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“We Need Partners—Fast!” Leveraging Partnerships to Respond to Paradigm Shifts

Posted By Michael J. Burke, Friday, November 15, 2019

For old established companies, responding and adapting to market changes and shifts in technology and consumer buying behavior can be especially difficult. When the old ways of doing business no longer bring in the revenue they once did and the once-revered firm struggles to maintain its top market position, entrenched internal processes and stagnant thinking can lead to a steady decline—or worse, an “extinction event” that topples the old behemoth.

            That might have been the case for Philips Lighting, which was spun off by Philips in 2016 with a new name, Signify (but still uses Philips branding for hardware products). Philips began its life in 1891 as Royal Philips, and was a market leader in lighting for at least a century thereafter. According to Ivo Rutten, vice president and head of global strategic alliances for Signify, the history of lighting amounted to approximately “110 years of tranquility followed by four major paradigm shifts in two decades.” He made these and other observations as part of his keynote address on the second and final day of the ASAP European Alliance Summit held Nov. 14–15 in Amsterdam.

            He even went so far as to compare these paradigm shifts to “the meteors that killed the dinosaurs.” The four paradigm shifts were the advent of LED lighting, lighting systems, services centered around lighting, and “light as a language,” involving the increasing use of Internet of Things (IoT) technologies.

            A company whose main business was ordinary consumer lighting found that this line of business was no longer so important. “Everything the company was based on was wiped away,” Rutten acknowledged. So in order to deal with these successive meteor strikes—and not to end up as dead as the poor dinosaurs—Signify realized that it “needed partners—fast.”

            And it was all very well to develop new lighting systems, services, and IoT applications and move into B2B. But to get businesses to buy and install them? IT managers at companies would say, “Philips? In my network? No way. I’ll be hacked.” Philips/Signify had no credibility in this area, so it had to seek out partners that would help it gain entry.

            A big one was and is Cisco, which could help with its own reputation in IT to pave the way. Now Signify could say, “You won’t be hacked—just ask Cisco,” Rutten said. Cisco’s credibility in network hardware and Signify’s lighting expertise combined to make a unique and appealing value proposition.

            But in order to partner effectively, Signify had to learn and develop a number of partnering best practices. Among the most important, according to Rutten:

  • Establishing clear objectives for the alliance—e.g., additional growth, alliance-attributable revenue, access to a channel, improved technology
  • Ensuring alignment in both companies, or as Rutten said, “Nail it tight”
  • Set up rigorous processes to run the alliance
  • Get “everyone on the bus” by incentivizing the sales force

Added to these must-haves, Rutten said, were a number of key insights, including:

  • An alliance is not necessarily a “regular business relationship” and may be relatively nontransactional
  • There should be a combined value proposition
  • Both companies must benefit beyond normal business returns
  • The financial impact—and the risk—may go well beyond normal business
  • Partners need to be continually aligned and realigned—which means explaining and re-explaining the what, why, and how of the alliance, internally and externally
  • The alliance should have similar importance to both parties
  • Local sales forces in both companies should become self-motivating

Although not purely transactional, it’s a reality that in an alliance each party must give and get, or as Rutten said, “Their contribution must match our needs.” He noted the importance of creating a balanced first-draft term sheet—“our end and your end”—and putting it in front of the partner before moving on to a dialogue and working out differences, aligning objectives, etc.

            As in other companies, the governance structure of significant alliances involves three tiers: day-to-day alliance management, decision making by a joint steering committee, and C-level interaction by the heads of both companies.

            Such principles and practices are important enough in a one-to-one alliance, such as with Cisco, but even more so when multiple partners are involved, as in the Philips HUE ecosystem, which blends security, lighting automation, the setting of events, tasks, and routines at home, a user-friendly interface that responds to voice or phone commands, and full integration into a smart home.

            To make HUE operational, an ecosystem was needed, involving many partners including Apple, Amazon, Nest, and Bosch, as well as more than 50,000 third-party developers who have so far put up over 900 apps on the Android and Apple platforms. As Signify and its many partners move forward, more use cases will be identified and the whole ecosystem will become an expanding universe—at least until the next meteor hits.

