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Valuable Economic and Financial Metrics to Support Partnering and Revenues, Part II: How Companies Underestimate Alliance Challenges—Especially When Their Operating Model Is the Barrier

Posted By Cynthia B. Hanson, Thursday, October 6, 2016
Updated: Wednesday, October 5, 2016

Alliance management workers and their associated crew members had the opportunity to stock their toolboxes with valuable building instructions at a unique session, “Applying the Latest Alliance Management Research to Your Partnering Practice,” at the ASAP 2016 BioPharma Conference, “New Faces, Unexpected Places in Partnering: The Foresight to Lead, the Foundation to Succeed,” which took place Sept. 7-9 at the Revere Hotel in Boston. The session included a presentation by Stuart Kliman, CA-AM, co-founder of Vantage Partners, on the key findings from Vantage’s 2015 study “Transcending Organizational Barriers—A Cross-Industry View of Alliance Management Trends and Challenges.” The deep dive was part of a two-part presentation that included the findings of Dr. Shawn Wilson, DBA, who introduced an ASAP-commissioned 6th State of Alliance study, “The Economics of Alliances, Social Capital, and Alliance Performance,” which was covered in my previous Part I blog post

“Our findings show that companies are actually doing okay. There aren’t giant failure rates taking place,” observed Stuart Kliman, CA-AM, co-founder of Vantage Partners, during his presentation of Vantage Partners’ latest comprehensive cross-industry study on alliances and alliance management. The 2015 study probes alliance prevalence and success rates through a two-part study methodology that included a 500-respondent survey and practitioner interviews. “ASAP would have been failing if those failure rates hadn’t [improved] over the last several years. Organizations have built up partnering capability, and that has had an impact on success rates.”

Kliman then zeroed in more specifically on the intent of the study: to determine the significance of alliance execution challenges and their consequences; the impact of alliance management maturity on success rates; and potential underlying organizational root causes of alliance execution challenges.

“People still identify alliance execution issues as being the foremost disabler in reaching alliance goals,” he explained of the impetus of the study. “They can identify significant loss of value through poor execution of those issues and spend a lot of time dealing with conflict. Shawn’s iceberg continues to be the underminer of execution.” [Part I of this blog post focuses on Dr. Shawn Wilson’s key findings, which included an “iceberg” analogy of how company issues can be hidden underwater, impacting social capital.]

The purpose of a merger is to eliminate difference, “but alliances are a different ‘berg,” he noted. “Organizations continue to significantly underestimate how challenging they can be. … Internal operating models haven’t evolved in a way consistent with how important alliances are becoming to our strategy.”

Alliance execution was identified in the study as the most frequent cause of alliance failure. Kliman linked that challenge to Wilson’s presentation. “Biopharma companies have internal innovation models, but they don’t spend a lot of time grappling. We actually have organizations involved in partnerships that haven’t evolved over time, so alliance management groups spend a lot of time putting ‘Band-Aids’ on organizations that are regularly undermining execution,” he observed.

He then explained more about the purposes of Vantage’s study:

  • To gain insight into the impact of ineffective management on alliance results
  • Identify new and persistent alliance execution challenges
  • Test hypotheses about the root causes of alliance management challenges

And the key findings of the study…

  • Organizations are increasingly leveraging partnerships to develop relationships for mutual gain, address business challenges, and drive bottom-line results.
  • Some 89 percent of pharma/biopharma respondents consider alliances “very important” or “mission critical.”
  • Some 83 percent of respondents reported having more alliances than five years ago.
  • Some 94 percent of respondents reported effective alliance management substantially increases the likelihood of, or is essential to, successful alliance execution.
  • The respondents reported that 39 percent of alliances fully achieved their objectives, 42 percent partially achieved their objectives, and 19 percent generally failed to achieve their objectives.

When higher maturity and capability grows, there are higher success rates, Kliman concluded. “This is where alliance management groups will lead the way:  One aspect of alliance management groups is to provide direct support to individual alliances and drive the capability. The next big goal is the focus in our second mission: To drive capability with alliances in mind.”

