By Larraine Segil
Overview
The growth in alliances will increase as a percentage of the overall growth numbers. That means that if growth is 10% in revenues, a growing percentage of that growth will come from alliances. The value of alliances and how to make them succeed will become part of the CFO’s agenda. As CFOs go beyond merely negotiating the financial aspects of the deal, they will play a proactive role in setting up metrics for fostering communication, decision making, problem solving and conflict resolution as well as for evaluating the performance of the relationship over time.
Following are key trends to look for in specific industries:
- The ability of pharma and bio tech to partner well continues to be a critical success factor in the ever-consolidating industry, especially for mid-tier companies. There are significant operational differences in areas such as manufacturing process, clinical trials and regulatory affairs, coupled with very different managerial and decision-making styles. These differences put considerable stress on alliances and often wind up frustrating both partners to such an extent that performance and the ability to realize economic value is slowed to a minimum or stopped altogether. Mid-tier companies and emerging giants that have not developed truly world-class alliance practices put themselves in danger not only of sub-optimizing current projects but also of putting themselves on the outside for future consideration in new opportunities.
- Managing key relationships between competitors and partners in the aerospace industry will increasingly be viewed as a source of joint value. Virtually every government contract requires the winning prime contractor to sub-contract work to competitors. Every major company is both prime and sub to every other contractor. How well they learn to manage differences will be increasingly critical to their ability to deliver quality work, on time and on budget. At the same time, there are often difficult issues around IP protection and sharing that can only be addressed well within the context of highly functioning relationships.
- Hospital systems and insurance companies will begin to recognize and act on the need to truly manage their relationships and jointly innovate in the years between contract negotiations.
- As the demographic makeup of populations in wealthy countries yields an increasing number of individuals of retirement age, more people will have multiple diseases which will simultaneously require a huge integration of data and coordination of treatment. Thus, information technology will become the competitive differentiator between hospital systems—those that can provide a single patient electronic file to patients and their doctors any place and any time will attract patients from other cities and countries to their center of excellence. This will lead to major alliances with the IT sector and the healthcare industry as a two-tier system of healthcare enables those who are insured to go to where the care is most integrated and coordinated. Consumer-driven medical care will demand higher levels of engineered and coordinated approaches to integrated treatment to an aging population.
- IT service providers will try to gain a competitive advantage through two key sources: improving their governance of client relationships and improving the way they manage their relationships with other providers to improve customer service.
- Marketing and promotion alliances will increase. As experiential marketing is seen as a strategic branding strategy, partnerships created to deliver these experiences—and the need to manage these relationships—will increase.
- Women will continue to rise to higher levels of authority and power in corporate and small business environments, with an evolving focus on collaboration and joint gain rather than hierarchical organizations. Internal alliances within organizations as well as external alliances with suppliers and distributors will be key tools used to create and maintain ecosystems of collaborative organizations that invested in innovation and new market definition and penetration.
- Security applications and expansion will continue to drive multiple alliances with software and systems into every aspect of human endeavor, from biological and genetic discoveries that require privacy for the individual, to terrorist detection and prevention systems. In all cases, relationships between unlikely partners will require open-mindedness and crossing of industry boundaries for “out of the box” alliances.
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Author Bio: Larraine Segil is a partner at Vantage Partners, a consulting firm specializing in building corporate relationship management capabilities. She is the author of Measuring the Value of Partnering—How to Use Metrics to Plan, Develop and Implement Successful Alliances; Intelligent Business Alliances; Fast Alliances: Power Your E-Business; Dynamic Leader, Adaptive Organization: Ten Essential Traits for Managers; and Partnering—The New Face of Leadership. Contact her at 310-556-1778 or via e-mail at lsegil@vantagepartners.com.
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