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Why are alliance sales so misunderstood? After all they represent a dramatically lower cost of sale than other alternatives? Is it because they involve joint value creation? make up your own mind by reading this simple presentation.
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The Sales Ugly Duckling – Alliances!
How Alliance Best Practices Can Deliver Competitive Advantage
Page 2
Contents
The following topics are covered in this briefing:
Why should organisations partner?
Why is a best practice approach the best option?
What do we mean by ‘Alliance Best Practice’?
Why isn’t everyone following a best practice approach?
What evidence is there that best practices = best results?
1
2
3
4
5What would be involved in developing an alliance excellence model?
Appendices – Further supporting evidence and documentation
6
7
The prime purpose of alliances - sales
- We survey IT executives at VP level and above regularly.
- The last survey was conducted in 2012.
- The question we posed was:- What is the prime purpose of
alliances in your organisation?- The top five answers are shown
opposite.
‘What is the main purpose of alliances in your company?
New Sales
New Products
New Markets
New Skills
New Technologies
0 10 20 30 40 50 60 70
Percentage Responses
Page 4
Why should we partner?
Alliance sales are the cheapest type of sales available:
Getting Others to Sell Your ‘Stuff’
Organisations need to grow to survive. Typically they have done so by using the ‘build, buy, ally’ model of business development.
The recession has made the first two of these growth options difficult hence attention is now turning to the third option – ally.
Organisations are now actively looking for the best way to ally with a range of: suppliers, competitors, customers and others.
Research from a multiple series of sources suggests that the best way to ally is by using a best practice approach.
This short paper describes: the rationale, the supporting justification, and the most cost efficient method of implementing such alliance best practice programmes.
Page 5
Why is a best practice approach the best option?
ApprovedTheory
Advantages
Proven Success Strategies
BetterResults
Best practice = higher return at lower cost in less time
Following a ‘best practice’ approach has been recognised as a successful business strategy for many years. (See for example the Total Quality movement e.g. Baldridge and the European Foundation for Quality Management).
Such programmes have unmistakable advantages over alternative proprietary solutions. Typically these are: greater speed, lower cost, better quality, predictability of outcomes and less risk.
By relying on proven success strategies that have been developed previously organisations will enjoy all the advantages above in developing their alliance sales programmes.
Results from best practice alliance sales programmes show a higher return in less time at a lower cost (see later research justifications).
Page 6
What do we mean by ‘Alliance Best Practice’?
There is a great deal of confusion regarding the term ‘best practice’ or ‘best practices’ particularly when used to describe strategic alliances.
In this briefing paper we describe ‘best practice’ as systematised common sense. An approach, behaviour, process or activity that shows predictably better results in a quicker and more efficient manner than the alternatives.
ABP has researched over 27,000 alliance relationships and currently maintains a database of over 180,000 entries. It is from observations of this database that we draw our best practice conclusions.
Best Practice = Doing the right things in the right order:
Page 7
Why isn’t everyone using it?
Knowing that you should do something and having the courage to do it is not the same thing. (See for example Strategy and the Fat Smoker by David H Maister).
Many organisations labour under the misapprehension that designing and developing proprietary approaches is the only way to secure a competitive advantage.
In fact simply knowing that best practices exist is no guarantee to success. The skill is in knowing which best practices can be implemented at which time by the organisation: 1) Unconscious Incopetence, 2) Conscious Incompetence 3) Conscious Competence 4) Unconscious Competence
Common sense is not always common practice
QUESTION ONE
WHAT ARE THE ADVANTAGES OF AN ALLIANCE SALE OVER A DIRECT SALE?
Page 8
Research by Steve Steinhilber of Cisco Systems Circa 2006
Direct Sales Alliance Sales0
500000100000015000002000000250000030000003500000400000045000005000000
New Business
Page 9
An alliance sales example (IBM)
2009 2010 2011 20120
20
40
60
80
100
120
140
160
180
Partner Resell and Influence Client TCV Sell To
Commercial value has increased steadily year on year
Page 10
Following a best practice approach has delivered year on year increases in all revenue types:
All
figur
es in
€ m
illio
ns
2009 2010 2011
IBM investment
€200K €460K €1.6M €2.1M
Client Investment
€250K €385K €649K €300K
Client Headcount
4 8 13 6
Alliance Sales Journey in Figures
2012
500 M?TCV€460 M€100
M
€344 M
Page 11
TCV = Total Contract Value
Page 12
What evidence is there that best practice = best results?
