Mastering AllianceStrategy

A Comprehensive Guide toDesign, Management, and

Organization

James D. Bamford Benjamin Gomes-Casseres

Michael S. Robinson

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Innodata0787965111.jpg

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Advance Praise for Mastering Alliance Strategy

Mastering Alliance Strategy is a must-read for anyone in corporate orbusiness unit management who is contemplating a strategic alliance or who wants to improve or exit a current alliance.

Jon T. Elsasser, senior vice president, corporate development, The Timken Company

I am fascinated! This is one of those rare books delivering valuablelearning for both newcomers and experienced alliance pioneers such as Lufthansa, a cobuilder of Star Alliance. The book covers the wholealliance life cycle, providing winning strategies, timeless principles,simple tools, and compelling real-life examples.

Thomas Sattelberger, executive vice president, product and service,Lufthansa German Airlines

In todays network organizations, you need to manage without com-mand and control. Written clearly, realistically, and full of insights, thisis must reading on both sides of the Pacific.

Hiroyuki Itami, professor, Hitotsubashi University, Japan

The authors have the deep knowledge and capability to help large cor-porations get alliance strategy and execution right. This book brings allthe insights, processes, and tools together in one place, and provides aroad map for exceptional implementation.

Patrick Canavan, senior vice president for global governance, Motorola

Provides a wealth of concrete and practical insight and advice on howto get the best possible results from strategic alliances. It is based onfascinating examples and draws on the work of leading experts on man-aging strategic alliances.

Yves Doz, professor, INSEAD; coauthor, Alliance Advantage

We cant do it alone; for most businesses we must have allies. This bookbrings experience, insight, and wisdom to elevate the management ofstrategic alliances into a major source of value for all businesses.

Thomas C. MacAvoy, Darden School, University of Virginia; vice chairman (retired), Corning Inc.; coauthor, Alliance Competence

This is not just another book on business combinations. The conceptof alliance strategy is invaluable in making us focus on the wholestrategy, not just on a single transaction. It is a must-read in todaysworld of industry consolidation and global commerce.

Nita Seelinger, president, DuPont Food Industry Solutions

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Unique in depth and breadth of coverage, this book is at once practicaland rigorous. It brings together some of the best ideas from the invalu-able Alliance Analyst and will benefit anyone seeking to understandalliance strategy.

Ranjay Gulati, professor, Kellogg School of Management, Northwestern University

Alliances are now a fact of life for business, an important piece of cur-rent operations as well as future strategy. Ben Gomes-Casseres has longbeen a knowledgeable guide to the challenging world of partnering,helping many companies get value from their alliances.

Rosabeth Moss Kanter, professor, Harvard Business School; best-sellingauthor of Evolve!: Succeeding in the Digital Culture of Tomorrow

As in other sectors of the economy, alliances will be crucial to the suc-cess of hospitals too. The authors expertly cover the salient elementsfor hospital senior leadership to understand, direct, and navigate thisrelatively new strategy in their organizations.

William A. Himmelsbach, executive officer, VHA Metro LLC; senior vice president, VHA Inc.

Years of focus on the evolution of business alliances have given theauthors deep insight on this powerful global development. Readers willappreciate the growing complexity of these alliances and the value tobe gained from their serious study.

William S. Edgerly, chairman emeritus, State Street Corporation

This book provides an important and very useful perspective onalliance strategy. No other book that I have read provides such a com-prehensive and practical approach to this important topic.

Lynda Applegate, professor, Harvard Business School

A must-read for any executive responsible for planning, choosing,managing, or implementing a business alliance. Provides invaluabletips, tools, and guidance in a how-to format that will serve as a readyreference for years. Buy this book now . . . your competitors are notwaiting for the paperback!

Michael J. Bellissimo, director, alliance operations, iPlaneta Sun|Netscape Alliance

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Mastering Alliance Strategy

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Mastering AllianceStrategy

A Comprehensive Guide toDesign, Management, and

Organization

James D. Bamford Benjamin Gomes-Casseres

Michael S. Robinson

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Copyright 2003 by John Wiley & Sons, Inc. All rights reserved.

Published by Jossey-BassA Wiley Imprint989 Market Street, San Francisco, CA 94103-1741 www.josseybass.com

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in anyform or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise,except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, withouteither the prior written permission of the Publisher, or authorization through payment of theappropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers,MA 01923, 978-750-8400, fax 978-750-4470, or on the web at www.copyright.com. Requests tothe Publisher for permission should be addressed to the Permissions Department, John Wiley &Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, e-mail:permcoordinator@wiley.com.

Jossey-Bass books and products are available through most bookstores. To contact Jossey-Bassdirectly call our Customer Care Department within the U.S. at 800-956-7739, outside the U.S. at317-572-3986 or fax 317-572-4002.

Jossey-Bass also publishes its books in a variety of electronic formats. Some content that appears inprint may not be available in electronic books.

Library of Congress Cataloging-in-Publication Data

Bamford, James D., 1965Mastering alliance strategy : a comprehensive guide to design,

management, and organization / James D. Bamford, BenjaminGomes-Casseres, Michael S. Robinson.

p. cm. (The Jossey-Bass business & management series)Includes bibliographical references and index.

ISBN 0-7879-6462-X (perm. paper)1. Strategic alliances (Business) 2. Strategic alliances

(Business)Case studies. I. Gomes-Casseres, Benjamin. II. Robinson,Michael S. III.Title. IV. Series.

