Creating strategic alliances is an important business strategy

Creating strategic alliances is an important business strategy that is often overlooked by small business. A strategic alliance is an arrangement between two companies that have decided to share resources and could help a company develop a more effective process.

1. Be selective and faithful (make sure you find “the one”). Perhaps surprisingly, some companies become infatuated with a potential partner and try to strike a deal without a sound business rationale, no matter the cost. To avoid this trap, it’s critical that companies develop partner selection criteria tied to the business problem or opportunity identified. Beware that several potential partners will meet some of your criteria. Don’t settle for second best. Try to find that partner that satisfies all of the most pertinent criteria. Once you’ve found “the one”, don’t be tempted to add more partners to multiply your success; this strategy rarely works. It’s better to be faithful and concentrate on making fewer, stronger alliances.

2. Find a win-win (the whole should be greater than the sum of the parts). Kanter refers to the importance of an interdependence where neither party can accomplish alone what both can do together. Steelcase, a leading global office furniture company, recently formed a partnership with Bolia.com, a top Scandinavian furniture designer. Steelcase did not have Scandinavian design and Bolia did not have business-to-business distribution. This combination created a growth opportunity for both organisations that neither could have achieved alone.

3. Ensure leadership alignment (make sure that the chemistry is right). While the selection criteria are quite rationale in nature, the more emotional sense of attraction is just as important, especially between senior counterparts. If the chemistry is strong, the partnership is more likely to endure difficult times. When there is little chemistry, there is little resilience and a much greater risk of falling, even at the slightest hurdle.

4. Create a simple contract (exchange vows but keep it simple). The conventional wisdom has been to put in place a detailed contract covering as many eventualities as possible. As the pace of business accelerates, developing such detailed contracts makes less sense. They take too much time to devise and do not inspire confidence between the partners. The best contracts are shorter, focusing on the critical aspects of the partnership and allowing wriggle room for the collaboration to evolve organically or for the partners to part ways.

https://knowledge.insead.edu/blog/insead-blog/the-ten-stages-of-successful-strategic-alliances-11086