The topic has touched upon before. During the ASAP round table in the Benelux we discussed alliance success with the members and saw many different views. In the fourth state of alliance management study as executed on behalf of ASAP it shows that 87% of all respondents have some kind of alliance metrics available in their company. It turns out however that only 24% of the respondents uses the metrics for all of their alliances.
Yesterday in a conversation at a client on this topic I started of with the remark, disclaimer so you will, “it depends”. There are many definitions of what an alliance is and it seems that there are many definitions of success and ways to keep track. Therefor I divided the metrics yesterday in two categories: company internal metrics and joint metrics that will be used to manage the alliance.
Internal measures
Company internal measures of success can be relatively simple and straightforward. Again it depends what kind of alliances your company have, but the metrics could be elements like % of new revenue, average deal-size, or even more straightforward being the revenue a partner brings in. That however would metrics for a channel kind of partnership or other partnerships where revenue is involved. In a R&D like partnership the partnership can be measured internally from a milestone perspective and the progress being made. The internal measurements are most often value driven and rarely include measurements for the relationship side of the partnership.
Joint measures
For joint metrics one can use the Partner Balanced Scorecard as used by Quintiles and Solvay as described in this HBR article. The Partner Balanced Scorecard looks at four quadrants of measurements, being Strategic, Financial, Operational and Relationship elements. However, as also described in the Q3-2011 issue of Strategic Alliance Magazine, the scorecards often meets resistance when one partner looks to introduce it. It will provide a concise overview, but will also require a lot of input and maybe more transparency than a partner is willing to provide.
Relationship measures
As Tara Mylenski responds to Gianluca Marcellino’s post on the topic “alliances ‘fail’ in large part due to controllable relationship factors.” The relationship side needs consistent metrics to continue the alliance. Also on this topic a couple of elements showed in the meeting yesterday that I have seen before. I strongly believe that assessment of the relationship health of an alliance can not be done internally, but has to be done in an independent way. When doing an internal assessment of the relationship, or even an assessment where the two partners tell each other what they feel, the chances for an open and honest response will be slim. An objective approach combined with a plan for improvement is in my view the only way to measure and influence the controllable relationship factors.
Your challenge
When you are involved with alliances you will recognize that a large part of your effort is in managing the relationship. Do you, and if so how do you, measure the status of the relationship?
[…] Simoons – leading Simoons & Company – also raised a very relevant point in his quick overview of alliance metrics. Peter distinguishes between metrics internal to one organization and metrics agreed between two […]