The first phase of starting strategic alliances

One of the first things we need to do when establishing alliances is to align strategic imperatives for the alliance. When we omit to do so, it may be a reason for failure in a later stage. Aligning strategic imperatives will bring a clear objective for the alliance and the partners will have an expectation of what the alliance may bring them and their partners.

The strategy work may have two angles to it. When you are fresh in preparing an alliance, you will not yet talk to a partner while working your strategy. Questions will need to be answered that will show why an alliance is the best solution for your growth strategy or for the particular challenge you are trying to solve. Options like doing it yourself or through acquiring a company, need to be evaluated too. Elements like speed to market, control over the solution and geographical or knowledge requirements will need to come into the equation.

The second angle to the strategy work comes in a later stage, after partner selection, when you are designing the alliance with your partner. Here is the moment to align strategic imperatives for your organization with the imperatives of your partners organization. Objectives for each of the partners to enter the alliance may be different, as long as they are synergistic, they will add value to the alliance.

Next comes the need to determine the value proposition. As Wikipedia puts it: “A value proposition is a promise of value to be delivered and a belief from the customer that value will be experienced”. In a strategic alliance the promise of value is the result of the work the partners execute together. The definition also clearly shows that a value proposition needs to deliver to three parties: both partners and the customer. It is important to be clear about the value proposition from all three angles. The value triangle needs to be in balance for good alliance success. Often I compare it with a tripod used for photography. If one of the legs of the tripod is unstable, the photo is destined to fail.

Defining the value proposition is again an exercise with two phases to it. First, during your initial phase, you will determine the value proposition as you would like to see it. Without an idea of the value proposition, it will be impossible to find a partner. Secondly, during your conversations with the partner and designing the alliance, you will need to refine the value proposition.

Defining the strategic imperatives and the value proposition may seem trivial exercises, but they are part of the cornerstones of your alliance. When overlooked, you may find yourself in a later stage with an alliance that will not work as expected.