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The Sharing Model of Alliances: Creating Value through Economies of Scale

Posted By John M. DeWitt, Wednesday, March 13, 2019

I arrived in sunny Fort Lauderdale for my first ASAP Global Alliance Summit and dove headfirst into my first session—a three-hour workshop with Dave Luvison, CSAP, PhD, and Ard-Pieter de Man, CSAP, PhD, on building collaborative business models. Both Dave and Ard-Pieter are academics: Dave is a professor and executive in residence at the Sellinger School of Business at Loyola University Maryland; Ard-Pieter is professor of knowledge networks and innovation at Vrije Universiteit Amsterdam.

Ard-Pieter started off the presentation talking about the three models of that he believes form the core of most alliances: sharing, specialization, and allocation models. I’ll focus on the sharing model in this article.

The sharing model creates value through economies of scale, in a horizontal combination between two organizations that share similar resources and capabilities. In other words, they might ordinarily be competitors. The goal of such an alliance is to increase the scale of one or more of the organizations involved, through a predetermined split of resources, costs, and revenue. As a result, the organizations are often thoroughly integrated. Additionally, the value creation potential of the alliance is very easy to predict, given that existing operations are combined.

Ard-Pieter cited the example of the Delta and Air France/KLM alliance. Here, the airlines share customers along North Atlantic routes, an area where they would normally compete for customers. They all sell tickets “color blind”—meaning the actual airline doesn’t matter—and send the customer on the airline that offers the desired flight, regardless of which airline the customer originally approached. This increases the number of destinations available to the customer, obviously making the airline more attractive to said customer.

This type of alliance forces the executives of the organizations involved to not only collaborate among themselves, but to do so regularly and frequently. Such involvement is necessary, again, given that many aspects of each organization are joining forces. Going back to the Delta and Air France/KLM example for a moment, 12 working groups from each company interact every single day, forcing the CEOs to interact regularly too.

About halfway through the session, Ard-Pieter and Dave initiated a breakout session. They asked the attendees to apply what they had learned to any alliances that they may have worked on in the past, i.e., identify which of Ard-Pieter and Dave’s models fit their chosen alliance best. I joined one of the tables to listen to their responses.

One interesting detail I noticed: participants found it very difficult to fit their alliances wholly to one model. Essentially, they would start to mix and match characteristics from each model to best fit their alliance. So while Ard-Pieter and Dave managed to boil alliances down into three basic models, in practice these models are not cut and dried. The two presenters commented that the hybridization of alliance models is not only acceptable, but sometimes encouraged to meet the needs of a specific partnering problem or business strategy.

Stay tuned for more insights from Dave and Ard-Pieter’s session—and read more of the ASAP Media team’s live, on-site coverage of the 2019 ASAP Global Alliance Summit on the ASAP Blog and in Strategic Alliance publications. John M. DeWitt is copy editor and staff writer for ASAP Media and an undergraduate at Catawba College majoring in biology. 

Tags:  alliance models  Alliances  allocation  economies of scale  sharing  specialization 

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The ‘Boundary Bridger’: How Leadership Style Drives Alliance Team Performance

Posted By John W. DeWitt , Tuesday, March 12, 2019

“The alignment challenge is not unique to strategic alliances,” commented veteran alliance manager Timothy B. Steele, president of ARM Partners in Leesburg, Virginia, as he kicked off the closed-door, invitation-only ASAP Leadership Forum on Monday, March 11—opening day of the 2019 ASAP Global Alliance Summit in Fort Lauderdale, Florida.

Indeed, leadership teams typically are aligned only 17 percent on any given topic, according to research by SchellingPoint that builds upon the work of Thomas Schelling, the late behavioral economist who (with Robert J. Aumann) received the 2005 Nobel Prize in economic sciences “for having enhanced our understanding of conflict and cooperation through game-theory analysis.”

SchellingPoint’s “analysis of 230 collaborations uncovered that teams are aligned on only 17 percent of their peer’s views of their collaboration,” according to Michael Taylor, SchellingPoint’s chief executive. Research further indicates that about 60 percent of senior leaders’ time is spent securing alignment across the leadership team.

