselves.
Relationship issues do matter and managing them is essential.
Integrate an "Alliance Relationship Plan".
Keep positioning yourself as a resource, not just a product/service specialist.
If you want to learn more about how strategic alliances can impact your organization and how to successfully build them, you can reach out to me at 952-239-9865 or email me at info@StevenJPike.com.
