Effective Alliances? The Data Speaks—Loud and Clear

Posted By: Michael Burke European Alliance Summit, Member Resources,

The ASAP European Alliance Summit is in the books for 2023, but judging from our recent interviews, the afterglow of fond London memories lingers on. Ditto for the insights generated at the conference, from multiple industries and perspectives. Everywhere partnering is happening, trends, practices, and just what makes effective alliances tick is being developed, analyzed, illuminated, and refined.

Nowhere is that analysis and thinking more rigorous than in the work of Jan Twombly, CSAP, president of The Rhythm of Business, whose presentation, “The Data Speaks: Focus Alliance Management Efforts to Produce Results,” highlighted the first day of the conference. (Twombly also moderated a discussion of alliance health checks that included George Rahim, former vice president of strategic alliances at Ipsen, and Nicolas Becker, CA-AM, director of business development and licensing, alliance management, at Bayer; and she chaired the life-sciences stream of sessions during the first day.)

The title of Twombly’s talk was neither hyperbole nor a one-off; the data in question come from the past three years’ worth of assessments and evaluations of alliance management practices performed by Twombly and Jeff Shuman, CSAP, PhD, cofounder of The Rhythm of Business and emeritus professor of management at Bentley University, whereby they sought to thoroughly examine and even quantify just what constitutes an effective alliance.

Are You Doing the Right Things, or Just Going Through the Motions?

“What we’ve seen is there is a direct relationship—I won’t say correlation or causation—but a direct relationship: the more effective an alliance operating model is, the better results you get, both in terms of the achievement of goals, and then the enthusiasm of the teams to work with a partner,” Twombly explained. “Because when you don’t have that enthusiasm, people tend to kind of go through the motions—they’re suboptimizing decisions, they just want to get through different views and disagreements, they want to move on to the next thing. Or, even worse, they want off the team.”

And lest you think these assessments are merely an alliance mood ring—“How are you feeling about your alliance today?”—let’s put that to rest right away. They’re actually shining a light on how alliances operate, for better or for worse. Or, as Twombly put it, “Are individuals doing the things that are going to make a difference?”

“When we look at those [alliances] that have the least effective operating models compared with those that have the most effective, we see about a 40 percent increase in agreement that the outcome measures are being realized [from the most effective alliances],” Twombly continued. “So it’s significant. The operating model is the intersection of the governance process of the alliance and the operating framework, which is the day-to-day work. So it’s really how decisions get implemented and how the work gets carried out.

“One of the items we looked at was duplication of effort, which people complain about a lot, and whether or not you have identified where you need joint work processes. You don’t want two companies running parallel processes and trying to align; you want to have an alliance process. We looked at onboarding processes: Do you get people appropriately up to speed? [Alliance managers] tend to only focus on the terms of the agreement. They also need to talk about, what’s the role of that individual as a team member, a governance member—what are they supposed to be doing? And then what’s the culture you’re trying to build in the alliance? When folks don’t have that understanding, they inadvertently can try to change things that have already been decided. They can step on toes, they can have some significant misses. Do they ultimately figure it out? Yes, but [meanwhile] they’ve had delays, and delay is the enemy of an alliance.”

Let’s Talk—Before the Fire Trucks Arrive

Another area Twombly pinpointed centers around how communication occurs in an alliance—or doesn’t. They say talk is cheap—but when you don’t do it, it gets expensive. And when decisions and actions are not communicated effectively in an alliance, there can be unpleasant surprises.

“When people are surprised, you wind up with fire drills,” Twombly said. “‘Why didn’t we know this? What’s this all about? What does it mean?’ Things get reworked, people get frustrated, it’s all churning and swirling and not-moved-forward actions.”

Twombly’s methodology involves having alliance members fill out a survey of around 60 questions stating levels of agreement or disagreement with certain statements about what’s actually happening (or not happening) in the alliance. From doing these surveys over time, Twombly has been able to quantify and categorize alliances based on the results.

“Over the years, in all of the many assessments we’ve done, we’ve come to look at a 70 percent level of agreement with survey statements as being indicative of an effective alliance,” she said. “You’re never going to have 100 percent, because there’s human nature involved, but when we see alliances hit that 70 percent mark, we can pretty much look at them and say they’re moving ahead, they’re getting their work done, they’re able to handle any challenges and bridge differences and get decisions made timely and they’re aligned on a North Star; they have all the elements in place of an effective alliance.

Storms Interrupt the Honeymoon

Problems in an alliance can arise at any time, but some of them may be there from the outset and simply haven’t been dealt with in the rush to get going. Put another way, the alliance may start out on the right foot, but any stumbles—especially if not addressed—can quickly put it on wobbly ground.

"By and large when you have a new alliance, the focus is on the alliance teams wanting to get to the work,” Twombly said. “There’s usually significant knowledge transfer that has to happen, there may be access to regulatory files or quality files that are necessary, and [there’s] a kickoff, but everybody just focuses on doing the work. And they don’t really realize that they also have to work on the alliance itself.

“People say that the first year of an alliance, or the first post-deal period, is the honeymoon period. I don’t agree with that at all. It’s a lot of storming and norming and trying to figure out how you work with each other. It’s really not until you get into it a year or 18 months [later] that people will step back a little bit and recognize, ‘Yeah, we’ve got to fix this. We’ve got to focus on this. We actually have different views on the level of investment required to maximize business value. And we’re not really aligned on where we’re going and what our ambitions are.’ If you don’t have that, you’re not going to have anything else.”

Twombly added that instituting alliance health checks—the subject of an upcoming article in the Q4 issue of Strategic Alliance Quarterly—should help with this process, but as she put it, traditional health checks “don’t ask the right questions, typically.” Hence her focus on alliance operating effectiveness: not just what people feel about the alliance, but what they’re doing, how their activities are tied back to the North Star of the alliance (or not), and whether those efforts are actually proving effective in getting to that goal.

"We’re really looking at things from the day-to-day perspective,” she summarized. “We’re looking at the alliance management practice to see that the alliance managers are engaging in providing the services and doing the things that are going to help their team be successful moving forward.”

This is just a small sample size from the incisive analysis of alliance management practices that Twombly shared in London last month—and incidentally, that she and other ASAP thought leaders regularly provide to our member community. Insights like these were plentiful at the ASAP European Alliance Summit, so be sure to check back on our blog coverage for more. Because when the data speaks, we listen!