My Profile   |   Print Page   |   Contact Us   |   Sign In   |   Register
ASAP Blog
Blog Home All Blogs
Welcome to ASAP Blog, the best place to stay current regarding upcoming events, member companies, the latest trends, and leaders in the industry. Blogs are posted at least once a week; members may subscribe to receive notifications when new blogs are posted by clicking the "Subscribe" link above.

 

Search all posts for:   

 

Top tags: alliance management  alliances  collaboration  partnering  alliance  alliance managers  partners  alliance manager  partner  partnerships  ecosystem  The Rhythm of Business  governance  Jan Twombly  partnership  Strategic Alliance Magazine  Eli Lilly and Company  IoT  Vantage Partners  biopharma  Healthcare  NetApp  2015 ASAP Global Alliance Summit  ASAP BioPharma Conference  Cisco  IBM  strategy  Christine Carberry  digital transformation  innovation 

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 

Share |
PermalinkComments (0)
 
For more information email us at info@strategic-alliances.org or call +1-781-562-1630