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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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Verizon Execs Steer Customer Executive Engagement on the C-Train

Posted By Administration, Friday, June 20, 2014
Originally posted on 3/5/2013

As part of the 2013 ASAP Global Alliance Summit’s Alliances and the C-Suite track, three Verizon executives outlined their relatively new customer executive engagement initiative in their presentation “Take the C-Train: Adding Strategic Alliances to Customer Executive Engagement Programs.”

Leona Helverson, CSAP, executive engagement program manager at Verizon, began the session describing the genesis of the program that sought to move from an ad hoc method of engaging key executives with counterparts at key customers and suppliers, and generate additional revenues while increasing customer satisfaction. Verizon segmented their key 100 players into three categories: 1) top customers, 2) top suppliers, and 3) top strategic alliances.

Ultimately, 28 Verizon executives vice presidents, direct reports to C-level executives, and C-Suite members themselves were assigned to each of these entities. Each were taken through a formal pre-engagement, executive engagement, and post-engagement process for their meetings with customer and supplier leaders. The former saw the customer engagement team prepare executive briefing forms, strategic account plans, and pre-briefing checklists that provided direction for all stakeholders for partner activities.

Verizon eventually settled on three success metrics for the program after a little reconnaissance revealed very few sample engagement program measures to work with: 1) first-year case studies, 2) revenue, and 3) number of actual in-person engagements between the two executives (two per year).

Bettina Raymond, CA-AM, global alliance executive at Verizon, walked attendees through the executive sponsor selection process. The company made sure the conversation cut across a variety of parts of the organization—alliance management, sales, solutions, and sourcing, among others. The group had to sort out who makes the decision? Does the alliance partner get any say? What if there are multiple partners in an alliance?

Karen Robinson, CA-AM, alliance executive at Verizon, summarized the team’s roles and responsibilities. A major one was to provide the right level of detail for the executives in a scorecard. Although according to Robinson, it took a few iterations to reduce the amount of information to a manageable level, the scorecards provided a full 360-degree view of Verizon’s engagement with each partner and customer that incorporated information from the alliance and sales teams.

Using methodologies from Phoenix Consulting Group, Robinson summarized the responsibilities of each executive sponsor: serve as champion, evangelize the alliance, represent the company on key issues with partner, provide strategic guidelines in aligning objectives, and assist in organizational navigation.

Finally, the presentation closed with a top-line summary of the program’s characteristics:
  1. Engage executive sponsors across the business (HR, CFO, CIO, sales etc.)
  2. Strategic (as opposed to tactical)
  3. Proactive (not reactive)
  4. Long-term, deeper engagements with customers and suppliers

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Panel Shows Off Updated Research on Go-to-Market Alliances

Posted By Administration, Friday, June 20, 2014
Originally posted on 3/5/2013

This afternoon at the 2013 ASAP Global Alliance Summit, a panel led by Norma Watenpaugh and including Jay Chitnis and Nimma Bakshi showcased the most recent iteration of a survey of go-to-market alliances. In “Making It to Market: The Latest Research on How to Optimize Go-to-Market Alliances,” Watenpaugh, founding principal of Phoenix Consulting Group, and her two panelists presented the 2013 Research on Best Practices in Go-to-Market Alliances, updating a 2010 study on the same subject. Chitnis, director of business development and alliances at Isilon, an EMC company, and Bakshi, senior director with PwC Corporate Advisory Services, were part of a steering group along with Watenpaugh and others that designed and implemented the survey.

Alliance professionals from 95 companies in 23 different countries responded to the survey, many of them via social media.

For Bakshi, the results of the new survey show an “affirmation that innovation is valued at the executive level, along with evidence that many companies are taking a longer-term approach to alliances and showing “resistance to the dollar-tomorrow view.” To Chitnis, the study shows just what a high-performing alliance partner looks like, as well as how patient senior management is toward alliances.

In the new survey, the top 22 percent of companies reported that their alliances exceeded or “greatly exceeded” expectations. The study also showed something about what differentiates the outstanding performers from the others. Overperforming alliances tend to recognize the full value of alliances, not just revenue. Outperformers also measure more metrics, at least a few more in each category, such as strategic outcomes and sales closure—new customer wins, market share increase, increased sales closure, and vertical market penetration.

“Alliance managers need to know and be able to show that they have a legitimate reason to be part of the strategy conversation,” said Bakshi, reflecting on the survey’s significance. “You really have to be able to speak to someone at the strategy level,” Chitnis agreed. And while alliance managers may not be as numbers oriented as financial folks, they still need to articulate a “crisp, clean strategy” for executives, partners, and customers, he said.

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“Show Me the Money! I Need to Feel It!”

Posted By Administration, Friday, June 20, 2014
Originally posted on 3/5/2013

Starting off with a fun clip from the movie Jerry Maguire, featuring Tom Cruise and Cuba Gooding Jr., Jan Twombly and Jeff Shuman, principals of The Rhythm of Business, kept the afternoon rolling at the ASAP Global Summit today with their presentation “Show Me the Money!: Demonstrating Alliance Management’s Key Strategic Role to the C-Suite.” In it they discussed the three pillars forming the theme of this year’s Summit: “Leadership. Performance. Value” (although not quite in that order).

