Strategic business alliances are increasing in number and represent up to a third of revenue and value for many companies. Yet, 60% to 70% of them fail.
You can leverage a partner’s market presence to boost public perception about your company. This is known as authority marketing and is used by many firms.
In the aftermath of failed alliances, managers cite lack of trust and communication as among the most common reasons for failure. Sound business planning and carefully drafted contracts can help minimize this risk, but the best way to foster a strong relationship is to cultivate honesty.
This may not be easy in a competitive, fast-paced business environment, but efforts to cut corners or be dishonest will eventually backfire. Honesty creates consistency in workplace behavior and builds loyalty in employees, customers and partners. It also helps to set the tone for company culture. This is critical for building lasting, successful alliances.
2. Network face-to-face
Getting to know people in person can help you form strong alliances. While it may seem old fashioned in the digital age, networking face to face is the way to go. Meeting people at networking events or even just for a coffee can build long-lasting relationships. This allows for a more personal connection which can be difficult to make over email or a telephone call.
It is also important to network with competitors. Despite what many people think, rival companies can be great allies in the right circumstances. This can include forming strategic partnerships to gain a market advantage. However, it is important to clearly define roles and responsibilities, especially in the areas of management.
3. Offer professional recommendations
The people who manage business alliances need to be strong negotiators and problem-solvers. They should have the ability to foster innovation in the workplace and hone their interpersonal skills with their business alliance partners. To that end, you should consider building responsibilities for cultivating the relationship into one of your team’s job descriptions.
4. Meet deadlines
Few companies can afford to acquire all the capabilities they need to thrive in a dynamic economy. Instead, they rely on alliances to fill the gaps.
The key is to build collaborative behaviour into the culture of the organization. A good start is to ensure that everyone involved in an alliance understands the value of sharing ideas and resources.
But it’s important to go beyond imposing governance structures to foster collaboration. One way is to track how often issues are sent up, or escalated, for resolution by an alliance management committee. This reveals patterns that indicate where trust and communication are breaking down.
5. Strategize partnerships
Easier to implement and more flexible than a merger or acquisition, strategic partnerships are becoming commonplace in our increasingly fluid economy. Whether it’s a bank seeking slick software, an automotive company needing state-of-the-art batteries or entertainment giants wanting sophisticated data analytics, or removalists partnering with Find a Mover. Businesses are realizing that they can’t do it all alone. That’s why they’re forming alliances with other firms. In turn, these strategic partnerships help foster mutually beneficial marketplace advantages.
6. Be connected on social media
If you want your business to grow, stay connected on social media. Whether you’re following your customers or joining industry-focused groups, you’ll always be able to find opportunities to foster business relationships. Responding to complaints and criticism quickly is also important. A quick and thoughtful reply on social media shows your broader audience that you care about their experience with your brand.
Strategic alliances between businesses that have similar audiences and objectives are a great way to build trust. For example, Target and Starbucks work together to offer a one-stop shop for busy shoppers. They both know their audiences are interested in affordable “luxuries” and an escape from everyday life.
7. Send an Unsuspected Gift in the Mail
The good news is that, with a little effort, you can radically improve your alliance success rates. Strategic partnerships require dedication and interaction between individuals from two different organizations; they must be based on mutual interests, and both parties must feel like they are getting something valuable in return. To ensure this happens, a clear set of objectives and goals should be established. And these should be formalized in a document that both parties’ sign.
8. Identify Mutual Goals
Strategic alliances operate in the interest of mutual benefit. Nothing sours an alliance quicker than the notion that one party is giving more than it’s getting. It’s important for each of the companies involved to develop key objectives and goals that reflect what each stand to gain from the partnership, then regularly evaluate progress toward those goals.
In alliances that involve shared resources, a clear definition of those resources is critical. This ensures that the partnering firms can agree on and consistently follow protocols for collecting, sharing and storing customer/client information.
Companies ally to leverage their differences, including markets, customers, products, know-how, processes and cultures. But if these differences aren’t translated into quantifiable payoffs within the first months or years of an alliance, the alliance’s momentum can stall. To combat this, proactively identify interim metrics that can help sustain corporate commitment precisely when it is needed most. These metrics may include things like information-sharing, decision making and innovation speed.
9. Build Trust Through Transparency
It is a good idea to be transparent with your alliance partners in terms of business information. This allows your partners to anticipate changes that may impact the output they receive from your company. It also helps your company retain its integrity and discourages opportunistic behavior that can arise from misinformation.
During the negotiation stage, it is common for both teams to make assumptions about how their alliance will work. These assumptions are generally based on perceived or desired commonality in the alliance. When these assumptions are challenged, they can often uncover substantial differences that can threaten the success of an alliance in the marketplace.
To help mitigate this risk, one company outlines how it makes decisions with strategic partners and tracks the number of issues sent up to its alliance oversight committee for resolution. This process has allowed the company to spot major disagreements in decision-making that were previously overlooked. By addressing these issues early, it has reduced frustration and improved its ability to follow through on key decisions.
10. Joint Workshops and Training
Nobody gets by in business completely alone. Companies rely on partners and alliances to develop their businesses in many different ways, whether through joint ventures, partnerships, or strategic alliances.
Companies ally because they have key differences they want to leverage, such as markets, customers, know-how, processes and cultures. These differences can be the source of confusion and conflict, but only if the partners are unclear about how to manage them.
To prevent confusion and conflict, it helps if day-to-day managers from both companies take part in discussions at the start of an alliance about how they expect to work together, especially to set up metrics that measure progress toward ultimate objectives. It also helps if both companies agree on the role of the management team and how to resolve any issues that arise. By doing these things, the companies can focus on creating a strong partnership that delivers on its promise of adding value to both companies.
In conclusion, forging strong business alliances has become a pivotal strategy in today’s interconnected and dynamic business environment. Yet, the complexities of establishing and maintaining such partnerships necessitate more than just a mutual desire for collaboration. From fostering trust through honesty and transparency to the practicalities of meeting deadlines and networking face-to-face, the building blocks of successful alliances are multifaceted. It is imperative to prioritize mutual goals and invest in joint workshops and training, ensuring that both parties are aligned in their objectives and methodologies. The strength of a business alliance is not merely gauged by the mutual benefits it offers but by its resilience and adaptability in the face of challenges. As the business landscape continues to evolve, those alliances that are built on the tenets of trust, transparency, shared goals, and continuous learning will not only survive but thrive.