Cisco benchmarking research 1999 – 2007
Procter and Gamble internal R&D programme 2002 – 2006
AstraZeneca – Internal project 2005 – 2010
Eli Lilly alliance programme re-evaluation 2001 – 2002
GSK Healthcare – strategic review 2004 - 2008
Practioners
Anderson Consulting ‘Best Practices in Strategic Alliances’ 1989
Boston Consulting Group Pharma Benchmarking report 2010.
IBM Healthcare industry annual review 2001 - 2011.
Booz Allen and Hamilton review of 3,500 global partnering organisations 2002 – 2006.
McKinsey annual alliance review 1995 – 2005.
Consultants
University of the United Nations – Bi Annual State of Alliances Review 2002 2004 2006 2008 2010.
Harvard University (Rosabeth Moss Kanter) Review of 37 global alliance programmes 2002 – 2006
University of Southern California annual review of 12,000 alliances in Silicon Valley.
University of Eindhoven Innovation centre annual review.
Academics
All of the following reports concluded that best practices = best results
This list is a small partial sample for example purposes only. For a fuller list of sources please see the Appendices Section.
QUESTION TWO
WHAT WOULD AN ALLIANCE SALES PROCESS LOOK LIKE?
Page 13
Category Vision Skills Trust
Purpose To create a Vision and a strategy for the relationship.
To develop the skills and knowledge needed by both / all partners for success.
To grow the relationship effectively over time.
Objectives To agree the type of partnership to be pursued.
To agree the scope of the partnership.
To identify relevant key stakeholders from both / all partners.
To agree current relationship value (baseline).
To develop appropriate Business Value Propositions (BVPs).
To document the vision and strategy for the partnership.
• To agree and document a joint go to market (GTM) plan.
• To improve both / all teams collaboration skills.
• To develop a simple and robust governance model.
• To develop an internal and external communication programme.
• To achieve a high degree of internal and B2B alignment.
• To train all partners appropriately on the chosen products and services of the BVPs.
• To increase the degree of organisational trust between all parties.
• To deliver BVPs to time and quality.• To increase the number and type of
BVPs sold.• To secure investment funding and
executive support for the partnership from both / all partners.
• To identify and eradicate cultural barriers to progress (both personal and organisational).
• To monitor and manage progress to key performance indicators (KPIs).
Critical Success Factors (CSFs)
Common Vision Joint Business Plan Alliance Process MOUP
Collaboration Skills Communication Internal alignment B2B Operational alignment
Trust (B2B) Cultural alignment Senior Executive Support Operational Metrics
Outputs MOUP document Initial relationship value
statement/s. Go / No go decision for
the relationship. Partnering readiness
assessment (Optional).
Joint go to market (GTM) plan. Governance model. Communication programme. Training plan. Skills gap analysis report.
Relationship development plan. Alliance balanced scorecard. Relationship change management
plan. Annual relationship strategy reviews
(recurring). BVP innovation process.
Category Vision Skills Trust
Tasks
Conduct alliance readiness assessment (Optional)
Conduct TECP workshop to agree the type of partnership to be pursued
Conduct an MOUP workshop to agree: vision, strategy scope and key stakeholders
Agree current relationship value (baseline)
Develop / agree Business Value Propositions (BVPs)
Sign off MOUP
Run go to market (GTM) workshop
Assess both teams collaboration skills
Develop skills improvement plans
Develop scalable governance model
Develop internal and external communication programme
Develop internal and B2B alignment action plans
Train all partners appropriately on the chosen products and services of the BVPs
Develop an alliance balanced scorecard and monitor results quarterly.
