Seven Strategies for Successful Alliances

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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.