Alliances tend to get into serious trouble when they succeed.
While their failure rate in early years is no higher than that of new ventures, alliances tend to get into serious trouble—sometimes fatal—when they succeed. Often when an alliance does well, it becomes apparent that the goals and objectives of the partners are not compatible.
The problems can be anticipated and largely prevented by following five rules.
- Before the alliance is completed, all parties must think through their objectives and the objectives of the “child.”
- Equally important is advance agreement on how the joint enterprise should be run.
- Next, there has to be careful thinking about who will manage the alliance.
- Each partner needs to make provisions in its own structure for the relationship to the joint enterprise and the other partners. The best way, especially in a large organization, is to entrust all such “dangerous liaisons” to one senior executive.
- Finally, there has to be prior agreement on how to resolve disagreements. The best way is to agree, in advance of any dispute, on an arbitrator whom all sides know and respect and whose verdict will be accepted as final by all of them.
ACTION POINT: Alliances have been portrayed as “dangerous liaisons.” What is so dangerous about entering into an alliance?
Managing for the Future
* Source: The Daily Drucker by Peter F. Drucker