Develop a joint relationship development plan
Track BVP progress and amend as necessary
Develop new BVP development process
Agree joint funding / resourcing budget for the relationship
Address cultural barriers through partnering attributes model
Monitor progress and report KPIs
Tools to Support Tasks ABP alliance capability
assessment tool Partner selection criteria
white paper How to run an MOUP
white paper How to calculate
relationship value white paper
How to run BVP workshops presentation
Various example MOUP sign off documents
How to run ‘Alliance to Win’ workshops
ABP alliance skills assessment tool
Various example governance models
Internal and external communication plan templates
Internal and B2B alignment discussion papers and training modules
Example echnical skills training programmes
How to develop alliance balanced scorecards (white paper and slide deck)
Joint relationship development plan templates (various)
BVP tracking system Resourcing and funding plan
templates Partnering attributes model and
assessment tools Identity compass (slide deck)
Page 16
How do you build an alliance sales programme?
Step 1 - Baseline• Deliverables include best practice
education/guidance, programme charter, programme design, and a customized alliance framework
• Provides goal alignment, implementable vision, and a more robust alliance valuation methodology.
Executing a best practice alliance sales programme is a five step process:Step 3 – Implementation• Deliverables include additional alliance
launches, performance metrics, an improved processes for inter-business decision-making, and a recommendation for a relationship management system
• Makes alliances an integral part of the organisation’s enterprise thinking.
Step 5 – Review• Tracking the
programme effectiveness to pre established success criteria.
• Taking remedial action as necessary
Step 2 – Strategy and Design• Deliverables include finalized vision,
portfolio plan, detailed roadmap, partner matrix, and tactical improvement opportunities
• Provides a pragmatic realization path with clear benefits defined
Step 4 – Scale Capability• Deliverables include skills matrix, tools,
legal frameworks, internal certification programme and, web site
• Spreads alliance capabilities throughout company; disseminates best practices; embeds training for certification and alliance thinking in business systems
Step 1Step 1 Step 2Step 2 Step 3Step 3 Step 4Step 4 Step 5Step 5
Alliance Excellence Model
Alliance Capability Alliance Performance
Leadership
People
AllianceProcesses
Commercial
KeyPerformance
Business Results
Procedures Technical
Programme Strategic
Products Cultural
Platform Operational
Internal Benchmarking on an Ongoing Basis : Continuous Improvement Cycle
Alliance Maturity Model (AMMTM)Alliance Best Practice Index
(ABPITM)
External Benchmarking Alliance Best Practice Database (ABPDTM)
Establishing partnering as an organisational competence requires a framework
KEY MESSAGES: Investment in training alone will not deliver alliance competence (AC) Trained personnel need ongoing support when they return to their jobs Building capability is essential to delivering key business results Alliance Competence = Competitive business advantage
Page 17
FINAL QUESTION
WHAT IS YOUR CURRENT COST OF:
A) A DIRECT SALE?
B) AN ALLIANCE SALE?
Page 18
Typical partner segmentation pyramid
Page 19
1
2
3
4
Typical IT Language
1 = Alliances (GSIs)
2 = Technology Partners
3 = Value Added Resellers (VARS)
4 = Distributors /Resellers
Alliance Best Practice Language
Tier 1 = Partnership
Tier 2 = Collaborative
Tier 3 = Enhanced
Tier 4 = Transactional
Valu
e / S
peci
alis
atio
n / I
ntim
acy
Alliance cost of sales model
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
Partn
ersh
ip
Colla
bora
tive
Enhan
ced
Tran
sact
ional
Partner Segment
Perc
enta
ge C
ost
of
Sale
s
MarketingSalesExecution
Page 20
Further Details
For further details please contact;
Mike Nevin
Managing Partner
Alliance Best Practice Ltd
Web: www.alliancebestpractice.com
Office: +44 (0)1675 442490
Mobile: +44 (0)7766 752350
E Mail: [email protected]
APPENDICES
Page 22
Page 23
Support for the Alliance Best Practice Approach
There are currently 523 documents in the ABP Framework which support the concept of best practices in alliances.
The oldest entry comes from 1989 the newest is from June 2011.
