This research presentation was produced from 93 separate alliance manager inputs from organisations such as: PPD, Quintiles, Cognizant, Covance, ICON, and RPS.
The research shows a very high correlation between Cultural Success Factors in alliances and overall success.
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Alliance Best Practice Research into Cultural Factors in Strategic Alliance Relationships
1. The Impact of Cultural
Factors in Strategic
Alliance Success
Research conducted by Alliance Best
Practice Q4 2012 – Q1 2013 for a
global Pharmaceutical Company
2. What is Alliance Best Practice (ABP)?
ABP is a research consultancy specialising in business to business alliances
Alliance Best Practice
Alliance best practices are the
identified practices that research has
shown lead to optimal alliance results
ABP is a group of over 20
international alliance experts able to
cover the world and work in multiple
languages
ABP is dedicated to: discovering,
developing and disseminating best
practices for its clients
It does this through the ABP
Database (ABPDBTM)
Page 2
3. Purpose and Conduct of Benchmark
83.50% correlation between Cultural CSFs and alliance performance
ABC Ltd wished to understand the impact that cultural factors (both
personal and organisational) have on strategic alliance
relationships.
Specifically it (ABC) was looking to discover whether there was any
correlation between high Cultural Critical Success Factors (CSFs)
and overall alliance performance.
Alliance Best Practice Ltd (ABP) captured data from 93 alliance
related executives; 41 people in ABC and 52 from partners.
The benchmark shows a significant correlation between high
cultural scores and alliance performance.
Partners benchmarked were: PPD, Quintiles, Cognizant, Covance,
ICON, and RPS.
Page 3
4. Cultural Scores v Alliance Performance
Cultural CSF scores are an accurate predictor of alliance success
100
90
80
70
60
ABC
50
Partner
40
Performance
30
20
10
0
Partner A
Page 4
Partner B
Partner C
Partner D
Partner E
Partner F
5. Common Success Factors : Best Practices
There are currently 52 CSFs in 5 categories
Commercial
Co1 Business Value
Proposition (BVP)
Technical
Strategic
T11 Valuation of assets
S20 Shared objectives
Co2 Due Diligence
T12 Partner company
market position
S21 Relationship
Scope
Co3 Optimum Legal /
Business Structure
T13 Host company
market position
S22 Tactical and
strategic risk
Co4 Alliance Audit
T14 Market fit of
proposed solution
S23 Risk sharing
Co5 Key metrics
Co6 Alliance reward
system
Co7 Commercial cost
Co8 Commercial
benefit
Co9 Process for
negotiation
Co10 Expected Cost
value ratio
T15 Product fit with
partners offerings
T16 Identified mutual
needs in the
relationship
T17 Process for team
problem solving
T18 Shared Control
T19 Partner
accountability
S24 Exit strategies
S25 Senior executive
support
S26 B2B Strategic
alignment
S27 Fit with strategic
business path
S28 Other relationships
with same partner
Cultural
Operational
Cu31 Business to
business trust
O39 Alliance process
Cu32 Collaborative
corporate mindset
Cu33 Collaboration
skills
O40 Speed of progress
O41 Revenue flow
O42 Business plan
O43 Communication
Cu34 Dedicated
alliance manager
O44 Health check
Cu35 Alliance centre of
excellence
O46 Change mgt.
Cu36 Decision making
process
Cu37 Other cultural
issues
Cu38 B2B Cultural
Alignment
O45 Alliance charter
O47 Operational
metrics
O48 Operational
alignment
O49 Exponential
breakthroughs
O50 Internal alignment
S30 Common vision
Page 5
S29 Common strategic
ground rules
O52 Issue escalation
O51 Project plan
6. Background
Critical Success Factors fall into 5 separate categories or dimensions.
- Commercial – Co1 – Co10,
- Technical T11 –T19,
- Strategic S20 – S30
- Cultural Cu 31 – Cu 39
- Operational O40 – O52
This summary report focuses on one of the five dimensions – the Cultural
Dimension.
