Cross-Industry Panel Imparts Insights for Executing David-Goliath Partnerships
Big company–small company alliances are a fact of life in some industries. You see them in tech when Global 1,000 technology vendors integrate innovative functionality from smaller startups that fill gaps in their offerings, or when Big Pharma organizations team up with biotechs to develop promising compounds into marketable drugs. Also known as “David-Goliath” alliances, these relationships can contain many hidden land mines if people aren’t careful. Just ask ASAP president and CEO Michael Leonetti, who has led alliance groups in Big Pharma organizations in his career.
“Quite honestly, I’ve seen [this dynamic] kill many an alliance in my time,” said Leonetti in the lead-up to a panel session titled “Managing Power Imbalances: How to Navigate Partnerships Between Large and Small Organizations,” one of the highlights of the second day of this year’s ASAP Global Alliance Summit.
Moderated by Jessica Wadd, partner at Vantage Partners, this well-rounded panel of seasoned alliance professionals from multiple industries brought a wealth of past and present perspectives from both ends of these types of collaborations:
- Steve Pessagno, Alliance director and head of global alliance management operations, at GSK
- Amy Walraven, founder, president, and chief strategy officer at Turnkey Risk Solutions
- Joy Wilder Lybeer, senior vice president of enterprise alliances at Equifax
- Troy M. Windt, associate vice president of global alliances and external relations at Reata Pharmaceuticals
“Cultural Diagnosis” Reveals What Might Ail a Collaboration of Big and Small
In kicking off the discussion with an overview of each panelist’s alliance portfolio, Lybeer noted that Equifax relies on smaller outfits to supplement its offerings in ways the company can’t do on its own, She added that the exercise of evaluating a variety of big and small partners “allows us to develop our understanding of potential coopetition, areas where we can supplement our capabilities, or find new routes to market.”
Walraven agreed with Lybeer that smaller companies have plenty of opportunities to complement larger organizations’ offerings with niche “cohesive enhancements.”
Pessagno, who works with a number of GSK’s R&D-centric alliances with small entities, extolled the virtues of conducting a “cultural diagnosis” at the outset of the relationship to determine how the organizations are and aren’t aligned. This process usually unearths what truly matters to the collaboration as a whole, and these priorities that emerge are eventually woven into the governance and operational elements of the partnership, including the periodic health checks.
Asked what her organization looks for in a larger partner, Walraven cited domain expertise, a strong reputation, and a shared vision of where the fraud, risk, and credit markets, areas in which Humaitrix competes, are heading.
When do you know when you as a smaller organization might have trouble coping with the power imbalance? Windt said to pay attention to the latter’s adaptability right from the start. Since a large firm has lots of processes, can it tailor an alliance structure to fit a partner that might only have two points of contact? He recounted instances where an alternative structure was inserted into the contractual language only to see the large company “migrate back to one way of doing things.”
Dealing with Outsized Expectations
At one point, Wadd wondered if the panelists ever got excited about a David-Goliath partnership, only to be disappointed when it didn’t fulfill its promise. The panel had no shortage of stories. Walraven spoke of a past partner that showed tremendous enthusiasm about her organization when it was brought in at a late stage of negotiation, but ultimately revealed itself to have little grasp of her company’s value proposition and business model as the collaboration unfolded. The parties tried retooling their joint client deliverables multiple times only to pull the plug on the project after a succession of misfires.
“You really want to make sure that you align ahead of time and that everyone has the same understanding before you set expectations about deliverables with the client,” she said.
Lybeer counseled viewers to identify “pink flags” quickly and abandon an initiative early if the team’s gut feeling is that it will never get onto the right course. She did, however, remind viewers that “the first idea is rarely ever the best idea,” and that oftentimes you don’t necessarily have to walk away from the partner altogether after one failed joint venture.
“As long as we are able and willing to learn and work together, we will find that next innovative idea together,” she said.
Plodding Behemoths Test Nimbler Smaller Companies’ Patience
What should small companies understand about their larger counterparts when evaluating a potential collaboration? Pessagno warned startup and SME alliance professionals that there is a good possibility some of the people in the negotiation stage will disappear after the launch of the partnership. He urged larger corporations to “deal with this transparently” and make some effort to guard against an “asymmetry in the governance.”
Even after some of the initial negotiators drift away, Pessagno acknowledged later in the panel discussion that the larger company’s team might still be four times the size of the smaller counterpart’s, and that the latter will have to endure cumbersome governance and operational processes at times. He recommended that the “Goliath” in the relationship assign a single contact person to the small company’s alliance manager and let the former liaison with the rest of the team and manage the bureaucracy.
In addition, Pessagno implored smaller collaborators to dispel the idea that their larger counterparts have tons of resources to dedicate to their activities. All alliances are competing for a finite amount of resources, even in big companies.
Tech Teams Need Alliance Management Principles
Walraven and Lybeer were asked specifically about analytics-based David-Goliath alliances. The big takeaway: remember that technology partnerships entail more than just technology. Lybeer once handed a technology alliance to the tech team and said, “Good luck to you.”
“Mistake, mistake, mistake,” she lamented. “Alliance management competencies are a thing.”
The tech team didn’t understand escalation processes and collaboration models, which ended up delaying the activities of the partnership considerably.
Walraven exhorted alliance teams to look at everything through the technical, strategic, solution, and practitioner lenses. Also, take into account that each client and prospect will similarly imagine a joint solution differently.
“Everybody will see it through a different perspective,” she said.
Alliance Skills Will Help Small-Company Personnel for Life
As the panel concluded, the panelists offered some final takeaways. Walraven reiterated that rigorous work aligning stakeholders on execution strategy up front would ultimately make it “easier to deliver to the client.”
Lybeer urged virtual attendees to strike that balance of being tough without compromising a collaborative mindset.
“Let’s make sure we’re hard on the hard issues, but not so hard on each other,” she advised.
She echoed her earlier sentiments that you can always walk away from a project that isn’t meeting KPIs without abandoning the partnership entirely.
Most important, according to Windt, work with your HR department to teach collaborative skills and alliance management principles to everyone working on the partnership who may not have an alliance management background. In fact, lobby to make it a permanent part of employee training programs, wherever possible.
“They will serve you well as a person and an employee for the rest of your life,” he said.
Remember, Summit registrants can find this panel, a plethora of sessions from the first two days of the conference, and several prerecorded presentations on demand in the 2020 ASAP Global Alliance Summit portal.