Alliance transformation webinar

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Brighton Landing West 10 Guest Street Boston, MA USA 02135 www.vantagepartners.com
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photocopying, recording, or otherwise, without prior written permission. Copyright © 2012 by Vantage Partners, LLC. All rights reserved.

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Copyright © 2012 by Vantage Partners, LLC. All rights reserved. 1

About Vantage Partners

Expertise in building organizational negotiation and
relationship management capability
Over twenty-five years of experience training and
consulting to Global 500 companies
Recognized thought leaders
√ Three-year study on Alliance Management
√ Cross industry study of SRM best practices
√ Instructors at Harvard, Tuck and West Point
√ Authors of Getting to YES: Negotiating Agreement
Without Giving In & Difficult Conversations: How
to Discuss What Matters Most (New York Times
bestsellers)
√ Authors of articles in the Harvard Business Review and
Sloan Management Review
Leaders in international dispute resolution through
CMG Conflict Management Group
√ New Constitution in South Africa
√ Arias Peace Accords in Central America


Today’s webinar

Discuss together what transformation is, what triggers it, and
what Alliance Management’s role is
Share some case studies illustrating best practices with respect to
alliance transformation


Poll

When you hear the term “Transformation” what do you think of?
(click all that apply)
Putting in place new operating protocols on an alliance
Re-structuring and / or re-staffing the governance structure
Terminating an alliance
The film Transformers – Robots in Disguise


Correct answer?!

All of the
above!


What is transformation?

Transformation: creating a new strategic and operational
context for an alliance
May include:
Changes to governance structure or membership
New strategic direction for the alliance
New or revising sets of operating protocols
Alliance termination
Effective transformations are efficient and collaborative, with a
focus on preserving the working relationship


Why transform?

Transition in the lifecycle of the alliance, e.g. from development
activities to commercialization
Significant changes in personnel at either company
A merger or acquisition impacts the structure and resourcing of
one partner
Technical failure
The business case is impacted by changes in the marketplace or
legal or regulatory rulings
Alliance dysfunction sub-optimizes performance
Poor health check results indicate a need for change

Alliance Management’s role

Anticipate or identify jointly with the alliance partner when
transformation might be necessary
Facilitate discussion and a decision on how the alliance might
change
Drive creation of an implementation plan that will adapt the
alliance appropriately
Drive execution of that plan
Check in on the status of the alliance post-transformation as
appropriate


Poll

For those anticipating some type of transformation on their
alliance, what do you think will cause the need to transform?
Transition in the lifecycle of the alliance, e.g. from development activities
to commercialization
Significant changes in personnel at either company
A merger or acquisition will impact the structure and resourcing of one
partner
Technical failure
The business case will be impacted by changes in the marketplace or legal
or regulatory rulings
Alliance dysfunction will sub-optimize performance / a recent health check
suggests a need for change

Managing Transformation: Case Studies

Case Study 1:
Case Case
Study 1 Study 2

Reviving an alliance post-litigation Case
Study 3
Case
Study 4

After settling a highly contentious litigation, the alliance was
left battered and with a new product to include going forward
There was a deep lack of trust on the alliance at every level of
the governance structure
Inclusion of a new product in the alliance created open
strategic issues as well as a need to develop and operationalize
new information-sharing agreements


Alliance was plagued by deeply held
Case Case
Study 1 Study 2

partisan perceptions Case
Study 3
Case
Study 4

Some at ACME believe MetCo… Some at MetCo believe ACME…
Is greedy and risky Is too bureaucratic and conservative
Is unduly critical, without the expertise Over-inflates its own internal expertise,
and experience to back up their and is unwilling to listen to viewpoints
assertions from MetCo
Over-inflated the value of certain Doesn’t appropriately prioritize the
markets alliance within its portfolio
Received a disproportionate amount of Deliberately hides information and puts
value in the settlement (i.e., that MetCo up hurdles to activities and decisions
“won” and ACME “lost”) that they do not support
Acts out of financial motivations and Wasn’t truthful about the development
not with the consumer’s best interests of [Product]
in mind Lacks integrity
Lacks integrity


Solution:
Case Case
Study 1 Study 2

Re-launch alliance over a six month period Case
Study 3
Case
Study 4

Key Short-Term Activities Core Re-Launch Activities Monitor and Optimize
Jan. - June July – Dec

Operationalize governance Within and Across Internal and MetCo and ACME are
structure Joint Committees and Teams well-equipped to:
Kick off the partnership and
Vision and Goals Resolve complex
conduct contract briefing issues
Re-form governance
committees; conduct initial Find efficiencies
Governance / Decision-Making
meetings Continue enhancing
Kick off data exchange relationships and
working group Joint Planning & Scorecarding
operations