Normally scores would be captured from both / all parties to the relationship to be
able to compare results and identify areas of misalignment.
White space on a graph shows opportunity for development.
Understanding of misalignment of scores is a good starting point for relationship
development.
Page 6
7. The Questions asked
Responses were received from; 41 people in ABC and 52 from partners
CSF
Question
Cu31
What is the degree of trust in the relationship and how is this evidenced? (Please place
score in Score Box and Evidence in Comments box.
Cu32
What is the level of maturity of alliance thinking in your organisation?
Cu33
Cu34
Cu35
Cu36
What degree of collaboration skills exist in this relationship on both sides and how have
these skills been applied in your organisation? (Please place score in Score box and
Evidence in Comments box).
Is there a dedicated relationship manager role identified to work on this alliance from both
sides?
Is there a dedicated alliance department in your organisation to whom you can turn for help
in this and other alliances?
How long is the decision making process in your partner‟s organisation and how does this
compare with decision making in your organisation? (Please place score in Score box and
comparison comments in the Comments box).
Cu37
Are there any other cultural issues which „get in the way‟ of business as usual?
Cu38
What degree of Business to Business cultural alignment exists and what measures were
used to ascertain this? (Please score in Score box and evidence in the Comments box).
Page 7
8. ABC and Partner Cultural Alignment
Overall
ABC
Page 8
BIC = A leading Pharma + CRO alliance
9. Alignment / Misalignment Areas
Factor
ABC
Partners
Dif
Dedicated Resource
51
77
-26
Cultural Alignment
47
59
-11
Decision Making
48
55
-7
Alliance Maturity
60
66
-6
B2B Trust
58
62
-4
Partnering Skills
60
60
0
Centre of Excellence
68
66
2
Cultural Issues
63
57
7
Totals
57
63
-6
Page 9
10. Strengths / Weaknesses Areas
Type
ABC
Partners
Comb
Centre of Excellence
68
66
67
Dedicated Resource
51
77
64
Alliance Maturity
60
66
63
B2B Trust
58
62
60
Cultural Issues
63
57
60
Partnering Skills
60
60
60
Cultural Alignment
47
59
53
Decision Making
48
55
52
Totals
57
63
60
Page 10
11. Partner Scores (Range)Relative Scores
100
BIC
90
80
Ptrs
70
ABC
60
50
40
30
20
10
0
A
Page 11
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
12. Cu31 Business to business trust
The degree to which each organisation trust each other to deliver on its
commitments.
One of the most hotly debated aspects of strategic alliances. Needs to be business to business to be
replicable rather than personally based (although often grows out of personal chemistry between
partners).
Trust is a high impacter but is the result of a number of low impacters like; communication, information
sharing, quality delivery, etc.
The incidence of business to business trust is far from common and no organisations identified in the
database have a formal or credible business to business trust building model. This is due in no small part
to the fact that the essence of organisational trust is misunderstood. See Trust / Competency Model
Paradoxically the impact that trust can have on relationships was almost universally identified as a critical
success factor (94%) with many individuals able to cite quite clearly the commercial value of developing
trust.
There has been an increasing degree of attention paid to this important area in the recent literature on
alliance management (see particularly - Getting the measure of culture: from values to business
performance by Prof Fons Trompenaars, PhD and Prof. Peter Williams, PhD and also Strategic Alliances
between American and German companies : A cultural perspective by Khaled Abdou and finally
„Managing Cultural Differences in Alliances‟ by Pablo C. Biggs ).
13. Cu32 Collaborative corporate mindset
The degree to which both organisations understand and practice partnering as an
organisational competence.
Many individual alliance managers cited this aspect as being the most difficult to deal with. Quotations
such as the one below from a senior executive at Atos Origin were typical;
“We don‟t do alliances very well, this is due in no small part to our historical growth, if we see an
organisation that we would like to work with we don‟t ally with them we buy them!”
