Summary of Simple rules for making alliances work by Jonathan Hughes and Jeff Weiss

Summary of Simple rules for making alliances work by Jonathan Hughes and Jeff Weiss
The article offers great advice on alliances on specific principles that help them tick. It is noted that almost a third of a number of companies’ revenue is generated through alliances. Dismally, the failure rate is at an unacceptable rate of 60% and 70%. There is a high degree of interdependence between various companies in an alliance that is a critical element in success of any alliance. The following five principles are critical for any alliance to succeed:
Principle 1: ‘Focus less on defining the business plan and more on how you will work together’
Businesses need to focus their energies on how they will interact and building their trust with effective channels of communication. This means individual employees working seamlessly as if they work for one and the same company. Partners should discuss and agree on how they will solve conflicts that arise before they get out of hand.
Principle 2: ‘Develop metrics pegged not only to alliance goals but also to alliance progress’
Companies need to integrate the “means”; measurements of the various factors that will have an impact on the company’s final score rather than directing all the energies to such factors as financial value; the “end”. Such metrics as information sharing are critical on the first few months.
Principle 3: ‘Instead of trying to eliminate differences, leverage them to create value’
The differences that exist between companies are some of the main reasons as to why they form alliances. Such differences are supposed to help the companies to leverage on the same and create more value rather than struggling to eliminate them.
Principle 4: ‘Go beyond formal governance structures to encourage collaborative behavior’
The companies need to develop a collaborative mindset by nurturing a working together relationship and avoiding blame games and pointing of fingers. This may sound obvious but its implementation is critical.
Principle 5: ‘Spend as much time on managing internal stakeholders as on managing the relationship with your partner’
Heretical as it may sound, sustaining a commitment between the various company departments with the other company is critical. Communication should be collaborative to achieve this.