By Amanda McAllister, PMP
Stakeholder engagement is a big part of alliance management: informing, educating, influencing, and enlisting the support of executive sponsors and other stakeholders goes a long way toward smoothing the path of an alliance going forward.
In my experience leading the decision-making process with licensing options for a large pharma company, stakeholder engagement is an even bigger part of the job—and always takes more time than I anticipate! As with any alliance, with an option situation there is investment, there is the anticipation of a reward, and there is risk. And there’s time pressure—we may have less than 100 days from a given date to make a decision, so the clock is ticking. Properly weighing and communicating all the relevant factors influences any decision about whether to pick up an optionor pass on it.
However, alliance stakeholders may have expectations, desires, and concerns that differ from the strategic goals for the deal. They might not always be fully aware of the origins of the alliance deal, the intentions behind it, or the specific objectives and parameters involved. Past experiences with challenging deals can also influence their perspective.
Alliance Management’s Role
That’s where alliance management has acritical role to play. In a couple of recent option deals I was involved with—one involving a gene therapy for neurodegeneration, the other a small-molecule disease-modifying treatment for Parkinson’s disease—there were big decisions to be made, significant risks involved, sizable investments at stake, and potentially great benefits if all went well.
But as we know, all does not always go well or according to plan. Executive stakeholders are keenly aware of this. Depending on where they sit, their history with such deals, and their appetite for risk, they may seek to expand the deal, acquire more rights from the partner, obtain more third-party data before proceeding, get the partner to do more experiments or conduct more studies or trials, or extract other concessions. They may want to acquire everything under the sun—or to stop the deal in its tracks.
Either way, it’s my job to try to manage and shape their expectations realistically, informed by data, market analysis, results of comparable deals, and the like: letting people know the risks and potential benefits, the options, the tradeoffs. When we do this in a pragmatic, step-by-step process, building on each step as we move forward, we get to a better decision in the end.
My recommendations for that process look something like this:
- Start early. Begin the conversation six months before you think you need to - and with the support of your partner.
- Ideally, have alliance management sitting at the table with business development when the deal is being negotiated. Alliance management may not technically be part of the deal team, but they may be able to influence some provisions of the agreement - and at the very least they’ll be informed about the structure, scope, and purpose of the deal.
- Educate stakeholders about the deal: why we’re doing it, what value we expect to get from it, any amendments of terms that have been agreed, what’s changed since we signed it, whether our assumptions have proved true so far, etc.
- Help to surface any fears around risks that stakeholders may have and learn what’s behind them. Did a similar deal they were involved with go badly? Are they facing budgetary or other pressures? Are they generally risk averse, or are they seeking additional information before making a decision? Listen to their concerns in a neutral, patient manner and generate scenarios to show what the tradeoffs may be with different courses of action.
- Identify three leaders to act as executive sponsors, ideally C-suite/functional heads. In my experience, this might mean someone charged with corporate strategy, someone from R&D, and a third person whose role depends on the phase and stage of the collaboration (e.g., discovery research). Once these key leaders are on board, they can then help influence and move things along.
The “Yes, and…” Approach
When stakeholders ask for more than was envisioned in the original deal, there’s a natural alliance management tendency to say, “No, we’re not going to do that.” It’s moving the goalposts—especially tricky when a partner is involved. But instead of shutting it down, we can employ the improv “yes, and…” approach: “Yes, we can consider that, and here are the implications and risks of that course of action.” For example, asking for “more” may expand the deal value, up the risk level, and lead to protracted renegotiation of terms, with the consequent loss of time. There could be a need for greater investment, with even more risk, and a possible loss of control if the partner or third parties are now taking on additional studies and trials.
Then there are those who just want to kill the deal altogether. To them we say, yes, we can pass on this—but how will you feel if our competitors snatch it up and a few years later they’re commercializing it? If we succeed, we’ll bring much-needed treatments to patients. And if we fail? The science may not work, which is the case for many of the decisions we make in R&D. Sure, it may go wrong. But what if it goes right? We could cure disease, make people’s lives better. That’s our mission, after all.
Having these conversations, you learn where people have concerns and where they don’t believe in the story you’re telling. You take their feedback and adjust the story and the development plan as you go. Maybe you realize you missed some good plot points for your executive summary.
Leading the Charge, and the Cheers
Stakeholder management sometimes feels likea cheerleading exercise: “Guys, you’re doing great. I know it feels like all we do is prepare decks for meetings, but stick with me. I promise we’re going to get there, and it’s going to be worth it.” You do what you have to do to keep people motivated and engaged.
If you follow the process and hang in there, it sometimes becomes very obvious that we have already negotiated the best deal and we’re on the right track. But stakeholders need to feel like they can contribute their ideas and we’re willing to explore them, even if we end upback at, “OK, we have the right deal. We’re good.” They start seeing that there are always other options, but they’re not always better options.
Amanda McAllister, PMP, is Director II and Global Alliance Leader.
About the alliance leadership spotlight series
The alliance leadership spotlight series is a joint initiative of The Association of Strategic Alliance Professionals (ASAP) and allianceboard to share practical knowledge in the alliance management community. It showcases Alliance Management professionals taking the lead in addressing challenges and driving alliance success.
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