Tags:  alliance management  ASAP European Alliance Summit  B2B  c-level  ecosystem  integration  Internet of Things  IoT applications  Ivo Rutten  joint steering committee  one-to-one alliance  partners  Philips Lighting  platforms  Royal Philips  Signify  strategic alliances 

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“Conductor of the Orchestra”: How Alliance Managers Harmonize Organizational Complexity

Posted By Michael J. Burke, Thursday, November 14, 2019

In “matrix organizations”—those working on multiple, complex, often large-scale projects with at least two chains of command—building and maintaining the alliance function “all comes down to leadership.” That was one of the key observations made by Lucinda Warren, who delivered the opening day keynote address at the ASAP European Alliance Summit on Nov. 14 in Amsterdam.

            Warren, vice president of business development, neuroscience, Janssen Business Development at Johnson & Johnson Innovation and also an alliance management veteran, called her talk “Leadership and Skills in Managing an Alliance in a Matrix Organization.” In an enterprise running multiple projects across multiple functions—and with multiple partners—who will tie it all together? Who will serve as the voice of the alliance and be the advocate for the partner, as needed?

            The alliance manager, of course.

            Some of the challenges, issues, and important insights that come with matrix organizations and their increased partnering complexity, Warren said, include:

  • “Alliances are not projects,” and thus alliance managers are not project managers, although the roles are often confused.
  •  Alliance managers create value; project managers deliver value.
  • Alliance management is critical throughout the product or asset life cycle; project management is critical at certain specific points.
  • When resources are stretched, alliance functions don’t always solve for it.
  • Alliance management is one function, but real collaboration requires the coordination and participation of multiple experts from various functions.
  • Who are the decision makers going to be? This question must be looked at from both internal and external perspectives.
  • Alliance management proactively identifies potential risks and seeks to mitigate them.

Warren further noted that having an alliance creates a sort of alliance “tax” on organizations—since all decisions and most information must be shared with the partner, it can double or even triple the time it takes to perform many actions, which can increase costs. Alliance managers need to help navigate these activities and act as the “conductor of the orchestra”: being familiar with all the instruments that are playing and making sure that each one—and all of them together—is “tuned perfectly for the ear.” They don’t know how to do each job, but (to switch to an electrical metaphor) they know which circuits need to be reset.

            They need to navigate not only their own organization but also the partner’s—otherwise they (and others) will be operating in a “black box” in which the partner’s challenges and motivations may remain unknown and/or misunderstood. Communication is thus imperative—about timelines, how decisions are made, how governance is to be conducted, etc.

            Which brings us to the critical role of leadership. As Warren said, “The value of the alliance function needs to be woven into the fabric of the organization.” Thus alliances and alliance management must be integrated into business strategy and operations—with full senior leadership backing and engagement. With increasing reliance by matrix organizations on partnering, everything that is done influences future collaborations and thus should be tilted toward attracting more partners going forward. Benchmarks must be established, with the goal of being a more successful partner.

            Warren said that alliance management is “more important than ever before,” and that the alliance manager is often “the CEO’s right-hand man,” the one who knows everything that’s happening, internally across functions and at the partner organization. Since these functions—and partners—typically speak different languages, the alliance manager’s job is to bridge divides for a common goal, bring everyone together in an unbiased and objective way, and not take sides.

            Or not take sides, except as the advocate for and representative of the alliance itself. “If we’re successful, people forget there’s a collaboration,” Warren concluded. “No fires are burning, nobody’s getting sued. It’s a thankless job, but [when done well] people seek you out as an expert who can triage. You’re the driver of organizational capability enhancement.”