Organisations that exhibited an immature or nascent organisational collaborative mindset tended to fall
into the Stage I – Opportunistic category.
This means that they would pursue collaborations only in so far as they helped them to secure particular
opportunities which were too large or too complex for them to win alone.
When that particular opportunity was secured they would then pursue another one, but there was no coordination of alliance activities other than those necessary to „win deals‟.
In comparison those organisations that had reached Stage III – Endemic saw partnering not as a separate
function but rather as „the way we do things around here‟.
Such organisations regarded partnering as the core of their business and took great pains to ensure that
partnering ethics and behaviours were practised throughout their organisations (e.g. Starbucks, Eli
Lilly, Dow Corning, Siebel, etc).
14. Cu33 Collaboration skills
The degree to which the individuals in both / all parties to the alliance have been
trained to use a set of defined collaboration skills.
Very few organisations in the database had a coherent and integrated structure for collaboration skills
development although many had individual training courses for aspects of the collaboration skill set (e.g.
negotiation, inter personal skills, 360O review, project management, influencing skills, mediation, Etc.).
This is in many respects surprising given that there is a clear and strong causal link between the
collaboration skills of key stakeholders and the success of collaborative relationships.
It appears that the reason might be that no association or trade body has sufficiently articulated a
comprehensive framework of skills to describe the competencies of professional collaboration.
However, evidence suggests that such initiatives are now gaining ground. E.g. the ASAP Certification
programme and the underpinning competencies framework. See Alliance Competency Framework.
15. Cu34 Dedicated alliance manager
The existence of an individual dedicated to the day to day management of a
strategic alliance.
This factor is very often a defining one in the understanding of a strategic alliance. If the role exists then it
is a strategic relationship if it does not then it is not.
The actual title can be many and varied; relationship manager, account manager, sales manager, key
account manager, etc.
In many respects this is the simplest and easiest best practice factor to track.
There is empirical evidence that when dedicated resource is allocated to a strategic relationship that
relationship improves by between 50% and 80% defined in the success terms of the individual relationship
(e.g. more products sold, greater influence with introducers, quicker time to market, better profit
margin, greater gross sales, higher revenue, etc.).
Given this fact it is surprising that so many organisations continue to expect individual managers to run
multiple alliances.
The reason appears to be a damaging catch 22 situation. When a manager asks to be allocated full time
to a relationship the common answer from executive management appears to be „When you can generate
x amount of increased revenue I will allow you to go full time on the relationship‟.
However, the problem is that without being full time the individual manager will never have the time
available to produce x revenue, let alone develop a coherent long term growth plan for the relationship.
“I spend all my time running from one of my three so called strategic alliances to the next desperately fire
fighting operational issues which arise and then I get criticised by my manager because I haven‟t
developed a coherent strategy for each!”
16. Cu35 Alliance centre of excellence
The existence of an actual or virtual group of people tasked with developing,
coaching, and implementing alliance and partnering standards.
Best practice examples include both back office and front office functions.
There was overwhelming evidence from the database that when organisations start to share alliance
knowledge amongst practitioners performance goes up (Incidence 46% Performance improvement 87%
increase on average).
These centres were by no means all physical entities, some were „virtual‟ groups of multiple disciplines.
Yet further not all were formally established some were clearly operationally started as a common
observation of need;
“We started a regular teleconference call once a month to share experiences on our alliances. To be
honest at first it was just a chance to share frustrations but pretty soon people began to share experiences
or tips and tricks that had worked well for them that others could use. We started to share documents and
templates and it really helped with our day to day jobs!”
There was a common misconception in Hi Tech alliances that the technical centres of excellence that
were formed to test technical solutions was the same as alliance centres of excellence this was clearly
erroneous although there were aspects of technical collaboration that shred common best practices with
alliances e.g. communication models, operating protocols, budgetary sign off procedures, etc.].
