The Art of the Alliance

A Historical Perspective

To understand the history of forming and managing successful alliances is to understand the radical changes in business in the last 30 years.

Looking back at the 1980s, there was a maze of everything from management fads to what are now required business practices. The challenges of increased competition and shrinking margins gave rise to process improvements, the drumbeat for value-added products and services, the elimination of waste , the identification of core competencies at both an organizational and individual level, and the use of technology as a “business enabler” as opposed to “an expense.”

We witnessed renewed impetus to increase revenues through total solution selling, customer loyalty and retention programs, account penetration and incremental sales, and new product and service introduction.

By the 1990’s another trend was gaining popularity in the US, having migrated eastward some 10-15 years earlier in Asia Pacific and into Europe . These were “new business models” – different forms of alliances- implemented to increase revenue potential and reduce costs.

And with these models came a new way of doing business. They ranged from the more traditional customer/supplier relationships with fewer, more strategic sources, joint marketing and sales initiatives, outsourcing agreements, and the more complex and potentially more risky development of joint ventures.

By the end of the twentieth century it was apparent that major international businesses were seeing anywhere from 15%-40% of their revenues generated through alliances, business partners located anywhere from down the street to the other side of the globe.

These ways of doing business also meant different ways for forming relationships, managing expectations and ongoing communication. It did not take long for people to understand “the game” was being changed. Drawing from the field of sociology and the work of Irving Goffman, from in mathematics, and business writers, the use of game theory in business took on greater importance. Because the likelihood of reaching a business objective was increased by a greater commitment by all the players, the game must be played so that everyone wins.

The onset of the new millennium saw even greater pressure on reducing costs. And then…
In the four-hour period when the Twin Towers collapsed on September 11, 2001, the world’s political and cultural landscape changed forever. Below the surface, however, were other pressures that erupted unto the international scene. It was as if the collapse of the towers unleashed a combination of forces that were about to change the nature of international business – if not forever, at least for the foreseeable future.

What were evolving, somewhat amorphous and uncharted methods for conducting business globally were frozen. The SARS and terrorist threats only added fuel to an already growing need to conduct global business without face to face interactions, across geographies, cultures, and time zones, with uncertain knowledge of capabilities and commitments.

Alliances, business partners, and partnering are used to describe different requirements and expectations that even small and medium sized companies want from the organizations with whom they work. Now there is the realization that regardless how far upstream or downstream you are in the value chain, there is only one true customer, and that is the person who writes the check for the products and services that you and your business partners collectively provide.

Partnering – how is it different

Partnering is a different way of doing business. It is an acknowledged agreement that two or more organizations must work interdependently in order for BOTH to succeed. Both must “win,” and both must contribute to the customer’s “win.” This is not simply a philosophy. It is a business model formulated on a set of nine best practices that comprise a unique process for conducting business. At a micro level it is a game of survival. At a macro level it is faith in the future. So begins the journey.

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