The research comprises: books, white papers, articles, research assignments, presentations and investigations.
Research
There are currently 1,777 active members of the Alliance Best Practice community.
The community is split into both a general group and a thought leaders group.
There are 53 global Chief Alliance Officers and renowned alliance authors in the thought leadership group.
Community
The Alliance Best Practice approach has been taught to over 1,000 active alliance executives during the last 10 years.
Companies who have adopted the approach (amonst others) include:
IBM, Microsoft, AstraZeneca, BASF, Bristol Myers Squibb, Pfizer, SAP, Rolls Royce, Starbucks, Oracle, and Bayer Schering Pharma.
Practitioners
There is considerable evidence supporting a best practice approach:
Page 24
What is Alliance Best Practice (ABP)?
ABP is a research consultancy specialising in B2B strategic alliances
Alliance Best Practice
Alliance best practices are the identified practices that research has shown lead to optimal alliance results
ABP is a group of over 20 internatioanal alliance experts able to cover the world and work in multiple languages
ABP is dedicated to: discovering, developing and disseminating best practices for its clients
It does this through the ABP Database (ABPDBTM)
Page 25
Alliance Best Practices Exist
Recognised in General Management theory - goes hand in hand with quality and benchmarking.
ABP has examined 27,000 international collaborative relationships from both domestic and international sources.
We found factors which appeared consistently in successful strategic alliances – common success factors (CSFs).
Research
Common Success Factors (CSFs) - ‘Those practices, principles, procedures, behaviours or factors which appear in successful strategic alliances in a statistically relevant manner’.
ABP then validated the concepts with over 500 practicing alliance managers from ASAP – The Association of Strategic Alliance Professionals.
Validation
ABP has since used the resulting framework with over 600 in depth benchmarking examinations of strategic alliances in action.
The ABP database currently holds over 180,000 observations of these CSFs in practice.
The results show that doing the right things (best practices) produced the right results (more value / revenue).
Implications
ABP has investigated over 27,000 alliances to identify best practices
Partner ‘Intimacy’ Spectrum
Tran
sact
ional
Commodity Price Interchangeable
Product Highly specified
deliverables Buy from and sell to
Shared risks & investment
Deeply integrated Mutually
interdependent Breakthrough
market value
Some customization Flexibility/levels of
service Special knowledge Buy from, sell to and
sell with (GTM together)
Customized/ individualized
Process & data integration
Solutions oriented Shared rewards Greater cost value
leverage
Colla
bora
tive
Str
ateg
ic
Enhan
ced
0 = None 25 = Low 50 = Median 75 = High 100 = Perfection
Both partners need to define the topology of the progression and the ‘value of the journey’
LowValue
HighValue
LowIntimacy
HighIntimacy
Page 27
Commercial Technical Strategic Cultural Operational
Co1 Business Value Proposition (BVP)
Co2 Due Diligence
Co3 Optimum Legal / Business Structure
Co4 Alliance Audit
Co5 Key metrics
Co6 Alliance reward system
Co7 Commercial cost
Co8 Commercial benefit
Co9 Process for negotiation
Co10 Expected Cost value ratio
T11 Valuation of assets
T12 Partner company market position
T13 Host company market position
T14 Market fit of proposed solution
T15 Product fit with partners offerings
T16 Identified mutual needs in the relationship
T17 Process for team problem solving
T18 Shared Control
T19 Partner accountability
S20 Shared objectives
S21 Relationship Scope
S22 Tactical and strategic risk
S23 Risk sharing
S24 Exit strategies
S25 Senior executive support
S26 B2B Strategic alignment
S27 Fit with strategic business path
S28 Other relationships with same partner
S29 Common strategic ground rules
S30 Common vision
Cu31 Business to business trust
Cu32 Collaborative corporate mindset
Cu33 Collaboration skills
Cu34 Dedicated alliance manager
Cu35 Alliance centre of excellence
Cu36 Decision making process
Cu37 Other cultural issues
Cu38 B2B Cultural Alignment
O39 Alliance process
O40 Speed of progress
O41 Revenue flow
O42 Business plan
O43 Communication
O44 Health check
O45 Alliance charter
O46 Change mgt.
