My first encounter with the word “alliance” was in the history class back in school. Axis powers, NATO, Warsaw, are some names I recall. These were strategic alliances of military nature; also considered the reason behind wars. Resource mobilization was vital to win battles and allies used steam engines extensively. The same steam engine that fueled the industrial revolution and formed the basis for future innovations
We have come a long way, and so have strategic alliances. The revolution we are experiencing now is not of steam engines but bots, AI and 3D prints. We live in a world where data, devices and human interactions are converging. While it sounds science fiction, we live it every day; Ubering our way to the office or letting Alexa play our favorite music.
Some have called this the “connected world.” It has put disproportionate power in the hands of customers; enabling them to make or break companies and create new markets. Organizations have no choice, but to align their best resources to customer success.
The paradigm is shaping our approach, to business alliances as well. The purpose of partnerships have evolved from market expansion, economies of scale and consolidation to delivering connected customer experience. The reality that no ‘one’ organization can provide this makes alliances strategically relevant.
The narrative, alliance leaders, have to internalize is also evolving. It presents them with a challenging question: Do we need to change from a ‘pie expanding’ mindset to a ‘customer experience’ one? It’s a significant shift. I have tried to visualize it through four fundamental tenants – Brand-Alignment-Relevance-Trust.
Beyond the Brand
Brand is more than the name. It represents the culture and subculture of business units. Culture defines pacing and shared values drive outcomes. Time spent in understanding culture goes a long way in building the right alliance synergies. The brand also represents a common point of view for specific industries and solutions. Revenue is a noisy measure and alliance managers prime their discussions with it. Viewing relevance of the alliance through the lens of joint solutions, is far more effective and provides a predictable path to both growth and customer experience. This approach requires patience and is the most critical part of alliance due diligence. I have often seen failures and frustrations when we don’t factor these before getting into a partnership.
Alignment not of titles
Mapping organizational structure of alliance parties is common. Countries, where power distance is prominent, see additional emphasis on aligning the titles. It promotes ‘managing-up’ behavior. In the new world order, I will like to challenge this approach. Focussing on disposition rather than position is vital. It means understanding roles, goals and priorities not just of alliance members, but also the customers they serve. It also means understanding business value through the lens of a consultant deployed at the customer and not the guy selling the next ticket. None of this dilutes the significance of an executive sponsor, who is critical to alliance success. This approach ensures governance by empowering alliance leaders to sanction, reward and persuade effectively.
Relevance through mutuality
My seasoned colleagues in alliances would relate to this expression “expanding the pie mindset.” It’s often discussed in the context of negotiations. The idea is, one will gain by giving up less in return for a greater gain. It is a short term view and a recipe for disaster. In long term alliances; investments happen ahead of the curve. The chicken and egg narrative becomes irrelevant. Since a lot of us live the life of dashboards, we default to share-of-wallet. The shift is to think of both share-of-wallet and share-of-mind. The shift is to move from “You have something I need” to “how this helps in customers’ success?” The idea is to move from a zero-sum, win-lose game to a win-win-win(customer) game.
Trust that withstands time
Start with trust, is what we read in popular leadership literature. In the objective world, trust is the outcome and not default to the alliance. Trust is mutual, built over time and executing the tenants around the brand, alignment and relevance are precursors. For an end customer trust is the differentiating value, alliance delivers: as everything else is replicable. Simple indicators of a trusted partnership include (1) being comfortable with sharing uncomfortable (2) communicating a collective view to the customer in case of conflicts (3) focussing on issues and not personalities. Lack of trust has a long term cost, and the immediate gain will taper off in a matter of time. In my earlier article: The curious case of trust and alliances, I have elaborated on this using game theory.
There are enough examples of successful partnerships available, though what worked for others may not work for you. I do believe that fundamental principles could be cross-leveraged. It also depends on the ecosystems maturity and organizations view of alliances as a growth multiplier or a fulfilling medium. The reality remains that Strategic alliances are increasingly relevant; while the context, texture, and tactics may vary by industry, the need to pivot around customer is imperative.
Disclaimer: The views and opinions expressed are my own and do not necessarily represent that of my employer.
Madan heads the Global System Integrators business at Amazon Web Services
