26th April 2022

How to rescue a failing strategic alliance

According to Harvard university, the failure rate for strategic alliances hovers between 60% and 70%. Despite an abundance of advice on how to make alliances work, this dismal record hasn’t improved in the past decade.

While every strategic alliance sets out with the best intentions and a joint desire for success many fail and usually for the same reasons which are common across every sector. 

One of these reasons is disinterest. One or both parties are not clear about what is in it for them. This is usually because no clear goals have been identified and shared. Also, senior management have not bought into the benefits of a partnership. Disinterest can kill an alliance stone dead as resources and commitment are deployed elsewhere after the initial enthusiasm wanes. 

Another reason why alliances do not succeed is because of a lack of an agreement and processes in place to measure and identify success or failure. When this happens, champions from all participating organisations will distance themselves from the partnership because they are not confident, they can quantify or justify the resources required to meet agreed alliance obligations.

The most common reason why strategic alliances fall by the wayside is because the groundwork was not done before the agreement was signed. One or both parties have not drawn up and agreed a robust plan that has identified goals, measurable milestones and which outlines the responsibilities of each business. Due to a lack of a plan, over time partners don’t build an adequate infrastructure, e.g., teams with well-defined responsibilities, processes and budgets — to identify points of failure. Sadly, when these occur alliances usually fail. 

So, what can you do to get an alliance back on track?

The first step has to be creating a plan which not only defines goals etc, but also identifies the mechanics of how everyone will work together.  

Companies have learned the hard way not to enter into an alliance without a detailed business plan and contract. But sound business planning is only half the battle. Dwelling on a formal plan can obscure the critical need to explore and clarify up front the nature of the alliances working relationship. This should focus on not  just what they will do but how they will interact and resolve issues. 

Agree metrics that can identify success and failure 

Both parties have entered into the alliance because they see value for them and their clients. However, patience is needed because it is very rare for an alliance to yield significant results in the first months or even in the first year or two.

The lack of an instant return can sometimes mean that senior management attention wanes and resources are redeployed elsewhere, and morale slumps, all too frequently leading to the alliance’s demise.

That is why it is vital to not only have detailed goals in the partnership plan to measure how the relationship is going but to also have these as the focus of regular partnership meetings. These can highlight progress in issues other than initial sales, in areas such as customer satisfaction or client retention. All key reasons why you would engage in a strategic alliance. 

Leverage differences don’t eliminate them

One of the main reasons why businesses agree on a strategic alliance is the differences between them, such as in markets, clients, knowledge and expertise. It’s these differences that can help retain existing clients and attract new customers. 

So why do so many alliances forget that and why do so many fail to promote these differences?

One way to kickstart  an alliance is to share these differences in both organisation’s and to encourage them to consider how each other’s clients can benefit from them. 

Senior leaders must encourage collaborative behaviour

Just as partners need to focus on building a strong working relationship at the start of an alliance, so they need to nurture that relationship throughout the life of the partnership. This means leaders must actively foster collaborative behaviour among all the people who work on the alliance. 

Although effective governance structures, such as joint steering committees charged with providing oversight and direction to alliance teams, can facilitate collaboration between individuals, they cannot guarantee it.

What will make an alliance work is empowered and enthusiastic people working together with shared goals and one vision. 

Ensure internal stakeholders understand why you have an alliance  

Alliances fail when people don’t believe in them that is why managing internal stakeholders is just as important as the time spent with those in any partnership. 

Without internal buy in and understanding of the goals set and the vison agreed the alliance will fail. 

The key to success is ensuring not only good communication with partners but maintaining commitment from and alignment among the business units and functions (finance, legal, marketing, sales) in your own company that are affected by the alliance or on whose contributions its success depends.

I’d urge anyone who strategic alliances in place or has had them fail in the past to consider these tactics. 

However, if I had to say what my experience has shown me to be the most effective tool to create success in strategic alliances it has to be an actively shared parentships plan with powerful goals and objectives. 

So next time I will share with you my template for strategic alliances success and the key elements it has to contain. 

John Joe, McGinley Glassagh Consulting 

Business Development, John Joe McGinley, Glassagh Consulting