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Mike Nevin understands the principles of success in alliances better than probably anyone. Back in the late 90s, he and a few colleagues went all-in on alliances. They predicted that considering the continued waves of technological innovation, alliances were the future.
As we said … he went all-in on alliances:
He became Founding President of the Association of Strategic Alliance Professionals (ASAP) in Europe. He’s also the CEO & Founder of his own alliance consulting firm, and he’s the Managing Director of Alliance Best Practice, where he continually analyzes the best practices of the world's strongest alliances and develops models we can all follow.
We interviewed him live on Facebook for Alliance Aces, and you can catch the entire interview right here, and check out the highlights below:
The Common Success Factors of All Successful Alliances
Mr. Nevin is a researcher at heart. With his clean-shaven face, professional dress, and rich Birmingham accent, talking to Mr. Nevin makes you think of a witty British professor.
He took his law degree, his business degree, and his foresight on alliances on the road. He studied the most successful alliances and created a hypothesis around CSFs (common success factors). And then he tested those ideas against a real-world example.
He found a British telecom company and offered to do a review of all their alliances: “I believe I can determine which alliances are performing well, which ones aren’t, and which ones are performing terribly.”
But it worked.
He turned his CSFs into questions and interviewed both parties for each alliance — the British telecom company's alliance manager, and the partner’s alliance manager. He went back to the telecom company and told them the score he gave each alliance, based on his questionnaire. His CSF test matched almost 100% to the ROI of each alliance.
The 5 Categories of Best Practices in Alliances:
So, based on his research (and the research of others), here are the 5 categories of best practices for alliances:
Commercial: Is there a good business case for both sides to enter into this alliance?
Technical: Is there strong technical alignment between the products and services of both entities, so they’re complementary rather than competing?
Strategic: Is there a good strategic imperative as to why this alignment is important?
Cultural: What are the personal behaviors of each organization; will it be easy or hard for them to work together? (This is where trust comes in.)
Operational: How will the parties operationalize what they are trying to achieve?
The problem: Most companies focus only on the commercial and technical aspects of best practices, but that’s not why alliances fail. (Commercial and technical alignment are a given for any alliance.)
The reason alliances fail is almost always a combination of strategic, cultural, and operational issues. Most organizations don’t even consider those 3 hidden dimensions when they are looking to start or build their alliance relationships.
Don’t Make This Mistake: Ready, Fire, Aim
So, you have to avoid those strategic, cultural, and operational pitfalls. You do this by strategizing from the outset.
Especially when there is high complexity within an alliance relationship, you have to be set on your strategy. This can’t be emphasized enough, yet, this is exactly why most alliances fail.
Once, Mr. Nevin went to Munich to consult Siemen's on their strategic alliances, one of which was with IBM.
He asked the gentleman in charge of the relationship what his plan was — his answer was found opportunities and execute. “We don’t have time for the ‘relationship building stuff.’”
Mr. Nevin told him his idea sounded a lot like the ready, fire, aim approach. In his academic-sounding way, he suggested the time-tested ready, aim, fire method. The manager disagreed, politely, and Mr. Nevin went home.
Nine months later he got a call:
"You were right. Come back, and let's do it your way."
Trust Is About Predicting the Actions of the Other Party
A quick note from Mr. Nevin on trust:
We often focus on the soft side of trust. We consider whether or not 2 individuals like each other, but he said that's not really what trust is. Trust is knowing and believing in a given outcome for a given action. You trust someone because you know when x happens, they will respond with y.
To illustrate his point, he talked about the mafia. (Yes, the mafia).
You can trust the mafia: You know the consequences of a given action.
Interesting illustration, but the point holds up for alliances: Trust is not simply built upon the cultural inner workings or likability of either party (although those are accelerators). Trust is built upon the foundation of predictable consequences for a given action, and the only action either party truly cares about is revenue.