O47 Operational metrics
O48 Operational alignment
O49 Exponential breakthroughs
O50 Internal alignment
O51 Project plan
O52 Issue escalation
Common Success Factors : Best Practices
There are currently 52 CSFs in 5 categories
Alliance Capability Model (ACMTM)
Alliance Capability Alliance Performance
Leadership
People
Processes
Commercial
Key Performance
Results
Governance Technical
Resources Strategic
Structure Cultural
Technology Operational
Internal Benchmarking on an Ongoing Basis : Continuous Improvement Cycle
Alliance Maturity Model (AMMTM) Alliance Best Practice Index
External Benchmarking Alliance Best Practice Database (ABPDTM)
The goal is to establish partnering as an organisational competence
KEY MESSAGES: Investment in training alone will not deliver alliance competence (AC) Alliance managers need ongoing support to produce best results Building capability is essential to delivering results AC = Competitive business advantage
Page 29
Partnering Competence
The combination of CSFs into suitable individual proceses
The combination of processes into partnering practices
Built around alliance portfolio management:
Add
Adjust
Optimise
Retire
Alliance Knowledge
Four stages of knowledge growth:
Unconcious incompetence
Conscious incompetence
Conscious competence
Unconscious competence
People / Skills / Behaviours
Built around:
Strategic
Managerial
Operational
In a matrix with:
Alliance
Sales
Marketing
Technology
Local Involvement
Organisational Structure
The ability to apply the CSFs in an efficient and effective manner
Page 30
Alliance Maturity
Alliances are opportunistic
Each alliance is a ‘stand alone’ venture
Alliances are not part of the company’s “Standard Operating Procedure”
Typically alliances are used to secure tactical ‘deals’ or exploit individual market opportunities
Stage 1 - Opportunistic
Separate corporate efforts in different areas of business
Strategic partners developed
Effort begun to adopt “best practices” in alliance management
‘Islands’ of ownership of alliances formed
Stage 2 - Systematic
Planned investment in partnering capability
Wide scale use of full range of alliance: training, tools and priocesses
Close integration of: sales, marketing, technology, innovation etc
Stage 3 - Endemic
There are three observable stages in organisational alliance maturity
The Alliance Maturity Model AMMTM
Stage IIStage I Stage III
• Planned investment in partnering capability
• Wide scale use of full range of alliance capability building
• Close integration of sales, marketing, innovation etc
• Separate corporate efforts in different areas of business• Strategic partners developed• Effort begun to adopt “best practices” in alliance
management
• Alliances are opportunistic• Each alliance is a ‘stand
alone’ venture• Alliances are not part of the
company’s “Standard Operating Procedure”
Company 2
Company 1
Page 32
Alliance Best Practice Framework
There are 52 Critical Success Factors (CSFs)
identified from examining over 27,000
international strategic alliances.
By combining the principles established in
the CSFs a range of Best Practices (BPs)
have been developed
‘Tools’ refer to any documents that help users apply the Framework knowledge.
The Alliance Maturity Model TM establishes: current situation, (benchmark) current and future challenges, the nature of the journey’ and success strategies for cost effective progress.