Tags:  Alliance manager  alliances  CEO  Cindy Warren  collaboration  creating value  leadership  life cycle  matrix organization  mitigate risk 

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Supplier-User Collaboration Requires More Than Advanced Technology—Alliance Management Is Needed, Too

Posted By Jon Lavietes, Wednesday, November 13, 2019

The World Economic Forum (WEF) issued a white paper this month calling for all players along the manufacturing chain to expedite the adoption of advanced digital technologies that enhance the collaborative supply chain. WEF has given the industry plenty of homework in the directives it detailed in the document:

  • Mine artificial intelligence (AI), predictive analytics, and machine learning technologies to reduce material consumption and increase resource efficiency
  • Utilize electronic labels, such as an integrated electronic display or a machine-readable code that links to a webpage (e.g., QR code), in order to foster the seamless movement of products across different regions that each have their own unique information and labeling requirements
  • Leverage digital twin technology to combat fraud
  • Use the potpourri of “it” technologies—blockchain, the Industrial Internet of Things (IIoT), edge computing, predictive analytics, etc.—to increase supply chain network agility so that organizations don’t miss a beat when faced with natural disasters, new tariffs, social instability, equipment or infrastructure failure, or any other unforeseen events that can disrupt operations
  • Remanufacture, reduce, reuse, and recycle parts wherever possible

WEF’s report is dotted with success stories from household names, including Foxconn, Ralph Lauren Corporation, Apple, and General Motors.

Now, nobody’s disagreeing with WEF’s premise; there’s an urgency for component suppliers, assembly manufacturers, final-product producers, and users to adopt these technologies—those who don’t will perish. However, we were struck by the relative simplicity of the use cases put forth in WEF’s paper. This isn’t to say that the achievements of the aforementioned brands came easily or that they implemented these technologies handily, but the case studies consisted largely of linear one-to-one relationships.

In reality, many of the increasingly complex products and services that manufacturers are trying to deliver today depend on an ecosystem of multiple deeply intertwined partners. As Russ Buchanan, CSAP, vice president of global channel strategy alliances and operations at Xerox and ASAP’s chairman emeritus, noted in a recent discussion about sourcing in the new economy, there can be as many as five or six vendors delivering a single smart vehicle, heart monitor, or other interactive device. Each of these partners has its own large network of suppliers and subcontractors. That is a lot of moving parts!

With each of these players bringing an essential part of a solution, a collaborative supply chain needs more than just these wonderful technologies themselves to deliver transformative solutions.

“The sourcing community is definitely being very sophisticated in some cases in managing their suppliers like alliance partners,” said Buchanan. “Increasingly, I find that the people in sourcing need these [alliance management] skills. When they start to work with a supplier, they’re trying to get more than just the lowest possible cost of commodity, the primary mission of most sourcing agencies. Increasingly, what you hear us asking our suppliers for, and what we hear our customers asking us for is, ‘Do more than that. Give me good value, but also give me innovation. Help me change my business. Help my transformation be more competitive in enhancing my customers’ experience working with us.’”

There is a much deeper degree of codependency between alliance members working together to construct solutions of this nature than the average supplier in a company’s network. This interdependency makes it much harder to switch suppliers in the face of a political revolution, seven-on-the-Richter-Scale earthquake, or sudden tariff hike, even if your predictive analytics algorithm is recommending and providing the blueprint for a change. That digital twin will certainly help the partner ecosystem synthesize a voluminous amount of data into actionable direction on how to maintain and enhance physical assets, systems, and processes, but it won’t help you iron out disagreements between each partner over how to implement changes.

As the degree of mutual dependence increases in manufacturing partnerships, the less effective advanced digital technologies will be in enhancing collaboration without good old-fashioned “soft skills,” particularly those set forth in The ASAP Handbook of Alliance Management. After all, conflict management, issues identification, and risk mitigation are integral parts of managing an alliance. Andrew Eibling, CSAP, vice president of business development and alliance management at Enable Injections, Inc., said it takes more backroom interaction to maintain a healthy relationship once you make the leap from run-of-the-mill supplier to strategic ally—or “Vegas-rules discussions,” as he framed it, where “you can have conversations with somebody about the partnership, but what we talk about stays here.”

In other words, supply chain collaboration has in many cases risen to a level of sophistication that requires more than just state-of-the-art software to drive industry-changing outcomes.

