Seven Strategies for Successful Alliances

Whether striking a new business partnership or building a coalition government, you can benefit from these tricks of the trade. Two veteran negotiators share their strategies for forging and maintaining successful long-term relationships.

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The tribal leaders of Afghanistan's new coalition government face some difficult challenges in the weeks and months ahead. Formerly feuding factions will likely encounter distrust, miscommunication, and crossed signals as they work toward a common cause. Chances are, one partner will eventually say something to arouse the ire of another. And, as negotiations muddle along, it's a sure bet some rogue staffer will engage in an inflammatory act that threatens to derail the whole enterprise.

In short, Afghanistan's new leadership ensemble will look a lot like the corporate boardroom when Microsoft sits down with Intel, or when Firestone teams up with Ford.

Danny Ertel and Stuart Kliman have seen it all before. They are both founding partners of Vantage Partners LLC, a Boston-based consulting group that specializes in relationship management — specifically, the care and feeding of high-stakes strategic alliances. These relationships — the ones an enterprise has with its two or three most important partners — are increasingly vital, they say, as companies decide to forge alliances, rather than engage in costly mergers or acquisitions.

But as crucial as they are to a company's success, strategic alliances are also fraught with peril. Industry studies indicate that between 55% and 70% of business coalitions either fail or don't meet their original goals. In a Vantage Partners study of 130 companies with multiple partners, more than 64% of alliance managers cited poor working relationships as the root cause of the collapse of partnerships.

Stuart Kliman
"People often think that as long as they share a common goal, things should all fit together," Kliman says. "But our study showed that even if you have the terms and conditions of a partnership right, it may fail if you can't manage the relationships across the network."

This is just as true if you and your partner are Amazon.com and Toys "R" Us, or the Pashtun and the Uzbeks.

Ertel and Kliman earned their stripes as members of the Harvard Negotiation Project (HNP) in the 1980s. Led by Roger Fisher, coauthor of Getting to Yes: Negotiating Agreement Without Giving In, HNP has been airlifted into more international trouble spots than Delta Force. The HNP team has played a role in negotiations in the Middle East, Central America, Ecuador, the Balkans, and the Soviet Union. Ertel, who ran the Latin American practice, spent time with the rebels in El Salvador, where "people were literally checking their weapons at the door."

Danny Ertel
Skills honed during negotiations between El Salvador's Christiani government and the rebels it fought for 12 years can be useful in helping a big pharmaceutical firm work with a small biotech company. Or in forging a successful relationship between a giant telecom and a regional phone company.

We asked Ertel and Kliman to list the skills crucial to managing strategic alliances, whether they aim to reap healthy profits or put an end to war.

1. Be prepared to commit.

A true strategic alliance is not a casual thing. "You may date other people on the side," Kliman says, "but your strategic alliance partner is the one you're going home from the dance with."

In other words, it's not enough for two companies — or tribes — to pose together for the duration of a press conference. They need to forge a strategy for building mutual value. "Both partners need to be successful," he says. "Otherwise, when times get tough, somebody's going to be tempted to make gains at the other side's expense."

2. Communicate one message.

"Everybody in the company, or on the negotiating team, has to be singing from the same hymnal," says Kliman. Partners must establish protocols for internal communication, consultation, and information dissemination. "Everybody needs to understand who's making which decision," he says. "If coalition partners get different messages from different team members, they'll question the other side's motives and commitment to goals."

3. To end well, start smart.

Begin the relationship with a structured launch process.

"Get key people in a room together, and answer these questions: What's our relationship vision? How should we work together to meet our objectives? What challenges will we likely face given our particular business context, the current economic conditions, and our differing strategies?" Kliman says. "Figure out all the challenges that will make it difficult to work together: How are we going to manage conflict? How are we going to handle surprises? How are we going to deal with breakdowns in trust?" Also, determine how those messages will be communicated to the rest of the organization.

4. Don't abandon your leader.

"The core mistake that organizations make is assuming that relationship management is an individual skill. It's not," Kliman says. "It's a business process with a beginning, a middle, and an end. It should have a set of tools underneath it, and a set of incentives underneath that."

Ertel agrees. "If the alliance is really important for you, you can't, in good conscience, simply say, 'Well, if we have a good people person on the interface, then it will get done.' Relationship management is a process that needs to be managed."

5. Stock up on capitalist tools.

Stock your alliance toolbox with supplies that will help the partnership thrive and grow. These tools may include techniques for effective negotiations, strategies for dealing with conflicts, a template for a joint planning process, or scorecards for auditing the health and quality of the relationship. Many companies create alliance-support teams that create measuring instruments and that build the alliance-management Web site, where all the tools reside.

6. Keep your friends close — and your enemies closer.

In business — as on the international stage — the most challenging alliances are those in which companies, or countries, are partners in one area and competitors in another. Think of IBM and Hewlett-Packard, which may collaborate on next-generation chip technology, compete vigorously in the service arena, and share a vendor relationship in printers.

"Our relationships in the international arena right now are multifaceted," says Kliman. "We're partners in the coalition against terrorism, we're competitors in some economic arenas, and we're adversaries in others. Making that whole thing work is a huge challenge." Both sides need to understand that "a strong relationship doesn't mean you always agree with each other," Ertel says. "It does mean you have a way of reconciling differences."

7. Imagine the worst. Plan for it.

Imagine a range of nightmare scenarios: a key Northern Alliance player is killed, bombers mistakenly hit a Red Cross building, faulty tires cause fatal auto accidents. Then develop the protocols and processes that will allow you to deal well and efficiently with each of those issues. "Think about how to make this very complicated, interdependent venture work over time," Kliman says, "and set the model so that it fits all situations."

Linda Tischler (ltischler@fastcompany.com) is the Fast Company managing editor of new media. Learn more about Vantage Partners on the Web. Contact Danny Ertel (dertel@vantagepartners.com) and Stuart Kliman (skliman@vantagepartners.com) via email.

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