Steele and his co-facilitator, Loyola University Maryland professor Dave Luvison, CSAP, PhD, described this aspect of leadership as “a boundary-bridging role.” Alternating between presentation and robust discussion with the group of veteran alliance leaders, Steele and Luvison presented leadership models and emerging research identifying the critical role of boundary bridging and other key leadership behaviors.

“When we look at the job of alliance leadership, we talk a lot about focus on the customer, Steele said, “but if you don’t have this boundary-bridging role,” instead of being a chief alliance officer (CAO) with a seat at the CXO table, you might end up on the menu. Your alliance skills might make you able to cope with ambiguity, but “don’t be ambiguous about having clear mission and mandate, because [building alignment] is one area of alliances where you don’t want to deal with ambiguity. Get it crisp and clear—the less ambiguity you have the better off you are.”

Research into leadership styles of product management teams—according to Luvison, an excellent analog for alliance management—supports the notion that you should “push alliance metrics to the CXO suite [so that it is] leveraged across the business,” Steele continued, adding that that boundary bridgers integrate the alliance agenda into annual corporate planning and involve business P&L owners into key partnering dynamics and decisions.

The science indicates that boundary bridger CAOs establish a “North Star” to guide their teams, a concept advanced by The Rhythm of Business and McKinsey, Steele noted. Furthermore, boundary bridgers demonstrate high emotional intelligence and are able to “feel the headwinds and tailwinds happening in your business,” Steele said. “Think about being up on the balcony, watching yourself dance, anticipating what your partner’s next move is.”

Fundamentally, Luvison said, boundary bridgers understand that just doing a good job does not alone drive success. Research exploring how particular leadership styles improve performance of teams has identified three types of leaders. The first type of leadership style describes leaders primarily engaged in task-focused behavior, “managing and driving the team to perform, making sure every executional aspect of the alliance is done properly. The second type are scouts, who see themselves as responsible for bringing resources to the team. The third type are ambassadors focused on dialoguing with superiors and other stakeholders, proactively putting themselves on the agenda of their leaders, and managing behaviors.”

According to preliminary research findings, Luvison said, “ambassador-led teams outperformed [the two others], especially when combined with task behaviors.” Interestingly, he continued, “Frequency of communications was less important than the nature of the boundary-bridging activities. Ambassadors created the opportunity to promote the team, secure resources, and protect it from interference.”

In other words, successful boundary bridgers also demonstrated traits of the other two types of leaders.

The facilitators then asked the two-dozen or so senior alliance execs in the room how they would describe their leadership style and how much time they spend on boundary bridging. General consensus in the room: 50 percent, if not more, of their time is spent on internal alignment across boundaries.

“It’s a full-time challenge to do this. It’s not just something you can do and be done,” commented one pharmaceutical alliance leader.

“I find I have to be task-oriented even when being ambassador,” said another senior pharma business development and alliance leader.

A leader in a large high-tech company with an immature alliance practice commented that, “since it’s a new alliance management function at our company, the ratio is much higher. We have to do the WIFM—‘what’s in it for me?’—lots of meetings, lots of time spent,” the exec explained. Her boss “spends 90 percent of his time as ambassador and is more networked than most senior leaders at company,” she continued, adding, “But we do split duty—you can evangelize, but you can’t deliver the goods if you’re not executing.”

Another leader commented that “it’s a fallacy that software will solve the problem, that [you can]manage by software, manage by milestones, and forget about alignment. Then you are managing instead of leading. And if leaders are not leading, managers default to tactical.”

Stay tuned for more of ASAP Media’s coverage of the Leadership Forum and other seminal leadership discussions at the 2019 ASAP Global Alliance Summit.

