Developing Strategic Alliances That Work

Strategic alliances — a fast and flexible way to access complementary resources and skills that reside in other companies — have become an important tool for achieving sustainable competitive advantage. The past decade has witnessed an extraordinary increase in alliances. Yet, alliances are fraught with risks, and almost half fail.

The ability to form and manage them more effectively than competitors can become an important source of competitive advantage. Our recent, in-depth study of 200 corporations and their 1,572 alliances revealed that a company’s stock price jumped roughly 1% with each announcement of a new alliance, which translated into an increase in market value of $54 million per alliance. And, although all companies seemed to create some value through alliances, certain companies — for example, Hewlett-Packard, Oracle, Eli Lilly & Co. and Parke-Davis — showed themselves capable of systematically generating more alliance value than others.

How do they do it? How can you do it? The coordination of all alliance-related activity within the organization is critical and institutionalizing processes and systems to teach, share and leverage prior alliance-management experience and know-how throughout the company is a foundation of success. Enterprises that build this foundation achieved a 25% higher long-term success rate with their alliances than those that do not — and generated almost four times the market wealth whenever they announced the formation of a new alliance.
  • Alliance business case
  • Partner assessment and selection
  • Alliance negotiation and governance
  • Alliance management
  • Assessment and termination
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