DiagnosticsDiagnostics
MOUPMOUPBenchMarks
BenchMarks
Relationship OptimisationRelationship Optimisation
The ABPDBTM with 180,000+ entries lies at the heart of the Framework
ABPDTM
Page 33
Relationships Benchmarked
25
72
48
27
25
15
Pre Formation FormationGrowth MaturityExtension Decline / Renewal
Organisations in the ABPDBTM
Accenture (Asia Pac), Accenture (EMEA), Accenture (USA), Aenis, Air France, AirPlus, Alcatel (UK), Alcatel Lucent, Amec, AMP Capital, ANA Airlines, Apple Computer, Ariba, Arriva, Associated Business Leaders LLC, AstraZeneca, AT+T, Atos Origin, Avaya, Avis, AXA, Bank of America, BASF, Basilica Consulting, Battelle, Bax Global, Bayer Schering Pharma, BBC Corporation, BCX, BDO Unicon, Bearing Point, Bell Canada, BMI Airlines, BNP Paribas, Boeringer Ingelheim, Borland, BP Oil and Gas, Bristol-Myers Squibb, the British Library, BT, BT Global Services, BT Wholesale, Buckland Austin, Business Objects, Capgemini, Cardinal Health, Carlson Wagonlit, Caterpillar, CGI, Chordiant, Ciber-Novesoft, Cisco, Cognos, Computacenter, Continental Airlines, CSC, Csiper, Delaware, Dell, Deloitte, Delta Airlines, Deutsche Bank, Disney Corporation, Dupont Industries, EBRC, Eli Lilly, EMC, Epiphany, Ericsson, Everis, Exact Software, Excel Logistics, Experian, Exponent, Fontline, Fontworkx, Fujitsu Communications, Fujitsu Consulting, Fujitsu Services, Fujitsu Siemens, GE Capital Finance, Genesys, Genset, GlaxoSmithKline, GSK (Healthcare), GSK (Pharma), Hitachi Consulting, HP (UK), HP (USA), i2 Technologies, IBM (Asia Pac), IBM (India), IBM (UK), IBM (USA), IBM Global Services (NE IOT), IBM Global Services (USA), IBS, IDS Sheer, Imbercal, Imperial Tobacco, Infor, Intel, Intentia, ITS, Japan Corporate Bank, Kalamazoo, Kana, Keane, KLM Airlines, KLM Cargo, KPMG, Kuehne & Nagle, Lawson, Lenovo, Logica, LTSB, Lufthansa, Marks and Spencer, McAfee, Merck, Micro Focus, Microsoft (CS), Microsoft (EPG), Mitie, Motorola, MSG, NEC Computers, nFocus, Nokia, Nordea, Nortel, Northwest Airlines, Norwich Union Life, O2 Telefonica, Omax Auto, Omega Signs, Oracle, Peregrine, Pfizer, PLM, RBS, RCC, Reckitt Benckiser, Rider Levitt Bucknall, Rifcon, Roiter Zucker, Rolls Royce, SAP (EMEA), SAP (Global), SAP (UK), SAS Institute, Satyam, Scottish Widows, Serco, Siebel, Siemens AG, Siemens Business Services, Siemens Enterprise Networks, Siemens Comms, Siemens GmbH, Singapore Airlines, Skyteam, Sprint, SSA, Staffware, Star Alliance, Starbucks, StorageTek, T Mobile, Tata Communications, Tata Consulting Services (TCS), TDG Logistics, Telmex (mexico), Telus (Canada), TNT Express, Tubelines, UBS, uLogistics, Unipart Logistics, Unisys, United Airlines, Verizon, Vodafone, Wipro, Withy King, Xerox, Xerox Services, Zurich Financial Services
ABP has worked with over 300 of the worlds best partnering organisations
Page 34
Benchmarks by sector
28
11219
21
15
17
Airlines / Finance ITPharma ManufacturingServices / Media Other
ABPDTM By Sector
The largest sector is High Tech
All business sectors are now beginning to use alliances
Most common use is:
Developing New Business (Growth)
Developing New Products and Services (Innovation)
Developing Quality or Cost Control (Recession)
High Tech and Pharma companies comprise the majority of entries:
Page 35
External research improves knowledge
UnconsciousIncompetence
Conscious Incompetence
Conscious Competence
UnconsciousCompetence
Organisations don’t know what they don’t know! No understanding of Best Practices or current performance Value loss high
Developing understanding that Best Practices exist, but no systems to take advantage of them. Difficulties in generating the business case.
Can use the Framework to massively reduce cost of alliances
Knowledge of Best Practices but need training and experience to apply them successfully.cost effectively generate breakthrough levels of incremental revenue.
Collaboration is a core competence now organisations can use partnering as a key business strategy.
Target = Partner of Choice (POC) in chosen sectors.