HD69.S8 B36 2002658'.044dc21

2002012105

Printed in the United States of America

FIRST EDITION

HB Printing 10 9 8 7 6 5 4 3 2 1

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http://www.josseybass.comhttp://www.copyright.com

The Jossey-Bass

Business & Management Series

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Contents

Acknowledgments xiii

Introduction: What Is Alliance Strategy? 1

Part One: Designing Alliances

Setting Strategy

1. Envisioning Collaboration 19David Ernst

2. Finding Joint Value 30Charles Roussel

3. Managing Risk 36

4. Entering Emerging Markets 45Ashwin Adarkar, Asif Adil, David Ernst, Paresh Vaish

5. Putting Strategy Before Structure 63

Building the Foundation

6. Collaborating with Competitors 77

IX

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X CONTENTS

7. Crafting the Agreement: Lawyers and Managers 88David Ernst, Stephen I. Glover, James D. Bamford

8. Negotiating the Deal 107

Part Two: Managing Alliances

Working Together

9. Relationship Management 119Jeff Weiss, Laura J. Visioni

10. Governing Collaboration 134

11. Making Joint Decisions 149Francine G. Pillemer, Stephen G. Racioppo

12. Managing Without Control 163Gene Slowinski

Leading the Relationship

13. Alliance Staffing 173

14. Roles of the Alliance Manager 186

15. Life as an Alliance Manager 195

Getting Out

16. Why Joint Ventures Die 207Bruce Kogut

17. Graceful Exit 216

Part Three: Competing in Constellations

Managing Networks

18. Constellation Strategy 231

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19. Constellation Governance 244

20. Constellation Dynamics 258

Veterans and Pioneers

21. Reaching Every Pocket: Coca-Cola 273

22. Network Effects: Visa International 286

23. From Local to Global: Colliers International 296

24. Leading Wagon Trains: Western Wisdom 311

Part Four: Building an Alliance Capability

Sustaining the Effort

25. Growth of Alliance Capabilities 321James D. Bamford, David Ernst

26. Alliances Across the Corporation: Unisys 334

27. Training for Collaboration 343

Master Builders

28. Grandmasters at the Extremes 355

29. Order Out of Chaos: Lotus Development 364

30. From Art to Science: FedEx 375

31. An Army of Diplomats: Eli Lilly 382Nelson M. Sims, Roger G. Harrison, Anton Gueth

About the Authors 395

Index 401

CONTENTS XI

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For Carol Lynn, Elliott, and Alex

For Susan and Rachel

For Kristine, Emma, Olivia, and Madeline

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Acknowledgments

Every book is the work of a team, but this one is more so thanmost. Our team consisted not just of us, our contributors, and ourpublisher but also of a long stream of advisers, experts, and staff thathelped shape our ideas, sharpen our judgment, and open our eyes tonew perspectives. Their insights are the essence of this book.

We owe enormous gratitude to the staff of The Alliance Analysta publication that Jim Bamford and Mike Robinson founded andran. The material for this book simply would not have existed but forthe small team of writers, designers, and production staff, includingDon Durfee, Cheryl Melchiorre, Marcia Meyerowitz, Jorge Sandrini,Kelly Schwab, and Demetra Taleghani. For eight years (19942001),they delivered a publication that had no equal in the field. The spiritof that team lives in this book.

At The Alliance Analyst we were also fortunate to have access tohundreds of managers, consultants, academics, and readersallstriving to make alliances work better and willing to share theirthinking with us. We particularly want to thank Reginald Jones,Malcolm Riddell, and Steve Forbes for their early encouragementto embark on the publishing journey, and Charles Roussel for hisfriendship and enduring support. Special thanks are due to DavidErnst for joint work through the years, his tenacity in engaging incontent, and for his substantial contributions to this volume.

XIII

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Mastering Alliance StrategyContents AcknowledgmentsIntroduction: What Is Alliance Strategy?Part One: Designing AlliancesSetting Strategy1. Envisioning Collaboration2. Finding Joint Value3. Managing Risk4. Entering Emerging Markets5. Putting Strategy Before Structure

Building the Foundation6. Collaborating with Competitors7. Crafting the Agreement: Lawyers and Managers8. Negotiating the Deal

Part Two: Managing AlliancesWorking Together9. Relationship Management10. Governing Collaboration11. Making Joint Decisions12. Managing Without Control

Leading the Relationship13. Alliance Staffing14. Roles of the Alliance Manager15. Life as an Alliance Manager

Getting Out16. Why Joint Ventures Die17. Graceful Exit

Part Three: Competing in ConstellationsManaging Networks18. Constellation Strategy19. Constellation Governance20. Constellation Dynamics

Veterans and Pioneers21. Reaching Every Pocket: Coca-Cola22. Network Effects: Visa International23. From Local to Global: Colliers International24. Leading Wagon Trains: Western Wisdom

Part Four: Building an Alliance CapabilitySustaining the Effort25. Growth of Alliance Capabilities26. Alliances Across the Corporation: Unisys27. Training for Collaboration

Master Builders28. Grandmasters at the Extremes29. Order Out of Chaos: Lotus Development30. From Art to Science: FedEx31. An Army of Diplomats: Eli Lilly

About the AuthorsIndex