By Michael Roch, Chief Commercial Officer, allianceboard
This post is a summary of allianceboard’s presentation at the ASAP Europe 2022 Summit in Amsterdam.
Who owns strategic alliance data?
Across industries, companies rely on strategic partnerships to reach long-term strategic aims and short-term profit targets. Yet who owns the analytics around these alliances?
We presented staggering statistics from the allianceboard Alliance Management Digital Maturity Index™, our ongoing thermometer of digital maturity in alliance management functions and centers of excellence:
- 67% of senior executives do not clearly understand the value each alliance provides to their organization
- 77% of key stakeholders do not have a clear view of all risks and associated management plans related to their alliances
- Only 37% of alliances deliver on their intended value within expected timeframes
We recognize that there are many reasons for the perceptions of the participants in our Index. One of them is that there is not yet an accepted way across industries of how to think about and implement compelling alliance management analytics that are meaningful to internal and external stakeholders.
In many organizations, this contributes to a significant gap between (a) the information that stakeholders require to take decisions and actions ensuring alliance success and (b) the information that alliance managers can pull together to support these decisions and actions.
We argue that analytics related to strategic alliances need to be owned by the team that manages the alliance and outline one of many possible ways to think about alliance analytics.
A simple way to think about alliance management analytics
Many alliance management heads ask us, “how do we measure all this?” There are many ways to think about alliance management analytics. Figure 1 offers a simple, three-part framework that distinguishes between outcome, activity and alignment measures.
Figure 1: Three-part alliance management analytics framework
It is important to recognize that outcome measures must always be unique to each partnership: this is because each partnership seeks to achieve different strategic, operational and financial aims. But activity and alignment measures are not unique to each alliance – these are common across the entire alliance portfolio, or at least common across different categories, tiers or groups of partnerships.
About outcome measures
Each alliance has its unique purpose, and thus outcome measures must also differ from alliance to alliance. We generally recognize five broad types of alliance purpose: co-innovation, cost-reduction, co-selling, new market entry and sustainability, yet this list is by no means exhaustive. Figure 2 offers example measures for each type of alliance outcome:
Figure 2: Example outcome measures
To repeat: it’s critical to recognize that outcome measures will always be unique to the individual partnership and its intended outcomes. The sources of information for these analytics will vary.
About activity measures
Activity measures apply across all partnerships (in large portfolios these apply across each type or each tier of partnership). While business units “own” alliance outcomes and related measures in most organizations, alliance activity measures are owned by alliance management. Thus, it is alliance management who must develop, evangelize, educate, drive and be accountable for alliance activity measures.
Figure 3 offers three broad types of activity measures that we advocate every alliance management function should drive:
Figure 3: Example activity measures
For example, in most organizations, decision-speed has a direct economic impact: the faster a decision is made, the faster the alliance can contribute to profit. Yet most organizations don’t track how long it takes to make decisions and thus don’t learn how to accelerate decision-making. Figure 4 shows a possible analytic about decision-speed that we presented at the ASAP Europe 2022 Summit:
Figure 4: Decision-speed over time
In this example, alliance Epsilon manages to make faster and faster decisions; the opposite is true in alliance Omega. There could be many reasons for this, yet Heads of Alliance Management should seek learnings from alliance Epsilon to apply to other alliances and also explore why Omega is going in the wrong direction.
Imagine a discussion with a stakeholder: “we resolved 15 issues for you before you even knew they were problems. Here is what we learned, and here is where you can help.”
Risk managment provides another example. Any alliance team wants to be able to understand the various risks that could derail the strategic, operational and financial objectives of an alliance. Where a risk is material, a risk management plan wants to be in place. (See our detailed article on risk management here https://www.allianceboard.com/post/managing-risks-in-strategic-alliances).
Figure 5 provides another analytic that we presented in Amsterdam:
Figure 5: Alliance risk management
Now imagine you could explain to your stakeholders the proportion of closed risks before they materialize – this forms the basis for understanding costs saved, and the value of alliance management. Figure 6 provides an example:
Figure 6: Open v closed risks
At the beginning of this article, we explained that 77% of key stakeholders do not have a clear view of all risks and associated management plans related to their alliances. Once an alliance team can explain what it does in simple, quantified ways, stakeholders are better equipped to act, and the value of alliance management becomes clear.
Execution is about moving the alliance along. There are many ways to show the status of an alliance and how an alliance is progressing. Figure 7 shows a possible view of how all alliances within a portfolio are tracking:
Figure 7: Status of deliverables within an alliance
This data could be aggregated for all initiatives with a partner, by alliance manager or across the portfolio (see below for levels of analysis).
About alignment measures
Alignment measures complement the picture of outcome measures (which are unique to each alliance) and activity measures (which look at what the alliance team does). Alignment measures look at the quality and potential of the existing partnership. Figure 8 shows a table of sample alignment measures:
Figure 8: Example alignment measures
The relationship dimension is all about the health of the alliance. Here, it’s important to understand how alliance health is tracking over time. Figure 9 shows an example, again from our ASAP European Summit 2022 presentation in Amsterdam.
Figure 9: Alliance health over time
A final thought about alliance health: alliance health tends to decline over time unless new initiatives are found to pursue with a partner – even if the existing initiative is performing well. Thus, identifying new opportunities for new initiatives with each partner is a key part of alliance management.
About levels of analysis
So far, we have offered three dimensions of analytics that an alliance management team should care about: outcome, activity and alignment measures. Yet these levels of analysis don’t yet recognize that different stakeholder groups have different information needs.
To keep things simple, it is helpful to think about four levels of analysis:
Alliance managers: what analytics do they need to manage the individual alliances for which they are responsible?
Governance committee members: what analytics do they need in order to take decisions for which they are responsible, and what analytics do they need about the partners and all initiatives that relate to a partner?
Alliance management leadership: what information do they need to resource and manage their alliance management function or team?
Senior management and other business stakeholders: what information do they need about the portfolio they are responsible for, key risks and their financial impact, upcoming milestones and the pipeline of new partnering opportunities?
Figure 10 provides a last slide from our presentation on alliance analytics:
Figure 10: Audience information needs
The case for alliance management analytics
We argue that it is imperative for alliance management teams to begin owning their alliance data – in the same way how R&D, human resources, pricing and sales teams own their data.
To all alliance managers out there: talk to us about how to make this happen in your organization.
Want to know more? Reach out to us!
allianceboard makes for better alliance management.
Like to learn more about digitizing alliance management? Follow this link or scan the QR code below to read an article, published in partnership with The Rhythm of Business, that looks at just that.