Taken from BCG’s review of Large Ecosystems Strategy
According to a recent blog post by Boston Consulting Group, business ecosystems are “dynamic groups of largely independent economic players working together to deliver solutions that they couldn’t muster on their own”.
While the article discusses large ecosystems like Amazon, eBay and Uber, lessons can be learned from the strategy guidance, that are applicable to strategic alliance management, across all industries.
In this blog we take a look at the 5 key takeaways for Strategic Alliance Managers, with practical guidance on the use of technology to support strategy development, management and evaluation.
Lesson 1 – The importance of identifying the right opportunities
Once you have decided to develop strategic alliances as part of your organization’s strategy, you will need to begin the process of identifying appropriate partners.
The BCG article takes a detailed look at the most effective ways to identify ecosystem opportunities, specifically: fragmented demand, fragmented supply, matching problems to solve, creating trust through mutual agreements, supplier coordination and co-innovation.
Strategic alliance management identifies similar opportunities. In a previous blog, we wrote about operationalizing partner selection where we review assessment categories; “These depend on the complexity of your industry and company, and on the size, nature and maturity of your alliance portfolio. For example, the ASAP Handbook of Alliance Management produced by the Association of Strategic Alliance Professionals (2013) offers three assessment categories (strategic, operational, chemistry) that align with your growth strategy.”
allianceboard insight: Ensuring that all stakeholders involved in the partnering decision are updated with new information, in real-time, is a substantial reason to use technology when evaluating potential partners.
Michael Roch, allianceboard CCO says “Being able to define and ensure adherence to the selection and due diligence criteria, across your entire organization, is just one of many advantages of using technology for this purpose.”
Lesson 2 – Establishing Governance
There are many models of collaboration to choose from when setting up an alliance. A common theme throughout all model types is the importance of good governance.
Understanding and agreeing to specified roles and responsibilities within a partnership is crucial for success. Good governance not only specifies these, but identifies key details like committees to be involved, key dates for committee meetings, access security levels and partner requirements.
allianceboard insight: This is an area where allianceboard, a platform purpose built for alliance management, adds true value to not only to the alliance manager / management team, but also to the executives that alliance management are reporting to. allianceboard allows detailed planning with interactive timelines, accessible by all involved, to ensure governance is established and managed without traditional admin burdens.
Lesson 3 – Social Acceptance
One of the most important lessons highlighted by the BCG article is the need for social acceptance. This is as applicable in strategic alliances as it is in macro ecosystem environments.
Crucially, social acceptance in both partner organisations is important to the success of the alliance. Ensuring internal buy-in is an important step not to be missed.
The article states “In order to build social capital and secure social legitimacy, orchestrators must establish an ecosystem governance model that is consistent and fair.” Where large ecosystems will be building this social acceptance among all its partners, suppliers and stakeholders, an alliance manager will be doing the same work but between the alliance partners and internal stakeholders on both sides of the deal.
allianceboard insight: Technology put in place to track projects, plans, risks, timelines, and required actions, which also sets reminders that are automatically sent to the right people, can significantly reduce the time required by the alliance manager to manage these, freeing them to focus on more value creating activities.
Lesson 4 – Partnership Impact
Lesson 4 examines the impact of an alliance. In simplest terms, this can be assessed with this question: Does the partnership make each of the partners involved, better off?
The BCG article looks at value in the ecosystem, in point 6. In alliance management, the value is realised by the partners, whereas in an ecosystem, value is realised by the customer and any benefits to the organisation such as revenue, growth and logistics are all benefits realised after.
“The best way to benefit from an ecosystem is to focus on creating value for the customer.”
While an ecosystem can support growth, revenue and eventually profits, it does so in a manner that involves higher risks. Strategic alliance management is a much more structured partnership whereby goals and KPI’s are agreed at the beginning with value and risk being shared and managed in a coordinated manner.
allianceboard insight: The use of technology in the management of an alliance drives value further by optimising each step of the process. In our blog “Digitize Your Alliance Management Practice to Provide Visibility, Promote Agility, and Create Value” written by our friends at Alliance Management Consultancy, The Rhythm of Business, we discuss the values that digitizing your alliance management function can bring, including: supporting you to become more agile, iterative and focused; improving visibility and access to information; maximising value creation and enhancing resource strategy.
Lesson 5 – Evaluation over Time
Just like with ecosystems, continuous evaluation and improvement are an essential part of creating success.
Regular health checks on an alliance can help to quickly identify opportunities and threats and allow both parties to act on the information with speed.
By maintaining regular evaluations, alliance managers can ensure that partnerships remain on track to achieve goals and confirm milestones are met relative to timelines and planned resources. When regular evaluations don’t take place, they become burdensome forcing a more in-depth exercise that is often time intensive.
According to our blog on alliance health checks, “Regular health checks help you achieve three important things:
1. Deep insights from your internal stakeholders and your external partner about the health of your alliances. What you do with these insights of course is up to you – you can proactively pursue opportunities identified or problems anticipated.
2. Build a repeatable process for conducing regular alliance health checks at the touch of a button. This digital approach is best practice and essential for leveraging your alliance team as you manage more partnerships.
3. Save hundreds of hours in the process that your alliance managers can use on more productive work.”
allianceboard insight: With allianceboard, you can automate your regular alliance health checks. allianceboard comes pre-loaded with templates recommended by the Association of Strategic Alliance Professionals (ASAP), the global best practices organization for alliance management and our knowledge partner.
The best part about using allianceboard to manage your alliance portfolio is your access to the reporting module. Real-time insights can be crafted into reports that are significant to your needs. These can be automated to run at set time periods and sent directly to designated recipients, reducing the hours of report building and distribution traditionally required to share these.
Alliance managers have one eye on the horizon, looking for opportunities and the other ensuring established partnerships have everything they need to flourish.
allianceboard provides managers with a platform that automates many of the operational responsibilities, ensuring areas like; identifying appropriate partners, establishing good governance, social acceptance, driving success and maintaining regular alliance health checks, are less of a burden, freeing alliance managers to concentrate on further developing partnerships to fulfil strategic direction.
Interested to discuss your current alliance management processes? The allianceboard team are happy to have an informal chat and help you to identify process improvements.
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