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Strategic Alliances


Last updated 8/5/2010

Strategic alliances are an opportunity to accelerate corporate growth, tap new sources of innovation and open new markets through effective partnerships. In a 2007 study on alliance management capability, commissioned by the Association of Strategic Alliance Professionals and conducted by the United Nations University, it was found that “most companies expect the contribution of alliances to the value of the company to increase from the current rate of 19% to a rate of 47% in five years’ time.” Alliances are a major cornerstone of strategy for many corporations and as they gain in importance, corporate management needs to understand the drivers for success. One critical success factor is the executive sponsor role.

Beginning at the Top
A successful alliance program begins at the top with the support of the CEO. Like many other things, the CEO influences company culture, models the behavior, and sets the priorities in collaborative relationships. CEO support and that of the CXO staff fosters the environment where alliances can thrive and deliver results.

When you look at the management model of strategic alliances, it becomes clear why this level of support is critical. As strategic alliances stretch across a company’s value chain, you find that company to company collaboration touches multiple functional organizations—R&D, operations, marketing, sales, and so on.  It takes the active involvement of senior management to keep the behaviors of the functional organizations in alignment with the company’s strategic goals in partnering with an alliance.

Companies that are well known for alliance excellence not only foster the partner-friendly environment from the top down but they assign executive sponsors to shape and manage the strategic intent of the most important relationships.

The Executive Sponsorship Program
IBM is one of those companies that has a well-developed Executive Sponsorship program built into its most important alliances. For the largest and most strategic alliances, alliance strategy, and performance is reported at the Board of directors level and the CEO, Sam Palmisano, regularly meets with his alliance CEO counterpart. Key business leaders are assigned as executive sponsors, especially to those partners that are considered important to the success of those lines of business for which they are responsible. These executives are actively involved in those alliances and have a clear stake in their success.

What Does an Executive Sponsor Do?
What are the responsibilities of an executive sponsor? That will vary with each alliance but, in general, here are some of the key roles:

Champion and evangelize the value of the alliance. An executive sponsor serves as an advocate of the alliance across the company. As the executive sponsor participates in discussions with peers in other functional organizations or lines of business, they ensure that the needs and value of the alliance are recognized as strategies are formed and decisions are made.

Represent the company position on key issues. The executive sponsor may also serve as the official company spokesperson on key issues. These issues can represent a full range of topics, including company strategy, product roadmap, and management changes to mergers and acquisitions, especially those that may impact the partnership.

Strategically guide in aligning with corporate objectives. One of the most common roles for the executive sponsor is to ensure that the strategic objectives of the company are being served by the alliance.

Assist organizational navigation. This role can be particularly important in large complex organizations where there are multiple lines of business. Quite frequently what makes a strategic alliance, well, strategic is that the relationship provides value across multiple lines of business.

Be a problem solver. One of the challenges of alliances is that it functions across the normal organizational command and control of management. So where and how do decisions get made? Having a clear, well understood and mutually accepted governance process for problem escalation and resolution is important. But at the end of the day who can make the final decision? This often falls to the executive sponsor and the partner counterpart.

Account for overall alliance performance. In the best sponsorship programs, sponsors are key stakeholders in alliance success. They are both accountable and rewarded for alliance performance. Ideally, alliance performance is aligned with the executive sponsor’s “day job.” For example, if the strategic objective of a partnership is to speed time to market of a particular product, ideally it is a product in development under the sponsor’s management.

Building Executive Sponsorship Relationships
Executive sponsorship is most effective when the roles and relationships are proactively managed. All too often, sponsors are identified but the relationship doesn’t extend beyond the initial business review or golf game. Having to build that relationship in the midst of a crisis when it is needed the most is a troublesome thing.

One of an alliance manager’s key challenges is to keep the executive sponsor relationships active and effective. Care should be taken to avoid overloading the executive with overuse of the relationship. The activities that alliance managers can undertake to support effective use and proper leverage of executive sponsorship include:

Continuity management. When the roles of an executive sponsor changes, or when an executive sponsor departs, it is necessary to ensure proper and smooth succession.

Preparations for executive meetings. Preparations may include briefings on topics and actions that were discussed in prior executive meetings, background information about new developments that are relevant to the alliance, and areas that may need special attention. Ideally, topics covered in executive meetings were reviewed and agreed to in advance by both alliance teams.

Follow-up and implementation. Whenever possible, the senior alliance managers should participate in executive meetings. This ensures that the alliance managers are fully aware of agreements that may be reached, the rationale and dynamics behind them, and any commitments to action that are needed for implementation.

In Summary
Strategic alliances represent a wonderful opportunity for corporate growth. But like any relationship, it takes effort to build trust between the parties and keep the lines of communication open. The alliance managers need to ensure they keep their executive sponsors appropriately informed and involved. Their success depends upon it.