Be sure to check out the forthcoming editions of Strategic Alliance Monthly and Strategic Alliance Quarterly in Q4, which will feature deeper explorations of the evolving relationship between alliance managers and the sourcing and procurement functions as the latter more and more often find themselves managing their supplier relationships like alliances.  

Tags:  alliance managers  alliances  Andrew Eibling  artificial intelligence (AI)  Enable Injections  manufacturing partners  partner  predictive analytics  Russ Buchanan  sourcing and procurement  Strategic Alliance Monthly  Strategic Alliance Quarterly  supplier relationships  World Economic Forum  Xerox 

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Here’s to Another Alliance Launch

Posted By Michael J. Burke, Thursday, October 31, 2019
Updated: Wednesday, October 30, 2019

Alliances win—and the profession of alliance management advances—when we partner together to meet the challenges ahead.

     In this “best of the past” issue of Strategic Alliance Quarterly, we’re actually embarking at the same time on a new voyage into the future. So I thought it would be a good idea to introduce—or reintroduce—myself to ASAP members and readers.

     It’s been my good fortune recently to be named editor in chief of this magazine and senior editorial consultant to ASAP. Some of you might remember me from my time editing and writing for what was then Strategic Alliance Magazine from its first issue in Q2 2011 until early 2014. I was also involved in editing the 2013 ASAP Handbook of Alliance Management: A Practitioner’s Guide, supporting the editorial team so skillfully led by Norma Watenpaugh, Ard-Pieter de Man, Dave Luvison, and others.

     My experience has largely been in the realms of writing and editing—copyediting, proofreading, and production editing for book publishers; and writing for and serving as editor or managing editor of a couple of quarterly magazines and one weekly newspaper. 

     Late last year I was thrilled to be asked to work with ASAP once again and write two (so far) updates to the Handbook: a supplement on IT partnering (completed) and another on biopharma alliances (in progress). Throughout the process of interviewing ASAP members and other alliance leaders for these supplements over the last few months, I was struck time and again by how knowledgeable, insightful, and far-seeing the members of this community are.

     These senior executives, consultants, researchers, and analysts drove home for me a number of important points. One is that alliance professionals need to transition from being merely “managers” who do what they’re told to leading as big-picture strategic visionaries who take an entrepreneurial view of partnering as they guide their alliances to fruition. Another is that they need to take responsibility for their own careers and take charge of their collaborations, working in multiple directions at once to educate and align senior leaders, get stakeholder buy-in, and achieve a sense of trust with partners, among other mission-critical activities.

     This is certainly easier said than done, and as one alliance leader told me, alliance managers typically end up “wearing many hats on one head,” accountable to people above and below them—not to mention laterally, in diverse functional areas—in their organization, as well as to their counterparts at partner companies.

In addition, these already busy, time-constrained folks somehow need to “see around corners” in their partnerships, their company, and their industry in order to know what’s coming next and help decide how their organizations—and their partnering strategies—will need to adjust, pivot, or even about-face to meet the challenges. This is especially true in the fast-moving world of technology partnering, but it applies as well to biopharma and practically any other sector you can name.

     As one IT industry analyst put it: “The whole world has blown up, and now it’s landing and settling. The head of alliances will be the most important person in any company in the next ten years. It’s going to create winners and losers, and complete disruption. But alliances win!”

     All the more reason for today’s companies to have not just an alliance management function, but a partnering strategy. More to the point, any corporate strategic vision should include partnering and alliances as part of the way business gets done, as a key route to competitive success in this age of ecosystems, complex supply chains, new markets, and ever more volatile conditions. The people and companies that can get that strategy nailed down and take it to market will be the most successful in a time of disruption.

     That, of course, is where ASAP comes in, drawing on the collective wisdom of its members in order to lead, educate, and set the agenda for the profession. I’m incredibly pleased to once more be partnering with ASAP in this endeavor, and as we launch our alliance, I invite you to be a part of it. Contact me anytime with article ideas and submissions, suggestions for blog posts or other content, and questions or comments about what we’re doing. And if you see me at BioPharma in Boston, the European Alliance Summit in Amsterdam, or next year’s Global Alliance Summit in Tampa, come up and say hello!