Tags:  ARM Partners  boundary bridgers  communication  Dave Luvison  McKinsey  stakeholders  strategic alliances  The Rhythm of Business  Timothy B. Steele 

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The Modeling and Management of Alliances: Workshop Takes Deep Dive into Three Models for Collaborative Business

Posted By Noel B. Richards, Tuesday, March 12, 2019

A preconference workshop delving into three different alliance models caught the attention of over a dozen pre-conference attendees at the 2019 ASAP Global Alliance Summit in Fort Lauderdale, Florida. Co-facilitators Ard-Pieter de Man, CSAP, PhD, Vrije Universiteit Amsterdam, and Dave Luvison, CSAP, PhD, Loyola University Maryland, instructed on the horizontal “sharing” model, the diagonal “specialization” model, and the vertical “allocation” model in the session “Building Your Collaborative Business Model.”

The two discussed how the sharing model is an alliance focused on sharing customers and information in order to generate more revenue for each partner, typically with a 50-50 split of this revenue. The specialization model is more about leveraging certain strengths or unique skills of each partner so that each can gain something they did not have before, resulting in the ability to increase revenue with new or improved products. Lastly, the allocation model works to reduce risk by delegating tasks that are a weakness for one company to a partner that expresses excellence in that specific area.

Once the co-facilitators established a baseline understanding of these alliance models, best management practices for each model and the hybridizations between them became apparent. “The bigger question is how you should manage these models, as not every model should be managed the same way,” Luvison pointed out.

The workshop co-facilitators also instructed on how to determine which specific framework is right for your alliance, based on the goals and purpose. The specific models are incredibly fluidconstantly moving, changing, and molding to specific needs, they said. Luvison and De Man then brought up the three things that need management across the boardincentives, relationships, and accountability. Additionally, they shared the idea that 70 percent to 80 percent of the problem in alliances is convincing people internal to the company rather than the partner.

After examining various methods of managing each type of alliance model, they encouraged the audience to split into groups and discuss best management practices. Though these practices may differ across alliance types, all group participants agreed upon the importance of consistent, fluid, and open communication among partner.

Also central to the discussion: as models adjust and change over the lifespan of the alliance, it is critically important that the alliance ensure that the partners are aligned and “on the same page.” Recognizing the scope and scale of each partnership and communicating about the alliance with the appropriate groups of people, notably the C-suite, is also fundamental to success. If one partner sees the alliance following a sharing model while the other recognizes it more as an allocation model, problems will arise. Ensuring and maintaining a mutual understanding of what model the alliance takes is vitally important.

“You’re half the battle. Getting your own organization on board with the alliance is quite important, so do this first, then get the partner on board,” said Luvison.

Once there is a clear mutual understanding of the model the alliance is founded upon, partners must turn inward and ensure consistency understanding within the company. This helps empower teams to deal with issues as they arise, they concluded. Though there are additional complexities in managing each model an alliance assumes, if self-awareness and open communication is pursued, the alliance and the companies involved will benefit across the board.

Noel B. Richards is a staff writer for ASAP Media. Stay tuned for more of the ASAP Media team’s comprehensive on-site coverage of 2019 ASAP Global Alliance Summit sessions on this blog, and in the weekly, monthly, and quarterly Strategic Alliance publications. 

Tags:  alliance  alliance model  allocation model  Ard-Pieter de Man  Dave Luvison  Loyola University Maryland  partner  sharing model  specialization  Vrije Universiteit Amsterdam 

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Partnering the Future: Our Community’s Ahead-of-the-Curve Thinkers Pave the Path Forward

Posted By Michael Leonetti, CSAP, Monday, March 11, 2019
Updated: Saturday, March 9, 2019

Want to know what the future holds for your organization? Go to an ASAP conference or read ASAP Media publications. It’s been that way since the first ASAP Global Alliance Summit in 1999—but two decades later, at the 2019 Summit in Fort Lauderdale, Florida, it feels different. As the future of business rapidly unfolds before us in this partnering everywhere world, it seems our thought leaders are on the cusp of just about everything.

