How do you select a partner when establishing new alliances? Will you look at partner fit or not?
In the dream scenario you will only establish your alliance with your ideal partner. Your partner will have the right skills or product, intellectual property or maybe market access. For sure you will look at partner fit, to ensure that the organizational culture of your organization is compatible with that of your partner and to ensure that your prospective partner is not already teaming up with you competitor. Won’t you?
Partner fit can be quite important; when the wrong partner is selected it may be a cause of future failure for the alliance. A typical example can be the teaming up between a large corporate and a small company where the founders are still in charge. The companies will have a different organizational culture and possibly differ in view on employee turnover, decision-making, budget control and criteria for success.
In the classical approach to partner selection one would select the ideal partner and a difference in culture may be a reason to disqualify a partner. The fact that a partner is teaming up with your competitor or has a competing product in their portfolio also disqualifies the partner.
We’ll make it fit
In a recent conversation an alliance executive from a pharma company said to me “we’ll make it fit”. His background for this remark was that he often can not afford to disqualify a partner. Sometimes a partner has that unique element you need and you will simply need to make it work. In his case partner fit was not examined; the partner only needed to have the right molecule and then the parties will make it fit.
In the past companies may have been in situations where they could afford only to team up with the perfect partner. Today there might be only a few that could still afford this luxury. As the pharma example illustrates your prospective partner may be the one with that missing element and you will need to make it fit. The partner fit element of the whole partner selection process will still have a function though. The purpose will continue to be the qualification of the partner and thus to understand the differences between the two organizations. The assessment on organizational culture, network and competitiveness will help you to better understand your partner. The partner fit analysis will make you aware of the elements that need attention during negotiation, launch and management of the alliance.
An example with obvious differences is the scenario where a small company is teaming up with a large company. It may appear that the small company is less skilled in the alliance management process than the large company. Organizationally the smaller one will be more gut-decision driven and the hallway is probably the company’s location where the most meetings take place. The small company will be thrilled to team up with the big name, but may fail to understand why the big company takes so long to make decisions. For the larger company the small company may be viewed as cowboys. But then the cowboys will have the missing element for them to make their product development successful. Some of the readers of this newsletter will recognize a scenario we use in the Alliance Mastery workshop; some of the readers will recognize some of their own alliance situations.
When you dive into the alliances because of the capabilities of the smaller firm you might be unaware of these differences, how obvious they may seem. When you do the fit analysis before establishing the alliance you will be aware of the differences and can manage them. Ways to overcome the differences may include positioning your alliance manager at the partner’s location or increase your communication to them in other ways. An external consultant can be helpful too, as independent guide to create the alliance or as an alliance coach to your partner helping them to increase the effectiveness and their return on the partnership.
Even though your partner is the only choice as they have your missing element, a solid partner selection process will help you identify the differences and manage them “to make it fit”.
How about you?
Have a look at your alliances; are you consciously aware of the differences and managing them accordingly? Even though your alliance is up and running you can still execute that fit analysis. Do it yourself, or ask an external alliance consultant to perform a fit analysis and issue an advice to you for improvements in your alliance management process. Contact me to discuss.
The report “Partner selection: A source of alliance success” by Danielle Twardy describes the results of a study into the partner selection processes companies use to select their alliance partners. The most important finding of the study is the more formal a company’s partner selection process, the higher the success rate of alliances.