17. Cu36 Decision making process
The process, speed and quality of decision making in both / all partner organisations
Disparate rates of decision making speed can be the most frustrating incidence of cultural misalignment.
Most commonly shows up where there is a large size disparity in companies.
For example, generally in a large multinational organisation, a significant decision needs to be vetted and
validated by a number of management levels; whereas in a small organisation the same decision can be
made quickly by a handful of senior executives sitting together or communicating remotely via telephone.
The problem is not so much that both organisations take different timeframes to make decisions; it is that
both sides misunderstand the nature of the other organisation.
In the large organisation (not unreasonably) managers have been told to generate a traceable audit trail of
authorisation thoroughly through multiple levels of senior executives; whereas in the smaller, more agile
company, risk-taking and entrepreneurship is generally encouraged.
The manner in which this factor affects relationships is in the misconception of either side to the pace and
depth of consensus needed to affect a successful decision. (e.g. Accenture / BT and Delta / Air France)
18. Cu37 Other cultural issues
The existence of any other cultural aspects of your partner‟s organisation that „gets
in the way of doing business‟
In every strategic alliance relationship examined there exists some specific aspect of both organisation‟s
culture which give problems with the relationship.
Sometimes this can be the nature of communication, in others it can be an organisational reflection of
arrogance or aggression; yet again it can be the attitude of organisations to escalating problems (in some
organisations this seems perfectly reasonable, whilst in others it is seen as a fast track to proving that you
can‟t do your job and leads directly to an early exit from the organisation);
Whatever the particular instance there is a highly repeating occurrence in the database of specific cultural
issues providing specific problems (over 86%).
19. Cu38 Business to business cultural
alignment
The ability of each organisation to an alliance relationship to understand the
business culture of the other and align their own business culture to it for best effect.
In those organisations that recognise organisational culture as an in-house enabler or barrier to progress
with partnership; many of them have developed their own language to describe their own cultural norms.
They use this language as a framework to identify to potential partners the culture to which that partner
will be aligning and they actively encourage the partner to consider their own organisation‟s culture along
similar lines.
There is good evidence that such an active and early cultural alignment helps minimise the
delays, misconceptions, and damaging perceptions commonly found in the cultural dimension.
In those organisations that do not already have a cultural alignment language or framework many are now
actively turning to external advisers to help them with the situation (e.g. SAP and Siemens and Air France
/ Delta).
See Identity Compass
20. Further Details
For further details please contact;
Mike Nevin
Managing Partner
Alliance Best Practice Ltd
Web: www.alliancebestpractice.com
Office: +44 (0)1675 442490
Mobile: +44 (0)7766 752350
E Mail: mike.nevin@alliancebestpractice.com
23. VST Methodology Analysis (Example)
Stage
CSF
Score
Attention
Impact
Long
Formal Business Plan
50
Y
Short
Alliance Process
75
Y
Medium
MOUP
0
Y
Short
Collaboration Skills
50
Y
Medium
Decision Making Process
48
Y
Medium
Communication
23
Y
Long
Collaborative negotiation
23
Y
Medium
Trust
20
Y
Long
Cultural alignment
83
Y
Medium
Operational Metrics
50
Y
Short
Skills
Y
Trust
50
Page 23
Common Vision
Vision
Operational Alignment
50
Y
Short
25. Suggested Next Steps
ABP would suggest the following immediate next steps:
- Ratify the scores with a range of key stakeholders from the partner organisation
(increase the data collection points).
- If the same score patterns persist then take immediate action on the RED areas:
communication, collaborative negotiation and trust
- Keep a watching brief on the AMBER areas: Decision Making Process and track
impact.
- Celebrate the relationship strengths GREEN areas: Cultural alignment.
- Further information: white papers, training courses, templates and research
reports exist in the ABP database to guide members in the best practices in
each of these areas.
