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Valuable Economic and Financial Metrics to Support Partnering and Revenues, Part II: How Companies Underestimate Alliance Challenges—Especially When Their Operating Model Is the Barrier

Posted By Cynthia B. Hanson, Thursday, October 6, 2016
Updated: Wednesday, October 5, 2016

Alliance management workers and their associated crew members had the opportunity to stock their toolboxes with valuable building instructions at a unique session, “Applying the Latest Alliance Management Research to Your Partnering Practice,” at the ASAP 2016 BioPharma Conference, “New Faces, Unexpected Places in Partnering: The Foresight to Lead, the Foundation to Succeed,” which took place Sept. 7-9 at the Revere Hotel in Boston. The session included a presentation by Stuart Kliman, CA-AM, co-founder of Vantage Partners, on the key findings from Vantage’s 2015 study “Transcending Organizational Barriers—A Cross-Industry View of Alliance Management Trends and Challenges.” The deep dive was part of a two-part presentation that included the findings of Dr. Shawn Wilson, DBA, who introduced an ASAP-commissioned 6th State of Alliance study, “The Economics of Alliances, Social Capital, and Alliance Performance,” which was covered in my previous Part I blog post

“Our findings show that companies are actually doing okay. There aren’t giant failure rates taking place,” observed Stuart Kliman, CA-AM, co-founder of Vantage Partners, during his presentation of Vantage Partners’ latest comprehensive cross-industry study on alliances and alliance management. The 2015 study probes alliance prevalence and success rates through a two-part study methodology that included a 500-respondent survey and practitioner interviews. “ASAP would have been failing if those failure rates hadn’t [improved] over the last several years. Organizations have built up partnering capability, and that has had an impact on success rates.”

Kliman then zeroed in more specifically on the intent of the study: to determine the significance of alliance execution challenges and their consequences; the impact of alliance management maturity on success rates; and potential underlying organizational root causes of alliance execution challenges.

“People still identify alliance execution issues as being the foremost disabler in reaching alliance goals,” he explained of the impetus of the study. “They can identify significant loss of value through poor execution of those issues and spend a lot of time dealing with conflict. Shawn’s iceberg continues to be the underminer of execution.” [Part I of this blog post focuses on Dr. Shawn Wilson’s key findings, which included an “iceberg” analogy of how company issues can be hidden underwater, impacting social capital.]

The purpose of a merger is to eliminate difference, “but alliances are a different ‘berg,” he noted. “Organizations continue to significantly underestimate how challenging they can be. … Internal operating models haven’t evolved in a way consistent with how important alliances are becoming to our strategy.”

Alliance execution was identified in the study as the most frequent cause of alliance failure. Kliman linked that challenge to Wilson’s presentation. “Biopharma companies have internal innovation models, but they don’t spend a lot of time grappling. We actually have organizations involved in partnerships that haven’t evolved over time, so alliance management groups spend a lot of time putting ‘Band-Aids’ on organizations that are regularly undermining execution,” he observed.

He then explained more about the purposes of Vantage’s study:

  • To gain insight into the impact of ineffective management on alliance results
  • Identify new and persistent alliance execution challenges
  • Test hypotheses about the root causes of alliance management challenges

And the key findings of the study…

  • Organizations are increasingly leveraging partnerships to develop relationships for mutual gain, address business challenges, and drive bottom-line results.
  • Some 89 percent of pharma/biopharma respondents consider alliances “very important” or “mission critical.”
  • Some 83 percent of respondents reported having more alliances than five years ago.
  • Some 94 percent of respondents reported effective alliance management substantially increases the likelihood of, or is essential to, successful alliance execution.
  • The respondents reported that 39 percent of alliances fully achieved their objectives, 42 percent partially achieved their objectives, and 19 percent generally failed to achieve their objectives.

When higher maturity and capability grows, there are higher success rates, Kliman concluded. “This is where alliance management groups will lead the way:  One aspect of alliance management groups is to provide direct support to individual alliances and drive the capability. The next big goal is the focus in our second mission: To drive capability with alliances in mind.”

Stay tuned for additional coverage of the session “Applying the Latest Alliance Management Research to Your Partnering Practice,” which will focus on a lively discussion between the presenters and audience participants on how the two studies connect. You can read more on Vantage’s studies by visiting https://www.vantagepartners.com/Articles.aspx

Tags:  6th State of Alliance  alliance execution challenges  alliance execution issues  Alliance Management  alliance prevalence  alliances  biopharma  Dr. Shawn Wilson  management  Stuart Kliman  success rates  Vantage Partners 

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