Relationship diagnostic Final Assess progress and
Conduct broad and deep
Report course-correct
Working Together Protocols and Incentives Out
interviews of individuals in End of
both ACME and MetCo June
Define relationship needs
Internal Alignment
and identify key challenges
Develop recommendations
Relationship Issue Resolution /Skill Development
Develop overarching
re-launch plan
Electronic Collaboration Space


Case Case
Study 1 Study 2

Key takeaways Case Case
Study 3 Study 4

It isn’t just about the people! Re-staffing the governance structure was a
critical first step, but not sufficient by itself. Essential to re-operationalizing
the alliance:
Re-chartering committees
Aligning on committee and team goals
Implementing operating norms, was essential as well

Alliances need leadership. Empowering governance committees to act as
true leaders on the alliance, and ensuring they provide clear expectations,
while even using informal incentives to inspire collaborative behavior, was
effective
A re-launch isn’t just a meeting. The full re-launch needed to be viewed as
a process, with a defined period of time, a set of deliverables and activities,
and a group of people responsible for overseeing and owning the effort


Case Study 2:
Case Case
Study 1 Study 2

Refreshing an alliance Case
Study 3
Case
Study 4

An alliance between a European-based pharmaceutical company and a US-
based biotech was approaching commercialization, but there was a sense
of malaise and some underlying frustrations. The Alliance Managers didn’t
feel a full-blown re-launch was necessary or warranted, but wanted to
understand why there was a lack of enthusiasm and a general sense of
frustration
To better understand the lack of enthusiasm the team conducted a health
check. Results confirmed the feelings of detachment and, in addition,
brought to light additional challenges that had been creating frustration
The health check survey results, combined with follow-up conversations
with key stakeholders, also allowed the Alliance Managers to develop a set
of specific recommendations going forward. These were presented at a
“Refresh Meeting”


Case Case
Study 1 Study 2

Health check results and quotes Case Case
Study 3 Study 4

Total Committee Working Group
Averages Averages Averages
Category
ACME BigPharma ACME BigPharma ACME BigPharma

1. Strategic Value 4.87 3.93 4.67 4.15 5.06 4.21

2. Value Enhancement 4.34 4.04 4.22 4.25 4.12 3.35

3. Relationship Quality 4.32 3.88 4.50 4.30 4.14 3.22

4. Operational Effectiveness 4.18 3.88 4.11 3.86 4.17 3.18

“Decisions seem to have been slow in coming “The committees seem to make decisions
forward. This may be due to differences in without all the right information – it’s the
internal governance and structure. ” working group members that are the experts!”

“It isn’t clear how we’re making decisions, “We need to build an understanding of the partner’s
and sometimes it isn’t even clear what the organization structure and how all the parts fit together.”
decision is!”


Some key challenges and
Case Case
Study 1 Study 2

recommendations identified Case
Study 3
Case
Study 4

Challenge Recommendation
Lack of clarity around how decisions are Clarify and determine decision-making roles for all
made on the alliance key decisions, and publicize the roles of different
committees and teams on the alliance SharePoint
site

Perception that BigPharma’s internal Provide an overview of each organization’s
organization is overly complex and governance structure, and clarify the extent to which
slows down work on the alliance internal consultation needs to occur on alliance
decisions so that the time needed to do so can be
taken into account and planned for

Sense that committees make decisions Provide a presentation on each organizations subject
without fully leveraging subject matter matter expertise and develop a process for review of
experts on the working teams all key deliverables and decisions so that expertise is
fully leveraged


Case Case
Study 1 Study 2

Study 3 Study 4

Yearly check-ups keep you healthy! Even though there were no
apparent, serious problems on the alliance, a health check helped
identify underlying issues that, if not addressed, may have
impacted execution going forward
Don’t fix what isn’t broken. A full re-launch isn’t the only way to
help an underperforming alliance. In this case, identifying a few
acute issues and addressing them was all it took to make an
impact
Simply getting the alliance team together, with the alliance
leadership, and having leadership emphasize the importance of
the work was enough to re-build excitement


Case Study 3:
Case Case
Study 1 Study 2

Living in a terminal alliance Case
Study 3
Case
Study 4

Following regulatory action, the strategic focus of a co-marketing
alliance changed to exclude one key product, leaving a product
for which the patent was to expire in 18 months
The quality of the alliance relationship felt less critical (and
alliance had become significantly less valuable for one partner).
At the same time, there was still significant value to be extracted
from the relationship prior to termination
A small task force was convened to review the latest health check
and make some moderate, easily implementable steps
Scorecard with key operational goals
Relationship protocols


Cross the finish line together!