Page 25
26. Partner ‘Intimacy’ Spectrum
Both partners need to define the topology of the
progression and the ‘value of the journey’
Low
Intimacy
High
Intimacy
Low
Value
High
Value
0 = None
25 = Low
50 = Median
Commodity Price
Some customization
Interchangeable
Product
Flexibility/levels of
service
Highly specified
deliverables
Special knowledge
Buy from and sell
to
Buy from, sell to and
sell with (GTM
together)
75 = High
100 = Perfection
Customized/
individualized
Shared risks &
investment
Process & data
integration
Deeply integrated
Solutions oriented
Shared rewards
Greater cost value
leverage
Mutually
interdependent
Breakthrough
market value
27. Alliance Best Practice Framework
The ABPDBTM with 180,000+ entries lies at the heart of the Framework
„Tools‟ refer to any
documents that help users
apply the Framework
knowledge.
Bench
Marks
MOUP
There are 52 Critical
Success Factors (CSFs)
identified from
examining over 27,000
international strategic
alliances.
ABPDTM
The Alliance Maturity Model
TM establishes: current
situation, (benchmark)
current and future
challenges, the nature of
the journey‟ and success
strategies for cost effective
progress.
Page 27
Diagnostics
Relationship
Optimisation
By combining the
principles established in
the CSFs a range of
Best Practices (BPs)
have been developed
28. The Alliance Maturity Model AMMTM
Company 2
80
70
60
Company 1
50
40
Stage I
Stage II
Stage III
30
20
• Alliances are opportunistic
• Each alliance is a „stand alone‟
venture
• Alliances are not part of the
company‟s “Standard Operating
Procedure”
• Separate corporate efforts in different areas of business
• Strategic partners developed
• Effort begun to adopt “best practices” in alliance
management
• Planned investment in partnering
capability
• Wide scale use of full range of
alliance capability building
• Close integration of sales,
marketing, innovation etc
10
C
3
C
31
C
11
W
C
C
1
C
30
C
17
C
8
B
IC
C
16
C
18
C
2
C
22
C
4
C
27
C
26
C
12
C
33
C
15
C
13
C
19
C
20
C
25
C
14
C
24
C
23
C
32
C
28
C
9
C
29
C
5
C
34
C
7
C
10
C
6
C
21
0
29. Individual relationship benchmark example
Co1
Generally consistent scoring
O49
O48
O47
O46
Client scored lower (usually)
than the Partner
O50
100
O51 O52
- Co1 Defined business value
proposition
- T2 - Partner company market
position
- T3 - Host company market position
- S7 – B2B Strategic Alignment
- Cu8 – B2b Cultural Alignment
- O2 – Speed of progress so far
- O12 – Internal Alignment
Co4
90
Co5
Co6
Co7
Co8
80
70
60
O45
Differences were perceived in
the following areas;
Co2 Co3
Co9
50
O44
Co10
40
O43
T11
30
O42
T12
20
O41
10
T13
O40
0
T14
O39
T15
Cu38
T16
Cu37
T17
Cu36
T18
Cu35
Cu34
Cu33
Cu32
Cu31
T19
S20
S21
S22
S30
S29 S28
S26 S25
S27
S24
S23
30. Alliance Capability Model (ACMTM)
The goal is to establish partnering as an organisational competence
Alliance Capability
Alliance Performance
People
Governance
Leadership
Commercial
Technical
Resources
Processes
Strategic
Structure
Cultural
Technology
Key Performance
Results
Operational
Internal Benchmarking on an Ongoing Basis : Continuous Improvement Cycle
Alliance Maturity Model (AMMTM)
Alliance Best Practice Index
External Benchmarking Alliance Best Practice Database (ABPDTM)
KEY MESSAGES:
Investment in training alone will not deliver alliance competence (AC)
Alliance managers need ongoing support to produce best results
Building capability is essential to delivering results
AC = Competitive business advantage