Michael J. Burke is editor in chief of Strategic Alliance Quarterly and senior editorial consultant to ASAP. He can be reached at mburke@strategic-alliances.org.

Tags:  alliance management advances  Alliances  Ard-Pieter de Man  big-picture strategic visionaries  BioPharma Conference  challenges ahead European Alliance Summit  Dave Luvison  Global Alliance Summit  IT industry  Norma Watenpaugh  partner  partnering strategy  profession  Strategic Alliance Quarterly 

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The Perfect Storm Meets the Perfect Ship: The Changing Face of Partnering in Tech and Biopharma

Posted By Michael Leonetti, CSAP, Wednesday, October 30, 2019

In most industries, change is now so rapid that we often have trouble seeing through the fog of day-to-day demands in front of us. The effects we experience, react to, and feel most keenly may be local—our jobs, our companies, our partners, our industries—but the bigger picture behind it is global, and the frequent wind shifts of global trade, the interconnected worldwide economy, and changing consumer and customer behavior cannot always be foreseen. Instead of being able to ride out the proverbial “calm before the storm,” we have to navigate our way through a series of storms, each one seemingly more disruptive than the next.

            This is certainly no less true in the fields of biopharma and technology partnering, two industries from which so many of our ASAP members hail.

            The technology sector is still undergoing a transition from traditional channel management to ecosystem management, from multipartner alliances and channels to ecosystems of hundreds of partners at various levels—all very challenging to keep tabs on, much less manage and oversee. Go-to-market efforts that formerly might have involved just two or three companies may now be mounted by 10 or 15 ecosystem partners—or more—leveraging their strengths and customer knowledge to sell solutions together.

            The sea change is happening in biopharma as well. The space has seen increasing partnerships between technology and biopharma companies, like those involving digital therapeutics startups, service providers, diagnostic companies, and even ecosystem-like multipartner deep engagements—all as pharma companies must still maintain their excellence in asset-based product partnerships in order to remain competitive.

            Even the language can get confusing. Alliances? Partnerships? Relationships? Ecosystems? We’ve heard from some who say they “don’t do alliances—it’s just partnering now.” Others may prefer the term alliances to partnerships from a legal or perhaps philosophical standpoint. Still others put the emphasis on ecosystems as the direction everything is heading.

            What’s going on? How to make sense of these shifting winds and rolling waves of disruption? Is there a perfect ship that can make way through the perfect storm?

The passage through these choppy seas is not always clear, but I believe the ASAP community—our “ship,” if you will—is perfectly positioned to illuminate the fog, avoid the icebergs, and take advantage of the opportunities provided amid all these developments. Here’s why:

  • Throughout its two-decade-plus history, ASAP has been driven by its mission to collect and promote the best partnering practices of both biopharma and tech companies, along with other industries that utilize partnering to create value.
  • Early on, ASAP predicted and began to prepare its members for frequent, if not routine, partnerships between health care/biopharma and tech companies.
  • We know that complex ecosystems and multipartner relationships require modified, agile best practices to be successful. ASAP has long been working tirelessly to provide solid education and actionable guidance in these areas.
  • We now have the opportunity to take advantage of the partnering skills as defined in The ASAP Handbook of Alliance Management and supplement these learnings with other informative insights that continue to be unveiled throughout all of ASAP’s media and publications—including Strategic Alliance Quarterly, Strategic Alliance Monthly and Weekly, and ASAP Netcast Webinars.
  • Finally, there’s the unparalleled access to education and networking provided by ASAP conferences and other events, such as the upcoming European Alliance Summit in Amsterdam (Nov. 14–15) and the Global Alliance Summit in Tampa (Mar. 16–18, 2020).

It’s all there and yours for the taking. Want to get on board with the latest partnering practices in the technology and health care/biopharma industries? Look no further than this seriously skilled community of practitioners—“our ship.” Together, we’re setting a course for the future of alliances and partnering.

Tags:  Alliance  biopharma  channels  collaboration  diagnostic companies  ecosystems  Go-to-market  health care  multipartner alliances  partner  partnering  service providers  technology  therapeutics startups 

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