As Richard Branson said: “Some managers saw what happened, some managers made it happen, and other managers are still wondering what happened’’

What is a Strategic Alliance?

A Strategic Alliance is a strategic cooperation between two or more organisations, with the aim to achieve a result one of the parties cannot (easily) achieve alone. (Peter Simoons)
Most companies cannot invest in innovation alone anymore and the question then is: ‘how to create a successful growth strategy?’ ‘Do we ‘make, buy or ally?’
The ‘Ally’ option is now, for most (especially small) companies more practical than ever.
A strategic alliance has a focus on the long term and partners will contribute part of their resources to realise the success and will in return receive part of the control and benefits from the alliance.

Why would you make a Strategic Alliance?

Basically there are three reasons if you want to keep or grow your business:
1. Knowledge transfer or Product Development: you do not have the knowledge to create something new and a potential partner has that lacking knowledge. Philips and Sara Lee were able to bring a coffee machine (Philips expertise) to the market, with dedicated Senseo coffee supplies (Sara Lee expertise).

2. Market Development: Pepsi Cola and Starbucks allied to create a, for both, complete new market to bring bottled cold coffee drinks to that market. Alone they could not have done that.

3. Efficiency: focussing on cost reduction and increasing efficiencies Rolls Royce jet engine division created an alliance with several logistics partners to increase the value for Rolls Royce’s customers. No longer was the focus on selecting the supplier with the lowest price but on the customer experience. Partners were also encouraged to cooperate together to optimise the entire system instead of optimising each for themselves. And every partner saw an increase of their turnover and profit.

Cooperation with other organisations

Cooperation with other parties is an important topic of the board agenda these days. They realise that no single organisation can survive alone and will be able to solve the complexity of today without an alliance with other companies.
Cooperation is necessary but not obvious. Confusion of tongues, different opinions and insights are often a stumbling block. ‘Cooperation’ becomes more and more important in internal organisational development. It is clear for organisations that it requires certain demands and skills to be able to participate in collaboration processes with other organisations.
You need to have a vision on cooperation, a collaboration strategy; individuals that are skilled for cooperation, conditions for cooperative behaviour etc. are necessary to be able to work effectively together, both externally and internally.
You find these conditions today in most organisations with an open eye for the developments in fast changing markets.

Five essential characteristics of cooperation

A high degree of interdependence
Every partner has to give up a part of his autonomy in the trust that he receives more. This is a delicate and vulnerable process.

An unclear ‘power centre’
Power is spread over more parties, parties derive power from different sources and, power and influence are executed in different ways and by different styles.

A new reality
When more parties start to cooperate they create a new reality together. This is a complex process because they not only have to define a goal and solution together, but also realise that their only base is their relation and interaction. And they have to communicate with the home base that lives in a different reality.

The attractiveness of heterogeneity
On one hand you are fascinated by the others because they help you to discover yourself. On the other hand you are afraid because the other might be a threat. This paradox creates ambiguity because the real basis for cooperation is created by the differences between the parties.

A dynamic context
Every attempt to clear a complex situation is out of date at the moment the parties agree. Every act creates a new situation. And every new situation requires that parties again have to commit themselves and trust each other.

Indicators for a successful cooperation

How can you check if the cooperation is constructive and successful? What do you look at?
These five indicators for success can serve as a starting point for a project with external partners as well as a check at the on-going process.

1. Shared ambition

• is the ambition shared?
• is the ambition attractive and meaningful for the partners?
• Contributes the ambition to the (cooperation) strategy of each of the partners?
• Is the ambition personally meaningful for management and other key persons in the cooperation?

2. Interests

• Is there real attention for the interests of the partners?
• Does the cooperation create added value for each of the partners?
• Is there space and willingness for negotiation?
• Are partners having a real dialogue?

3. Relation

• Do partners in the cooperation have a personal capacity to connect?
• Does group-dynamics contribute to the group so it is more than cooperation between partners?
• Is there trust among the partners?
• Is there given connective leadership?

4. Organisation

• Is there an effective structure, aimed at goal and partners?
• Is there enough participation and support for the cooperation?
• Is there enough working power, support and engagement?
• Are the agreements clear and does everybody do what has been agreed upon?

5. Process

• Are there well thought phases and a good process design, the right things at the right time?
• Is there enough attention for both the content of cooperation as for the process aspects of the cooperation?
• Are roles clear and clearly divided with a clear process management?
• Are the conditions for cooperation met and will the cooperation deliver concrete results?

Keeping the cooperation alive

This is the responsibility of each of the cooperating parties and thus of the total group. They are all responsible for the two key conditions to keep this cooperation alive.
•       Do it together

What are the ideal ideas for cooperation? What are the necessary ingredients that this group needs? How can you make that concrete, practical and sustainable? Does every party agree and commit?
•       Create the conditions for a real dialogue

Create a location and atmosphere where all perspectives and viewpoints are expressed and heard. Pay attention to what is said and what is meant between the lines (meta-communication).

Acknowledge the value of differences and give assumptions and perceptions without a judgement.

Ten examples of successful alliances that created a win-win for every partner
 

1- Network leadership – Trucks platooning
April 6 2016 from all six EU truck manufacturers (DAF, Daimler, Iveco, MAN, Scania and Volvo) drove from 6 EU cities (where they are produced) as connected ‘trains’ to the Rotterdam Maasvlakte.

