How to Ensure Your Strategic Alliance Doesn’t Fail

By: Shamini Sellvaratnam

For large enterprises, strategic alliances with local start-ups can be crucial to ensuring that they achieve a continuous innovative product development cycle. Strategic alliances are partnerships among two or more businesses that collaborate to achieve a common goal while increasing efficiency and boosting profitability. Companies participating in a strategic alliance typically share people, expertise, technology, property or capital investments in hopes of reducing expenses, gain access to a larger or more diverse customer base, and achieve quicker market access.

However, with failure rates of strategic alliances ranging from 50 to 70 percent, it is not only crucial to choose the right business partner, but to share a common vision. In order to ensure that your strategic alliance does not fail, Pamela Harper at shares four crucial steps to ensuring a successful strategic alliance:

 1) Develop an individual strategy before entering a strategic alliance
Often times a strategic alliance fails when businesses find themselves shifting away from their main priorities or losing focus on core objectives. This not only wastes time, resources and effort, but decreases productivity for all parties. By developing an individual alliance strategy before entering into a strategic alliance, one that supports individual company visions, businesses can determine whether a particular strategic alliance will actually be beneficial in supporting their individual goals.

2) Develop a joint alliance strategy before finalizing the formation of the alliance
To avoid a strategic alliance from favouring one company’s goals over their partner’s, it is important for participating companies to co-develop a joint alliance strategy; one that supports the goals of each individual company and all companies collectively. In a strategic alliance, companies must understand the vision, strengths and differences of each partner in order to cater the joint alliance strategy to meet each individual goal. When creating a joint strategy, company roles, responsibilities and expectations must be clarified in order to resolve possible conflicts and support decision making.

3) Understand the cultures of each business and cater each relationship accordingly
When working with alliance partners, it is crucial that each relationship is individualized and catered based on the cultural and strategic approach of individual companies. Since companies work and interact in different ways, it is crucial that businesses adjust the communication strategy for each of their partners. In order to create a high-performing strategic alliance, organizations must not only provide enough capital and human resources to the alliance, but also ensure that their employees have the necessary resources to form and manage teams within the alliance.

4) Continuously review and alter the joint alliance
Throughout the alliance, businesses must review and adjust their joint strategy according to milestones and problems encountered. In order to avoid the alliance from moving away from the original objectives outlined in their joint strategy, it is essential that businesses establish frequent checkpoints to evaluate the progress of the alliance. During the adjustment process, both parties must continuously aim to satisfy each company vision; this will not only benefit both parties, but maintain the collaborative culture that is crucial in an alliance.

By implementing these steps, companies can ensure that a foundation for mutually beneficial relationships exists. Should the partners fail to identify their individual strategies or nurture their join strategy, it can be expected that one or all firm will fail to realize the full benefits of the alliance. This may lead to a weakened business relationship and should be avoided at all costs. To learn more about protecting strategic alliances from failure, please click here.

Shamini is completing her final year at the University of Toronto Mississauga and is pursuing an undergraduate specialist degree in Business Administration and a major in Communication, Culture & Information Technology. Shamini is joining the RIC team this summer as a Communications Intern bringing with her a passion in marketing and various experiences in online marketing.

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