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AI Is Simple—Until It’s Not

Posted By Jon Lavietes, Thursday, March 26, 2020

ASAP members, the Q1 2020 edition of Strategic Alliance Quarterly is now in your hands, and we hope you enjoy our feature that examines some of the early tenets emerging around still-nascent artificial intelligence (AI) alliances that now dot all walks of business. Per usual, this blog serves as a vehicle to share some of the thoughtful commentary that didn’t make it into the print feature. The following insights come to you via Bruce Anderson, electronics industry global managing director at IBM. 

We touched briefly in the piece on how vertical-industry expertise is a must for creating some of the more advanced AI applications in the market today. This isn’t true of all AI-enabled products and services—Anderson cited smart speakers, which evolve their communication based on the data they collect throughout their interactions with end users, as an example of an application that doesn’t require much more than the optimization of a set of programming APIs to bring to market.

Those Who Have External Data Use It—Those Who Don’t, Buy It

However, to develop a program for optimizing manufacturing schedules, development teams need more than just base APIs. Anderson noted that an AI algorithm of this nature would in all likelihood need to digest various sets of internal end-user data, plus some external data sources, such as weather (to account for factors like humidity and temperature). In this case, the coding skill and IT knowledge of software developers can only take you so far. They need to collaborate with manufacturing veterans to figure out how to integrate domain expertise that is specific to that manufacturing environment. In many cases, companies may conclude that there isn’t “a [single] package with all of the data I might want. There’s engineering, and perhaps data acquisition, that has to be done,” according to Anderson.

Alliance managers charged with bringing AI innovations to market must get creative and figure out which companies might possess the data sets needed to create a new AI application. Then they must use their deal-making skills to put together win-win agreements that incentivize those data proprietors to share their data sets. (We discuss this new “offering manager” role in depth in the quarterly feature.)

Anderson also spoke about the difference between early back-end technology AI alliances and partnerships designed to bring an AI solution to market—more specifically, how the former is often much simpler than the latter. Bringing together servers, development platforms, sensors, traditional enterprise applications, and data management services that will ultimately power your AI APIs could be just as simple as integrating technology pieces.

“One of the companies involved may not know what you’re using [its product] for. You just know you’re using a lot of it,” said Anderson.

Happy Selling? Easier Said Than Done

But once an ecosystem of partners starts to jointly comarket and/or cosell a product offering, another layer of complexity is added.

“The more people that you get involved, there’s a lot of people who want a slice of the pie—in other words, the revenue—so you start to get complex marketing and selling arrangements,” said Anderson. “You could have a single offering that is jointly developed with somebody else. It could be sold by either of the parties. It could be delivered by either of the parties. There could be a third company in there, as well, if they’re involved in the overall stack.”

The challenge can be summed up in one question: “How do you keep it so that all of the alliance partners are happy?” asked Anderson.

Again, in the quarterly feature we delve into some of the specific issues partners need to sort out in these situations in order to bring orderly, concise, and impactful sales presentations to prospective buyers. Check-out the print issue you received earlier this month! 

Tags:  AI  API  Artificial Intelligence  Bruce Anderson  comarket  cosell  data management services  external data  IBM  innovations  integration  Strategic Alliance Quarterly 

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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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