Case Case
Study 1 Study 2

Study 3 Study 4

Give your partner something good to remember you by! Partners
were motivated to terminate on good terms out of interest in
possible future partnering opportunities
Even when an alliance is at the end of its life, resources devoted
to enhancing the collaboration can make an impact — the
partners took a critical look at what was implementable given
limited resources, and this made a difference
Don’t ignore your alliance when it’s most in need! Termination
activities themselves can create a need for close alignment and
joint conflict management approaches


Case Study 4:
Case Case
Study 1 Study 2

Building the capability to transform alliances Case
Study 3
Case
Study 4

A large pharmaceutical company with over 90 alliances, both development
and commercial, regularly reviewed and reprioritized its portfolio of
alliances, often resulting in a need to terminate some alliances. The
company had no systematic way of actually transforming those alliances,
leading to drained resources and wasted time
There was no consistent approach to making the determination to
transform and implementing the transformation

Dimension
Alliance Z scorecard
Category Metric Sub-metric Metric Value Target Trend Status

Alliance Y scorecard
Strategic Value

Joint and Individual
strategy / objectives
Dimension Category Metric Sub-metric Metric Value Target Trend Status

Innovation

Alliance X scorecard
Strategic Value

Strategic fit
Partner survey: strategy / objectives
Strategic value Dimension Category Metric Sub-metric Metric Value Target Trend Status

Alliance Acme scorecard
Financial Value Innovation
Strategic Value

Value Strategic fit
strategy / objectives
Partner survey: Dimension Category Metric Sub-metric Metric Value Target Trend Status
Revenues Strategic value
Innovation
Strategic Value
Financial Costs
Value

Strategic fit
Partner survey: Joint and Individual

Alliance
Value
Financial value strategy / objectives
Partner survey:
Revenues Strategic value
Partnership Capability
Innovation
Financial Value
Costs
Governance
Strategic fit
Partner survey: Value
Partner survey: Financial value Partner survey:
Partnership Capability Strategic value
Revenues

Review Meeting
Partner survey:
Financial Value
Partnering Image Costs
Governance
Operational Value
Effectiveness Partner survey:
Partner survey: Financial value
Timelines Partnership Capability Revenues
Partner survey:
Quality Partnering Image Costs
Governance
Operational
Partner survey: Partner survey:
Effectiveness
Operational Financial value
Partner survey:
Effectiveness
Timelines
Partner survey:
Partnering Image
Quality Governance
Operational
Partner survey:
Effectiveness Partner survey:
Operational
Effectiveness Partnership Capability
Timelines
Partner survey:
Partnering Image
Quality
Operational
Partner survey:
Effectiveness
Operational
Effectiveness
Timelines

Quality

Partner survey:
Operational
Effectiveness


Case Case
Study 1 Study 2

Developing a function-wide approach Case Case
Study 3 Study 4


Transform Guide:
Case Case
Study 1 Study 2

Step by step guidance Case
Study 3
Case
Study 4


Transform Guide example tool:
Case Case
Study 1 Study 2

Guidelines for Terminating an Alliance Case
Study 3
Case
Study 4

The Guidelines for Terminating
an Alliance provides guidance on
the key things to keep in mind
when terminating an alliance and
ensures that the alliance
management function across the
globe is able to leverage the key
lessons learned from past
experience
The guide has multiple tools like
this, and each can be updated
over time to truly develop a best-
in-practice approach


Case Study 4: Case
Study 1
Case
Study 2

Key takeaways Case
Study 3
Case
Study 4

Avoid zombies! Approaching alliance transformations in a
systematic way allowed for identification of best practices and
the ability to perfect the process over time, while ensuring
alliances never became the living dead
Enhance your brand. It was important for this company to be
viewed as a partner of choice, and making an explicit decision to
work to preserve the relationship, even when terminating
alliances, helped preserve its reputation
Actively manage change. Many people are afraid of changes, but
putting place a diagnostic process allows you to have those
difficult conversations and be proactive about portfolio upkeep


Questions?


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Vantage Partners

A spin-off of the Harvard Negotiation Project,
Vantage Partners helps companies achieve
breakthrough business results by transforming the way they
negotiate with, and manage relationships with, their
suppliers, customers, and alliance partners.

10 Guest Street
Boston, MA 02135
T: +1 617.354.6090
F: +1 617.354.4685

Renee Jansen, rjansen@vantagepartners.com
Patrick Petitti, ppetitti@vantagepartners.com

www.vantagepartners.com


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