Twombly and Shuman started with a question: What is value? Is it the same as money? Are there other forms of value? And what sort of value is the CEO expecting to derive from his or her company’s alliances?

Touching on performance, Twombly stressed the need for alliance managers to be more proactive—or even, in Steve Steinhilber’s term, “preactive”—meaning that they must “look around the corners and see far out.”

And when you put value and performance together, Twombly said, you have demonstrated leadership in your alliance.

Then Twombly and Shuman asked the audience: “What should alliance managers do to be perceived as leaders in generating value?” Answers ranged from “owning the asset” in an entrepreneurial sense, to driving the process for the benefit of all parties involved, to aligning the parties so that they “sing from the same hymn sheet,” and aligning to corporate strategy as well.

“You’ve got to link what you’re doing to value,” Twombly concluded. “Look at your calendar, look at your task list—anything in there, can you link it to value? If not, why are you doing it? What are you doing to make the link between performance and value? What can you do?”

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CAO Panel Reflects on Global Summit Opening Plenary

Posted By Administration, Friday, June 20, 2014
Originally posted on 3/5/2013

Although the speakers at the earlier sessions of the 2013 ASAP Global Alliance Summit’s opening plenary represented vastly different industries and walks of life, a few common threads seemed to emerge across each presentation—changing ecosystems, disruption, and foresight, among others. This was noted in the final portion of the plenary, a roundtable titled, “Dialogue with the CAOs: Provocative Ideas for Elevating Leadership, Performance, and Value” moderated by ASAP Vice Chairman Jack Pearson, CSAP, managing director and chief alliance officer for Alliance Development International.

When asked what struck her the most of the ideas presented throughout the morning, Laura McCluer, director or partnerships and alliances at ANCILE Solutions, said she would heed the advice of keynote Alex Counts, head of the Grameen Foundation, not to “underestimate your capabilities.” She was also moved to issue herself and every other attendee in the IT industry to occasionally take a step back and try think through strategy more deliberately, so that you can “look for what you don’t see.” She explained that folks in IT are constantly in a hurry and that pace moves increasingly fast as executives move up the corporate ladder making it easy to miss opportunities and threats.

Posed with the same question, Harm-Jan Borgeld, head of alliance management at Merck Serono, took to heart Counts’ recommendation not to wait on an ideal prospective partner if they are not seeing the opportunity, a reference to the initial rejections from big banks that led the Grameen Foundation to lend to impoverished populations themselves on a larger scale. Of the plenary’s second speaker Steve Steinhilber, vice president of emerging solutions ecosystems at Cisco, Borgeld said he “could have been one of the nominees” for the Oscars because his performance was so impressive. He echoed the sentiment that companies need to be thinking five to ten years down the road, and added that “sometimes we also need to look 20, 30, 40 years out.”

Struck by Steinhilber’s illustration of the fall of former major giants like the big five record labels that ruled the recording industry for much of the last century until Apple’s innovations eroded their market caps, McCluer took to heart the message not to get too attached to your current partners, even ones with which you have worked hard to form strong bonds.

“You have to be flexible and look at other ways to create value,” she said.

McCluer also realized she had been mistakenly thinking of sustainability as its own industry until Christopher Turner, director of Rio+20 for the World Business Council for Sustainable Development, and director of state and local government at PricewaterhouseCoopers, showed the audience that everybody is affected by the need for sustainable business. Borgeld, too, noted that we need to look to the past to solve some of the issues related to sustainability, citing the example of Tokyo 150 years ago which had no waste management issues.

As someone who has made a career in the biopharma industry in which agreements are sealed with thousands of pages of contracts, Borgeld was incredulous that a handshake was all that was needed to hatch some of Grameen’s partnerships. His takeaway: “How can we simplify the work we are doing?”

The audience then met in groups to discuss the lessons they learned. One attendee noted that ASAP has to have an eye towards expansion of its membership to include the new players in this cross-boundary/cross-industry model. This new model needs to engage people, particularly senior level executives who need to understand the new ecosystem as it multiplies.

Another asked, “To what extent do alliance managers in organizations have strategic impact?” Since alliance managers often cannot bring new partners in completely on their own, how does an alliance pro assist senior leaders with this process?

“The light is shining on alliance management to take that leadership [in strategic thinking],” the attendee said.

When asked to offer closing thoughts, McCluer told the audience that the new alliance management professional needed to be a creative thinker who can work with new business models—a far cry from the days when alliance management was where “folks went to go when they didn’t know where to go.”

Borgeld recounted several lessons learned from his peers at an invitation-only CAO Roundtable the previous day. His Ipsen colleagues had business development and alliance management functions in equal standing reporting to one level of senior management. At Astellas, the CEO gets involved in committee disputes. Eli Lilly involves alliance management earlier in the contract negotiation process than he was accustomed to seeing. Novartis is always assessing the financial value alliance managers bring. Takeda drove home the notion that alliances will run much smoother if the proper groundwork is laid.

“If you do the first 100 days correctly, the other 200 or 2,000 days will be easier,” he said.

On that note, the plenary closed with perhaps the value proposition that was front-of-mind to most attendees by the end of the morning: lunch.

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