Last fall, I kicked off three conferences in three months on two continents, each time ticking off essentially the same list of trends that now are accelerating alliances and transforming how we partner. On Tuesday, March 12, I welcome alliance management’s best and brightest at the Summit’s opening and my list of game-changing topics remains pretty much the same:

  • Artificial intelligence (AI) software learns to learn
  • Internet of Things (IoT) on the edge
  • Public cloud innovation
  • Cyber security, distributed trust, blockchain, data protection and privacy (in particular, Europe’s General Data Protection Regulation, or GDPR)
  • Med tech, organ on a chip, and bio printing
  • Agile partnering and agile technologies
  • Consumers and their tools (social media) and immersive customer experience (CX)
  • Amazon and Alibaba

For alliance managers in biopharma, I also added the volatility of the Affordable Care Act (ACA) in the US—and healthcare costs everywhere; the co-pay accumulator and the consolidation of patient access; the inevitable convergence of e-services; the role of gene therapy as an economic change maker; digital therapeutics; and new antibiotic discoveries.  

Then, each time after I ticked off this list—at the ASAP BioPharma Conference in September, at the October ASAP Tech Partner Forum, and in November at the ASAP European Alliance Summit—I found myself sitting back in wonder, listening as speaker after speaker boggled my mind. Heading into spring at this month’s Summit—and heading into summer at the June 19, 2019 ASAP Tech Partner Forum in Santa Clara, California, hosted by Citrix Systems—the ride gets even wilder, and more relevant, current, and provocative.

We’ve had CEOs onstage talking about combining Cambridge, Massachusetts, life sciences and Silicon Valley technologies into software-based, FDA-approved therapeutics that replace pills. A global alliance manager who manages a $5 billion public-private partnership dedicated to accelerating the innovative medicines pipeline. Chief alliance officers from software, artificial intelligence, and robotics companies that are partnering at light speeds to automate everything they can, from clerical work and automobile driving to marketing, sales, and even alliance management itself.  

I was amazed to hear in an IoT session the back-and-forth between speakers and audience about regulatory efforts, like GDPR, to stick the data privacy genie back into the bottle. “What about privacy?” ChromaWay’s Todd Miller asked the panelists.  Scott Smith, founder of Fathym, surprisingly replied:

I think people will eventually give up privacy. Go back 100 years, when we all lived in small villages. We lived with no privacy whatsoever. I think that today's privacy issue grows out of [Orwell’s] 1984 and the ‘70s when we were concerned about Big Brother and the CIA, but I think in comparison with human history, today's concern over privacy is an anomaly. I think we’d be shocked at what they already know. … I was sitting next to a 20 year old when Snowden came out. She said, "I thought everyone already knew this.”

There’s a reason we’re so on top of things in the ASAP community: We’re in the middle of it. We didn’t have to do a dissertation on it (though we do have a plethora of PhDs in our ranks). We’re seeing, hearing it, living it every day. That’s why we build our leadership muscle—the topic of the Q4 2018 Strategic Alliance Quarterly cover story. We’ve got to be strong and flexible to pave the road to the future through our partnerships.

Ready for our next mind-blowing workout? Join me and attend at least one of the next three events already on the calendar in this year—the March 11-13, 2019 ASAP Global Alliance Summit, the June 19, 2019 ASAP Tech Partner Forum, and the September 23-25, 2019 ASAP BioPharma Conference. You’ll return to your daily tasks with profound new insights—and a brain that’s just bulging with newfound leadership muscle.

Visit http://asapsummit.org for the most up-to-date agenda for March 11-13, 2019 ASAP Global Alliance Summit, and register for the event, at. See the ASAP Media team’s comprehensive before, during, and after coverage of the 2019 Summit in Strategic Alliance publications and on the ASAP blog.

Michael Leonetti, CSAP, is president and CEO of ASAP and executive publisher of ASAP Media and Strategic Alliance publications. A previous version of this article appeared in Q4 2018 Strategic Alliance Quarterly.

Tags:  Agile partnering  Alibaba  alliance management  alliance managers  Amazon  Artificial intelligence (AI)  bio printing  blockchain  customer experience  Cyber security  distributed trust  GDPR  healthcare  Internet of Things (IoT)  Med tech  organ on a chip  Public cloud 

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Covey Got It Just Right: ‘Sharpen Your Saw’ in 2019—Because the Faster Partnering Moves, the More Learning and Professional Development Matters

Posted By Michael Leonetti, CSAP, Saturday, March 9, 2019

We recently did some research into ASAP’s Certified Strategic Alliance Professionals. Going back to 2010, we found that fully 90 percent of CSAPs—nine out of every 10 recipients—remain active members in the association. That tells me that that CSAPs are leaders who think seriously about our profession, who want to ensure this is an enduring profession, and who can do the hard, heavy lifting it takes to be at the top of their game.