Stay tuned for additional coverage of the session “Applying the Latest Alliance Management Research to Your Partnering Practice,” which will focus on a lively discussion between the presenters and audience participants on how the two studies connect. You can read more on Vantage’s studies by visiting https://www.vantagepartners.com/Articles.aspx

Tags:  6th State of Alliance  alliance execution challenges  alliance execution issues  Alliance Management  alliance prevalence  alliances  biopharma  Dr. Shawn Wilson  management  Stuart Kliman  success rates  Vantage Partners 

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Ben Gomes-Casseres and the Bayer Team Return to the 2016 ASAP BioPharma Conference with an Interactive Roundtable on Creating Alliance Success

Posted By Cynthia B. Hanson, Tuesday, September 6, 2016

One session at last year’s ASAP BioPharma Conference was such a success that Ben Gomes-Casseres, CSAP, DBA, and the Bayer HealthCare team are returning with the same theme in a new interactive roundtable format. Their deep dive on “Making Better Alliances: How Alliance Management, Business Development, and Legal Can Collaborate More Effectively” will delve into how to successful integrate alliance management, business development, and the legal division to improve alliance success rates.  They return to the stage for this year’s ASAP BioPharma Conference Sept. 7-9 “New Faces, Unexpected Places in Partnering: The Foresight to Lead, the Foundation to Succeed” at the Revere Hotel, Boston Common, Boston.

 

An alliance strategy consultant, professor at Brandeis University in Waltham, Mass., and author, Gomes-Casseres will be moderating the session with Bayer award-winning cross-functional team of John A. Calvo, Karen Denton, CA-AM, and Claudia Karnbach problem-solving an alliance management case. Attendees will be participants, too, tackling tricky alliance scenarios with best practices through dynamic peer-to-peer exchanges. I asked Gomes-Casseres a few questions about the impetus for the session.

 

What are the most common reasons for the high failure rate of alliances?

As a community, we have made great strides in alliance management, but we have been myopic. We need to broaden our view so that we can see more clearly the faults in alliance strategy and design that frequently lead to dissolution.

The reason half of all alliances fail can be largely attributed to poor up-front design, which includes: 

  • Choosing the wrong partner
  • Deciding to partner for the wrong reasons
  • Flawed contract terms

Part of the problem is that alliance management is left out of the early decision process. Part of it also is that alliance management, business development, and legal speak different languages and concerns. Making a robust alliance requires effective collaboration between business development, legal, and alliance management. However, this aspect of internal collaboration often receives less attention from alliance managers than the work they perform after the deal is “done.” That’s one component in critical need of change to improve the success rate.

What solutions will you and the Bayer panel be recommending in your session? 

At the 2015 BioPharma Conference last year, I held a session with Bayer Healthcare executives from alliance management, business development, and the legal division that focused on four areas: 

  • How Bayer’s does the “Deal to Alliance” process, which is a way of describing how to pay attention to both alliance strategy and management
  • The importance of involving alliance management early on in the deal
  • The contributions alliance management makes to negotiation and contract terms
  • How combining these elements builds more robust alliances

This year, I invited the same team that provided a session at the BioPharma Conference last year to come back and work in an interactive continuation of that session with participants. We plan to quickly rehash what was covered last year and then do a deep dive into fresh and innovative approaches. We plan to share a case study and explore in open discussion how to solve it. In the process, participants will learn how alliance management can contribute to business development and contracting and the best way to bring the D2A process back to their own companies.

 What is your goal of the session for participants?

 The goal is simple but essential to having a solid alliance. We want to:

  • Make more robust and quicker alliances
  • Resolve the differences of perspective among functions in alliance design
  • Broaden the role of alliance management in the organization

How does your new book Remix Strategy: The Three Laws of Business Combinations, published by Harvard Business Review Press, promote some of these ideas?

 Remix Strategy provides the tools to fix this problem. The solution lies in designing alliances so that they can be governed effectively to create value. I call it the “Deal to Alliance” process, which means paying attention to both alliance strategy and management. For a healthy alliance, it’s critical to integrate the process of designing and implementing alliances along their full lifecycle.

Tags:  alliance management  alliances  ASAP BioPharma Conference  Bayer HealthCare  Ben Gomes-Casseres  business development  Claudia Karnbach  collaboration  John A. Calvo  Karen Denton  Keywords: Remix Strategy  management  patner  strategy 

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