Winning Alliances

With the complex challenges businesses face in today’s world, having all the competencies required in house for your company to be successful may be daunting.

Let’s assume that you cannot fulfill all the requirements to meet the demands of your clients if you want to continue to grow and be profitable. Your choices are to develop the competencies by training or hiring the right personnel, adding technology, or forming an alliance with another firm for your mutual benefit. If your business goals are compatible, this can be a wonderful and economically beneficial solution. But be careful that you plan properly and don’t let the excitement of the moment cloud your thinking or lead to quick uninformed decisions.

Before entering a new and strategic relationship, spend the proper time to plan. Consider the benefit, for example, of a business plan that forces you to think about various topics before you start the business. What a wise luxury it is to have a business plan which asks pertinent questions before you make an investment or commit time and resources to a new venture. While a business plan is typically used for creating a new venture, in practicality, before an alliance is formed, more than likely the two partners to be are already in operation. You probably don’t have the opportunity to start from zero but you can analyze the current situation of both parties and plan accordingly.

Be aware that there are very few recognized successful partnerships. If you have a good one then you are fortunate. But I am sure that if you have been in business for any length of time you have either been party to or have knowledge of partnerships that didn’t work as planned. For purposes of this discussion an alliance or partnership can be called by many names with slight variations in definition. They can include a merger, takeover, joint venture, private-label or an original equipment manufacturer (OEM) relationship. While there are certainly differences defining each of these, the principles of a successful union share common features. Be sure to define where your company is headed and how you plan to arrive. Will the alliance allow you to implement your vision appropriately?

A successful alliance will have mutual benefits and ideally be structured as a win-win deal for both partners. But normally there are partnership inequalities. If you enter into a supplier/purchaser relationship, there’s a risk that the alliance can devolve into little more than a purchasing mechanism because of the unequal bargaining power. Alliances may be characterized by behavior that is adversarial or non-trusting unless issues are defined and addressed initially. Ask if the partner organization has the features with which you can work, live, learn and grow. To determine the nature of the characteristics, an analysis of each partner’s organizational stage in the life cycle and personalities of the leaders is vital. There are diagnostic tools that, when employed, can help avoid much pain and increase the probability of a successful alliance. Failed alliances are more often a factor of incompatible personality characteristics than any other weaknesses in the business rationale.

To be successful, you must first determine your company’s stage in the corporate life cycle. If you are familiar with the “S Curve,” you may recall these stages: Start-up; hockey stick (high growth); Professional; Mature and Consolidating; Declining; and Sustaining.

The managerial personality types relative to these stages include: Adventurer (Start-up), Warrior (Hockey stick), Farmer (Mature and Consulting), Politician (Declining) and Visionary (Sustaining and Re-birth.) This diagnostic approach was developed by Larraine Segil in her book, “Intelligent Business Alliances.” Segil advises clients to follow these steps in what she calls the “Mindshift” method.

First, discover your organization’s state in the life cycle. Then determine your corporate personality. Examine your leadership’s personal managerial characteristics to see how you fit with the stages of corporate cycles of change. Next examine the project’s personality characteristics and determine the level of importance that needs to be attributed to each partner. Use these same diagnostic tools to analyze your actual or prospective alliance partner’s company and leadership just as you have analyzed your own company. Work to develop a strategy based on the observed personality differences that will allow you and your partner to communicate.

This process may be arduous and at times uncomfortable because you may be exposing weaknesses and identifying areas of necessary improvement within your organization. Leaders are subject to review and the results of the analysis may reveal that the wrong people are in place or at least those with incompatible characteristics required for moving the company forward. With this type of risk, a wise plan would include the support of top management. Be care of the political considerations that may cause your job or career to be at risk.

Whatever the risks you face internally, the benefits of the successful alliance can be extremely attractive. They may even be crucial and vital to the future sustainability of your organization. So the risk of not completing the analysis or proceeding with the alliance may be far greater than the immediate costs. Your chances of a successful alliance will increase dramatically if you perform the hard work in the beginning of assessing compatibility before you walk down the aisle.

Joseph Greco is president of Greco Apparel. Visit them on the web at www.grecoapparel.com