In other words, our CSAPs are still reinvesting, following the late Stephen Covey’s advice: “We must never be too busy to take time to ‘Sharpen the Saw.’”

Covey’s seventh habit of highly effective people borrows from ancient wisdom traditions as well as modern insight into the importance of renewal. It reminds us to take regular breaks in our personal lives, and to periodically re-sharpen the skills and knowledge that keep us on the forefront of our profession. This essential saw-sharpening only happens when we engage deeply in the alliance management community and participate in its events.

Just how sharp does the learning get? Check out our Strategic Alliance publications’ coverage of the November 8-9, 2018 ASAP European Alliance Summit in Amsterdam—and join me in Fort Lauderdale, Florida, for the March 11-13, 2019 ASAP Global Alliance Summit, “Agile Partnering in Today’s Collaborative Ecosystems.”

Both of these international events exemplify how our community collectively sharpens the saw—how we continually reflect, reexamine, and renew the content of our learning. ASAP events are an eye-popping confluence of brilliant and diverse people—typically a 50/50 mix of ASAP veterans and newcomers. Our content gets richer and more nuanced with every conference as it updates tried-and-true alliance management fundamentals with the bleeding edge of practice.

The alliance lifecycle—as presented in the ASAP Handbook of Alliance Management: A Practitioner’s Guideremains very relevant “blocking and tackling.” But—as we push across industry boundaries and into ecosystem partnering, agile practices, organizational collaborative capability, and even partnering process automation—it’s obvious that so many things around the alliance lifecycle must be agile. One partnership may skip lifecycle steps two, three, and four; another alliance might start at one, continue through three, and then go to market.

We’ve talked for years about partnering going beyond alliance management. Now we’re in the “perfect storm” as the partnering everywhere model comes to life. Ecosystem partnering is everywhere—in technology, in life sciences, even in jewelry, where open innovation networks fuel innovation for Swarovski, as I learned last fall in Amsterdam. Classic channel partnerships are in decline, cloud partnerships are accelerating, and the whole field of partnering is getting much larger, much more complex.

Look at digital therapeutics—I’ve been predicting at ASAP conferences that IT companies would be the healthcare partners of the future. Now we have life science member companies partnering with big data and analytics and launching therapies approved by the US Food and Drug Administration that are primarily software based, while tech companies’ business models evolve to be able to deliver safe, reliable healthcare-related services. In telecom, 5G speeds will create new networks and mobile capabilities that we’ve never seen before—requiring partners we’ve never seen before. And artificial intelligence—what organizations and processes will become our partners in the future because of the advances of AI, and how will that again change the complexity of our alliances? 

Amidst this perfect storm, ASAP is a perfect conduit for everyone who leads collaborations to learn how to do it better and evolve “the how” every day in practice. So sharpen your saw. Invest in your community through ASAP, and invest in yourself through ASAP’s professional development events and publications.

Stephen Covey got it just right: “‘Sharpen the Saw’ means preserving and enhancing the greatest asset you have—you.”

Visit http://asapsummit.org for the most up-to-date agenda for March 11-13, 2019 ASAP Global Alliance Summit, and register for the event, at. See the ASAP Media team’s comprehensive before, during, and after coverage of the 2019 Summit in Strategic Alliance publications and on the ASAP blog. 

Michael Leonetti, CSAP, is president and CEO of ASAP and executive publisher of ASAP Media and Strategic Alliance publications. A previous version of this article appeared in Q1 2019 Strategic Alliance Quarterly

Tags:  5G  agile practices  alliance lifecycle  alliance management  artificial intelligence  ecosystem partnering  healthcare-related services  mobile  organizational collaborative  Partnering  Professional Development  telecom 

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