Strategic alliances are not easy to sustain. Studies show that 60-70% of alliances fail within 12 months after commencement. Most of these mergers fail due to execution; there is a lack of communication, too many structural compromises, inadequate planning, and commitment.
Many more factors can cause alliances to fail. On the other hand, successful ones have demonstrated that sustaining the momentum requires thoughtful decision-making, purposeful planning, and genuine collaboration.
Thoughtful Decision-Making
Failure could be on the horizon simply because there are no metrics or systems in place to foster thoughtful decision-making. A data-driven approach provides clarity and predictability in delivering value to your alliance.
Each partner can supplement a shared scorecard with metrics that track progress against goals. This can include financial and non-financial metrics such as revenues, cash flow, market share, competitive positioning, cultural fit, and trust rating. Once you back up decisions with quantifiable data & show real-time results, it will be easier to align your goals and KPIs.
Purposeful Planning
Alliance partners should commit to shared goals and expectations with certainty and predictability even amidst the worst-case scenario. Hence, the need to develop protocols and processes will allow the venture to work and fit different situations.
A robust business plan is only half the battle. To ensure the success of the alliance, senior management should construct a proper structure, create an efficient communication system, build an adequate incentive system, and guarantee the commitment of the organizational personnel.
Each partner should clarify the nature of the partners’ working relationship—not just what they will do but how they will interact.
Genuine Collaboration
Nurturing collaboration between alliance partners may seem obvious, but it is often unmet. Keep in mind that there will be opportunities to learn from each other as you solidify your alliance.
For this kind of collaboration to occur, members of the merger must know how their counterparts operate in decision-making, resource allocation, and information dissemination. An emphasis on gaining knowledge and experience from each alliance activity can help subsequent partners perform their job better.