Where by a unique cooperation between industry, governments, and knowledge institutes and logistic services the first steps are made to make the innovative concept of smart and sustainable mobility or ‘platooning’ operational. This project was partly financed with EU-subvention.

An impressive 4’25’’ video shows you what it is about, the link is:
http://www.tis.tv/video/vision-truck-platooning-2025-creating-next-generation-mobility/

2- Robo Valley
Small companies make robots for industry, care organisations or the security sector. In Robo Valley are some 170 robotic researchers and start-ups cooperating with companies and the Technical University of Delft. This project received two weeks ago an investment of 100 million euro from Canadian investment fund Chrysalix Ventures for further development. For an informative video (3’15’’), the link is: https://youtu.be/CKVFHBDMpGM

3- Hewlett Packard and Disney
Hewlett-Packard and Disney have a long-standing alliance, starting back in 1938, when Disney purchased eight oscillators to use in the sound design of Fantasia from HP founders Bill Hewlett and Dave Packard. When Disney wanted to develop a virtual attraction called Mission: SPACE, Disney Imagineers and HP engineers relied on HP's IT architecture, servers and workstations to create Disney's most technologically advanced attraction.

4- Eli Lilly
Pharmaceutical giant Eli Lilly has been forming alliances for nearly a century, according to its brochure, Power in Partnerships, and was the first in their industry to establish an office devoted to alliance management. Lilly currently has over one hundred partnerships around the world devoted to discovery, development, and marketing. For example, Lilly partners with the Belgium-based company Galapagos to develop treatments for osteoporosis. Lilly also partners with Canada's BioMS medical group in a licensing and development agreement for a novel treatment for multiple sclerosis. In Japan, Lilly is partnering with Kyowa Hakko Kogyo Co., Ltd., to bring a targeted cancer treatment to market. Lilly will have the exclusive license to develop and sell the product worldwide except in Japan, and the two companies will share rights in certain Asian countries.

5- GAVI Alliance
The GAVI Alliance (Global Alliance for Vaccines and Immunization), is a public-private global health partnership based in Geneva. It brings together developing-country and donor governments; national healthcare delivery systems; the World Health Organization; the World Bank; UNICEF; the worldwide pharmaceutical industry; research agencies; NGOs, such as Médecins sans Frontières and Oxfam, and private philanthropists, such as the Bill & Melinda Gates Foundation; and many others. They all have different agendas, but a common purpose, to eradicate several deadly child diseases, which is a major world problem in desperate need of solution. And it works! The fact is, no huge problems will ever be solved without effective collaboration.

6- Google & Luxottica
The Google/Luxottica partnership is a brilliant one. Google glasses speak to technology but not fashion and Luxottica’s brands speak to fashion and not tech. The partnership will result in attractive Google glasses that could be purchased based on looks alone, and the cutting edge technology can give Luxottica brands a reason for purchase that justifies a premium price. Luxottica’s glasses are increasingly being undercut on price by retailers such as Costco, TJ Maxx and Warby Parker.

7- Spotify & Uber
The ability to enter a hired car welcomed by your favourite playlist provides added value, meaningful competitive advantage and exclusivity for Uber cars. For Spotify, it provides an incentive for users to upgrade to the premium level and a unique point of difference that Pandora, iTunes or YouTube don’t have.

8- Snapchat & Square’s Snapcash
This is another innovative partnership. Square adds the credibility of secure money transfers and also a young, hip, complementary brand image for the target audience of this service. For Square, it adds significant incremental revenue and a further boost to its cutting edge, hip brand image through the association with Snapchat.

9- Alexander Wang & H&M
Continues H&M’s tradition of offering limited time, high end fashion brand items to drive people into their stores and support their brand positioning as a trendy fashion destination. As with all H&M’s designer partnerships, the limited time offer increases awareness for the fashion retailer. By affording (literally) a limited experience with his brand, Alexander Wang forges a bond with a new generation of potential consumers, who will increasingly aspire to owning more pieces from his high end collection.

10- Apple & IBM
To quote IBM, its new partnership with Apple “brings together the analytics and enterprise-scale computing of IBM with the elegant user experience of iPhone and iPad to deliver a new level of value for businesses”. The alliance will draw on Apple’s consumer experience, hardware and software integration and help invigorate IBM’s image, which has sagged a bit in recent years. The partnership will leverage IBM’s big data analytics and more than 100,000 industry sales consultants and software developers, to help Apple penetrate the global corporate enterprise market. To quote Apple “the partnership will add a new class of apps to connect users to big data & analytics, on their iOS devices”.

Conclusion
Of course I realise this is not basic thinking in Croatian companies, however, I think there is not much choice. This is what is happening in the international market place and it goes faster and faster.
- If you have no ambition for your company to survive, just keep on doing what you always did and your company will end sooner or later.
- If you have the ambition to stay in the market you might get inspired by the given examples and conditions. Of course, it is always your choice.
- If you have an ambition, spread it in your company and listen to the ideas of your people. Engage them and create a vision and a strategy together. Be creative in finding that niche in the market, a new product-market combination, a new market and, eventually a partner with whom you can make a win-win partnership.

Hundreds of small companies already did it the past few years and remember: all big multinationals started as a small company!

John Lodder M.A., Msc.
www.balance-consultancy.com