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Getting Horizontal in Alliance Ecosystems

Posted By Administration, Friday, June 20, 2014
Originally posted on 3/6/2013

Alliances between two companies are complicated enough—but how do you manage alliances involving multiple partners with sometimes differing objectives? The answer: very carefully.

Christophe Melle, head of strategic alliances and partnerships for Philips Lighting, addressed this subject in “Getting Horizontal: Building Alliance Ecosystems with Partners from Different Industries,” this morning at the 2013 ASAP Global Alliance Summit in Orlando. Philips, which in addition to lighting also has health care and consumer lifestyles businesses, has been involved in multiparty ecosystems for some years but primarily for standardization purposes, as in the Blu-ray alliance. “We see an emerging trend of multipartner alliances, to serve a customer need and bring a complete solution into the market,” said Melle. “It’s not a new subject, but at Philips it’s growing and it has brought us quite some learning.”

Among the multiparty alliances in which Philips has been engaged are a “Smart Society” program in Almere, Netherlands, with Cisco, IBM, and Liander, involving smart lighting (Philips’s role), the smart grid, an urban operating system, and more. Another project has Philips working with Haworth, Ecophon, and Somfy on thought leadership in achieving enhanced well-being in offices in Europe. This project, just starting to be deployed, seeks to provide more comfort and energy efficiency in European offices at lower cost.

As is often the case with alliances, the opportunities are many and great—but so too are the challenges. “Multiparty alliances are generating much more complexity than one-to-one alliances,” Melle acknowledged. In these complex ecosystems, you’re not always cooperating or collaborating with the same partner, there may be areas of coopetition, and you have to manage trust and credibility while not being exclusive. Schneider Electric is just one of Philips’s many partners, said Melle by way of example. “We can cooperate in some areas, and in some we are competing. How do we manage that? We can’t kill each other, we have to work together.”

The success of multiparty alliances depends on trust, as well as processes and competencies, said Melle. “Right at the beginning, we name the elephant in the room. We put it on the table. If you wait too [long], you will not build trust.” Processes that are key include partner selection tools; clarity on choices, goals, concerns, and benefits; frequency and structure of communication; and a simplified governance model to balance more complex networks. The competencies involved include multiparty diplomacy and influencing; trust and credibility; empathy with multiple perspectives; insights into and understanding of different industries and business models (complementary or overlapping); and the legal issues that can arise out of multiparty and bilateral agreements.

In the Q&A session at the end of the presentation, one audience member mentioned the ecosystems in which Apple is involved, in which that company tends to be the controlling force. How can ecosystems be formed with more equal partners—and what would “equal” mean in that context?

“Equal will not work,” Melle answered. “But each party getting the benefit they want—that’s easier. Everything starts from the customer. What is the driver?”

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