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Making Strategic Alliances Work-the Cisco Way

Partnering, collaboration, strategic alliance—call it whatever you want, but the practice of companies working jointly to create new products and services is one of the most compelling trends in business today. Perhaps no company employs collaboration to greater effect than Cisco, where such partnerships account for 13% of the company’s total business. AMA’s Travis Adkins spoke to Greg Fox, Cisco’s Director of Marketing for Strategic Alliances, to get his insights into how companies can collaborate effectively.

AMA: When did Cisco first get involved in strategic alliances in a major way?

Greg Fox: Alliances have been a core part of Cisco for the last eight to ten years, but over the last six years, Cisco really brought in a more formalized alliance management program together. We now actively go out and seek new alliances, manage existing alliances and coordinate alliances activities companywide. Alliances have grown yearly in double digits, so the need to bring in high-caliber people has been an important part of the strategy.

AMA: Was there any initial internal resistance to the concept of strategic alliances?

GF: For the most part, it has been a widely accepted core component. [CEO] John Chambers is actively involved in establishing alliance relationships. When the CEO is involved, you can get a lot of senior-level support for a relationship. John has helped incubate some alliances and asked us to go off and look at new alliances…he sometimes takes a leading role and that has helped break down the barriers within Cisco. Each alliance has an executive sponsor, usually a senior vice president, and part of these executives’ success is tied to the success of the relationship.

With that said, alliances are not easy. We try to avoid alliances that have competitive overlap with Cisco, although there are some alliance partners that have products that do compete with Cisco—not in a high market share area, but in some areas. We’ve had to navigate through that. When the sales force is trying to sell Cisco products or offers and the partner has a competitive offer, you’ve got to do a lot of education, both internally and with the partner. That’s where we get potential resistance at field level. We have to be really clear about the value proposition that Cisco and the partner bring to the customer to help the joint sales force win the business.

AMA: How do you train employees on the process of strategic alliances?

GF: We have a curriculum for training. We’re really high on strategic alliances as a self-developing organization, meaning that we’re investing in our people to try to give them the skills and the tools needed to be a successful alliance professional. Typically, someone may be a senior alliance marketing lead but may aspire to transition to an alliance manager role, where he or she oversees the whole alliance’s success and governance. We have a series of best practices that we’ve created around the alliances life cycle—from new alliance evaluation to formation, incubation, operations, transitioning the alliance and alliance retirement.

AMA: What makes Cisco an attractive partner?
GF:
One thing about Cisco that stands out is our reputation in the industry. Cisco is a leader in many markets, and companies are attracted to such organizations. Cisco also has been given a lot of awards around philanthropy and diversity. People are attracted to companies that give back to the community and less-developed countries and create a diverse workforce. They’re also attracted to our CEO, John Chambers, and our senior management team. Chambers is a visionary who understands how to lead and mobilize an organization around a core set of priorities. Because of the reputation that Chambers has with Wall Street, industry analysts and the high customer satisfaction that we have, potential partners understand that a relationship with Cisco provides an opportunity to jointly accelerate the market.

AMA: Do companies from industries outside of high-tech seek advice on strategic alliances from Cisco?

GF: We’re beginning to see more of that. We frequently get speaking requests. It has been kind of high-tech oriented, but now we’re seeing companies outside of the industry—consumer-oriented enterprises, small and medium businesses—that want to build that collaboration and partnering capability, and they come to Cisco to learn. They’re trying to manage complexity, establish the right governance and business model, build business relationships with other companies and learn how to get executive support. We’ve been pretty open about sharing. It’s not proprietary information, and we’re trying to grow the profession overall. By doing that, we’ve seen a lot more companies outside of the high-tech arena come and want to learn more about it.

AMA: What’s the most important driver in establishing a culture of collaboration at a company?

GF: Executive support is definitely an element. You have to have executive buy-in. But Cisco also is a pretty risk-embracing kind of company. People are allowed to step outside in terms of activities they can go and lead. There is a collaborative environment internal to Cisco that fosters our ability to go out and partner with other companies. It’s part of the core of Cisco’s culture. It starts at the very top. Our senior leaders collaborate among themselves, and that behavior filters down throughout the company. We are graded as employees and our bonuses are tied to our ability to execute and demonstrate teamwork and collaboration.

Cisco creates an environment where collaboration can take place. Someone may or may not reside within strategic alliances, but they could still play a big role in alliance success, because the products they develop or the sales team that they lead will intertwine in making the partnership successful. The alliances team can’t be successful without the support of others in cross-organizational areas.

AMA: You’ve developed a six-step process in creating a successful strategic alliances initiative. Talk a little bit about the first step of that process, the “Shared Strategic Map.”

GF: The Shared Strategic Map outlines the value proposition, what the partners are going to sell, the method of delivery, the method of measuring success and the key checkpoints to what that success looks like. Companies have to have a common view of the world and the market. They have to ask themselves, “What is our shared strategy? What do we want to focus on together?” It has to be clearly defined that Cisco, with the partner, has a value proposition that it can offer, and that as a result there’s a joint value proposition that Cisco and the partner bring to the customer. So being clear about that value proposition, making sure there’s buy-in between Cisco and the partner, is an essential step. If we can clearly state that, it gets the organizations aligned around a common view of our value with the partner and the customer. It’s really the first step.

AMA: How do you build trust with your partners?

GF: The fact that there is someone accountable for the relationship in terms of an executive partner really drives home the message that there’s trust. I think, too, the level of investment we’ve made in the program creates trust. Having a dedicated team for each alliance in the portfolio shows that there’s commitment there and that we think that this partnership can be successful. Sometimes Cisco will even over-invest in some regards, versus the partner, to show that Cisco is committed—kind of carry them along a little bit, until they build the capability and can get the buy-in across the company. Sometimes, as that trust develops, the partner will invest even more than Cisco.

But another part of it is our track record. We follow through on our commitments…through the good times and the bad times. After the dot-com bubble burst, there were some pretty hard times in the industry, but Cisco stayed committed to its partners and showed it was trustworthy. If we’re pursuing a deal with the partner, and we say that we’re going to stay committed, we have to follow through.