To improve organisations must be aware of what ‘best practice’ looks like:
Page 36
Better knowledge = competitive advantage
UnconsciousIncompetence
Conscious Incompetence
Conscious Competence
UnconsciousCompetence
Organisations don’t know what they don’t know! No understanding of BP or current performance Value loss high
Developing understanding that BP exist, but no systems to take advantage of them. Difficulties in generating The business case.
Can use the Framework to massively reduce cost of alliances
Knowledge of BP but need training and experience to apply them successfully.cost effectively generate breakthrough levels of incremental revenue.
Collaboration is a core competence now organisations can use partnering as a key business strategy.
Target = Partner of Choice (POC) in chosen sectors.
The impact of lack of ‘best practice’ knowledge:
RiskRisk
CostCost
ValueValue
LeaderLeader
Page 37
Commercial Implications of Best Practice II
Best Practice (BP) consistently out performs Non Best Practice (NBP)
2004 2005 2006 2007 2008 2009 20100
10
20
30
40
50
60
70
3439
49 48
6561 59
1519
23 2529
21 19
Best Practice (BP) Non Best Practice (NBP)
Recession
Review
RationaliseRecession
Review
RationaliseWidening Delta as
times get tough
Same CompanySame VP
Different Approach
Page 38
Setting alliance manager standards
Alliance manager standards are now beginning to be introduced
Organisations are paying more attention to alliance management training
ABP chaired the certification standards committee for ASAP (the Association of Strategic Alliance Professionals) and researched and built the competency framework on which the certification is based.
In addition ABP has worked with IBM, Starbucks, Eli Lilly, and Rolls Royce to set suitable alliance manager standards to support training needs analysis and appraisal review systems.
A professional well educated alliance executive is the ‘point of the sword’
Individual relationship benchmark example
Generally consistent scoring
Client scored lower (usually) than the Partner
Differences were perceived in the following areas;- Co1 Defined business value
proposition- T2 - Partner company market
position- T3 - Host company market position- S7 – B2B Strategic Alignment- Cu8 – B2b Cultural Alignment- O2 – Speed of progress so far- O12 – Internal Alignment
0
10
20
30
40
50
60
70
80
90
100Co1
Co2 Co3Co4
Co5Co6
Co7Co8
Co9
Co10
T11
T12
T13
T14
T15
T16
T17
T18
T19
S20S21
S22S23
S24S25S26
S27S28S29
S30Cu31
Cu32
Cu33Cu34
Cu35
Cu36
Cu37
Cu38
O39
O40
O41
O42
O43
O44
O45
O46O47
O48O49
O50O51 O52
ABP Relationship Optimisation Process
Identifier Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
Description Goal Setting and Scoping Diagnostic Action Planning Resource Mapping 90 Day Review
Objective To identify the currently projected commercial value of the relationship for the next 12 months.
To generate an objective view of the relationship which shows 52 strengths and weaknesses identified as a score from 0-100
Objective – To generate a jointly agreed (with the partner) action plan to optimise the relationship.
To map all identified actions to a RACI[1] framework to identify key stakeholders roles and responsibilities.
To track the progress of the joint action plan to target/s and take remedial action as required.
