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Why Alliances, Mergers and Acquisitions Fail - Part 2
by Larraine Segil


Not Establishing Common Ground Rules for Working Together

The relationship between alliance partners will not take care of itself. Building an effective working relationship requires planning and ongoing management. Companies need to work with their partners up front to identify and plan ways to manage the differences between them, since these differences will inevitably arise over time.

In order to manage differences well, it is useful to have a standard method in place to define with partners a shared vision of what a good working relationship would look like, explore possible challenges to realizing that vision, and develop a set of ground rules for how to work together over time to manage these challenges. These ground rules are most commonly integrated into contract terms. Companies use their alliance contracts to delineate such things as general escalation and dispute resolution procedures, committee structures and governance models, decision-making authorities for each partner, and designation of general responsibilities.

According to Managing Alliance Relationship: Ten Key Corporate Capabilities, a recent study by Vantage Partners, the most serious and frequently reported cost of not having this capability is partner misalignment, which results in alliances falling short of their goals. The experience of one biotechnology company illustrates this consequence well:

This biotech firm partnered with a pharmaceutical company to co-market a new drug. Despite recognizing their operational and cultural differences up front, the companies jumped right into the engagement together without setting ground rules or planning for how to address their differences. Barely one year into the alliance, the partners could no longer ignore their opposing operating styles, differing expectations, or mounting negative perceptions of each other. In response, they decided to “re-launch” their relationship. During the launch, with help from a third party, the partners began exploring their differences in order to understand why they did not work well together and then, in light of those differences, jointly brainstormed ways to bridge their particular gaps. They eventually planned a course to improve their working relationship and instituted a number of joint protocols and processes to improve day-to-day interactions.

Not Having Dedicated Alliance Managers

In its study, Managing Alliance Relationship: Ten Key Corporate Capabilities, Vantage Partners found that beyond business and/or technical acumen, alliance managers need the qualities of a good relationship manager --- a strong problem-solver able to spot and resolve conflict, effective at seeing situations from multiple angles, skilled at listening as well as conveying important information, and tuned in to how well people are working together.

Specifically, relationship management responsibilities of an effective alliance manager include:

  • Actively seek new opportunities with a partner in order to maximize synergies and identify ongoing opportunities for joint gain;

  • Coordinate communication between partner companies;

  • Coordinate with partners over and align around expert communications regarding the alliance;

  • Serve as the main channel or first line of defense for dealing with conflict;

  • Spot potential conflicts;

  • Resolve, mediate or intervene in conflict;

  • Decide when to escalate conflict;

  • Maintain internal alignment about the alliance;

  • Spot changes that may effect the alliance and initiate activities to address and adapt to change;

  • Monitor the health of the alliance relationship.

To avoid the risk of becoming dependent on a few naturally effective people, or over reliant on people with only subject matter expertise, companies need to institutionalize the role of an alliance manager by developing a cadre of people with both business management and relationship management skills and experience. Companies must also enable this group of alliance managers with common methods and tools for effective practice.

Not Developing Collaboration Skills in Alliance Employees

Alliance partners must do more than just espouse the need for collaboration. They must exhibit the behaviors of collaboration if they want to forge successful alliances. To do this, people all along the interface need collaboration skills to solve the day-to-day issues they face --- skills for joint problem-solving, negotiating, engaging in difficult conversations, and managing conflict. Rather than playing the ‘blame game’ with partners, they need to acknowledge and learn from each other’s contributions to problems and seek solutions that take into account the interests and concerns of both partners.

To ensure that this capability exists among senior alliance people, it is important to pay close attention to hiring practices, competency models, and development. And, to ensure that the skills exist throughout each alliance, it is important to at least have a standard way of training people (perhaps the partners’ people too) on the basic skills of collaboration.

For instance, a financial services firm with several partnerships and two strategic, international alliances has instituted a strategic relationship management training program designed for alliance managers and other more junior employees who work with partners. The program begins with two days of basic negotiation skills training. The next step is an advanced session focused on internal alignment and consultation, and dispute resolution using an alliance simulation exercise. To provide ongoing opportunity for people to improve their skills outside of the workshops, the organization has a small team of internal coaches available for help with difficult relationship management issues and skill reinforcement.

Companies that do not teach collaboration skills face needless conflict in alliances and rampant escalation of conflict to managers and executives. The conflicts themselves slow work down while employees scramble to resolve them and the cumulative effect of having conflict that isn’t easily resolved damages relationships between alliance partners. The frequent escalation of problems to managers and executives wastes their time and expends needless resources.


The Author


Larraine Segil is a Partner at Vantage Partners, a consulting firm with expertise in building corporate relationship management capabilities. She is author of Measuring the Value of Partnering – How to use metrics to plan, develop and implement successful alliances; Intelligent Business Alliances; Fast Power your E-Business; Dynamic Leader, Adaptive Organization: Ten Essential Traits for Managers; and Partnering - The New Face of Leadership.

Larraine can be reached at e-mail:

Many more articles in Partnering & Alliances in The CEO Refresher Archives
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Copyright 2005 by Larraine Segil. All rights reserved.

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