Activities • Contact all key stakeholders and draw up strawman value projection
• Resolve conflicts and discrepancies with stakeholders
• Document draft final value projection
• Obtain sign off of value projection from senior executive sponsor
• Agree on key stakeholders to provide data
• Gather data and send results to ABP
• ABP benchmarks the data and produces draft alliance efficiency report (AER)
• Discuss AER with partner (and / or ABP) and decide whether to progress to stage 3
• Construct agreed agenda from draft report
• Analyse areas of misalignment (i.e. CSFs which show different scores from one partner to the other)
• Agree common scores for all 52 areas (with the partner)
• Identify areas for action• Identify short term and long
term actions• Identify help required with
long term actions• Produce agreed action plan
• Conduct RACI chart mapping for all identified improvement actions
• Communicate and agree role of all stakeholders on the RACI chart
• Revise the RACI chart as necessary
• Agree a single stakeholder from both /all organisations in each category
• Sign off RACI chart with host and partner executives
• Conduct healthcheck assessment prior to review meeting
• Construct agenda and pre meeting progress report
• Conduct meeting focusing on underperforming areas
• Agree revised action plan with remedial actions
• Publish revised action plan
Inputs • Relationship business plans• Alliance strategy document• Briefing Pack from ABP
• Online diagnostic• Briefing Pack from ABP• ABP coaching as required
• Draft AER• Suggested workshop agenda• Agreed workshop attendee
list
• Agreed Action Plan• RACI resource mapping
tool
• Jointly greed action plan• Jointly agreed
stakeholder map• MOUP• Agenda
Outputs • Agreed Scope• Agreed initial commercial
valuation
• Draft alliance efficiency report (AER) from ABP
• Benchmarking report• Decision to proceed
• Jointly agreed action plan • Stakeholder map of agreed actions
• Revised Action Plan
Having a consistent way to optimise relationships improves results:
The ROI of the Ally Model
The commercial return of the ‘ally’ model is typically five times higher than the other two models*.
Organisations are increasingly turning to the third generation business growth model of ‘ally’ because it represents a more flexible and cost effective growth model. In addition it is easier to achieve in a recession.
*Source Booz Allen and Hamilton Research 1996 - 2002
The ‘Ally’ model outperforms the ‘Build’ or ‘Buy’ models:
Page 42
The two forces driving systematisation
Regular interaction drives value Need to reuse knowledge gained Individual / corporate responsibility Systematisation allows consistent comparison
Sarbanes Oxley, Basel II & III, Enron, credit crunch, etc.
External audits of processes CFOs identifying value in the balance sheet It costs less to be working to a system CEOs tired of the hype ‘show me the money’
Systematisation is being driven by internal and external; factors
Internal
External
Commercial return of systematisation
Efficiency- (e.g. internal knowledge transfer,
having a defined process, having a clear business value proposition, constructing good alignment with partners, etc.).
Effectiveness- (e.g. Assessing potential partners
more quickly, refusing to be drawn into the opportunistic deal chasing merry go round but rather setting and keeping to a defined strategy, etc.)
- *Source Alliance Best Practice database 2001 - 2011
Best practice practitioners on average earn more from their alliances:
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Alliance myths
Some commonly held views are negated by the evidence in the database:
Alliance Best Practice
Alliances are about people pure and simple
There can be no ‘one’ single best practice all alliances are unique
Collaboration is an unnatural act
Alliances are not ‘sexy’ business models
If the money is good enough then people will pretend to get along
No organisation is going to willingly commit to a limited number of partners
There are too many variables in any collaborative relationship to allow meaningful analysis
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Alliance Challenges
Internal Challenges
Significant alliance challenges remain
External Challenges
Building bricks with no straw
Confusing terminology
Identifying Key Stakeholders
Lack of control
Appointing the wrong person to the alliance role
Technical excellence is not partnering excellence
Short term thinking
Managing multiple alliances
Embedding collaborative thinking in an organisation
Collaborative negotiation
Developing a business case for an alliance department / function
Distributed governance
Identifying alliance value
Positioning alliances in organisational structures
Overcoming organisational resistance / inertia
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The developing future for alliances
Internal Challenges
Collaborative business to business relationships are here to stay
External Challenges
More revenue coming from indirect means
More audit pressures on organisations to have auditable alliance processes
Alliance manager certification and qualification
Greater and more balanced measurement of alliances
Greater focus on the ROI of alliances
Accelerating Hi Tech alliances with Pharma companies
Development of PRM systems
Greater focus on systematisation
Training emerging as a capability enhancing tool of choice
More structure in alliance job descriptions, behaviours and assessment centres
Alliance virtual teams and ‘ad hoc’ knowledge exchange taking place
New models and business cases being built (e.g. cost of sales v cost of alliances)
Further Details
For further details please contact;
Mike Nevin
Managing Partner
Alliance Best Practice Ltd
Web: www.alliancebestpractice.com
Office: +44 (0)1675 442490
Mobile: +44 (0)7766 752350
E Mail: [email protected]
