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Have you heard the term "strategic alliance"?
It's not just another business buzzword. Done well, strategic alliances multiply
the resources and reach of your business.
Let's start with a definition: a strategic alliance is simply a relationship between two businesses or
organizations who agree to share the work of pursuing a common goal.
For example, we partnered with Mindful Marketing to offer a yoga trends seminar
earlier this summer. Our joint goal was to increase awareness of our
businesses among the mind/body community. We split the work required to
put on the seminar: handling registration, sending a pre-survey, writing the
emails announcing the seminar, and so on.
Now, when we use the word "partner" in this context, we mean collaboration
- not a legal partnership where each participant shares ownership of the
company.
These relationships have powerful potential. Yet they often disappoint both
parties.
Why does something with so much potential go so wrong?
Five issues typically emerge
when an alliance fails:
Both businesses need compatible visions of how their businesses will succeed,
separately and together.
We advised a business that had developed a really clever health product for
older adults. They felt strongly that the right way to market the product
was direct to consumers through infomercials, ads in AARP's monthly magazine,
and other mass media outlets. They had a strategic alliance with another
company that sold its products through medical products distributors who then
fulfill orders from retailers like Walgreens.
However, selling directly to consumers is entirely different from selling to
distributors who then turn around and fulfill orders from retailers.
Imagine the difference in the customer service calls you get! And that's
just one difference.
We also talked recently with two solo practitioners who are partnering together
to grow their businesses. One's a dietitian specializing in morbidly obese
kids who gets her referrals from pediatricians. The other's a personal
trainer who provides online corporate wellness coaching. There's just not
much overlap between their practices, which makes it tough for them to work
together.
Ask yourselves whether your business strategies are compatible. Do you
work with similar kinds of customers? Similar sales and marketing
strategies? Common operational or day-to-day needs?
What to do
- Identify areas where you and your prospective ally might compete. How will you
handle those situations?
- If and when you decide to stop working together, how will that affect the way
customers see you both?
What creates a trusted relationship? We think it's being able to predict what the other person will do in a given situation. What lets you accurately predict their behavior? Knowing how they think about the world - what's
right and wrong, what's acceptable and what's not.
We worked with a healthy living program recently whose strategic partner
suggested that they use marketing materials that had actually been created for
another company. It instantly created fear that they'd be victims of the
same behavior.
Another wellness coaching client partnered closely with a local therapy
practice. They co-located their offices, planned joint marketing efforts,
and shared an office staff. Things fell apart when the therapist got a
fabulous media opportunity and didn't include the coaching business in the
interview.
What to do
- Look for baby steps - small opportunities to work together that give you a
chance to build trust.
- Don't "open your kimono" until you've actually
experienced what it's like to work together.
We often see situations where one partner feels that they're doing all the work.
Despite good intentions on both sides, this can happen when the other company
has limited resources or capabilities.
What to do
- Stay objective about what your strategic ally can bring to the party. You
can like them just fine - it doesn't mean your businesses should work together.
- Make a list of each partner's strengths and capabilities. Strong alliances
combine complementary strengths and avoid duplication.
Successful alliances offer meaningful rewards to each partner that justify their
commitment of resources to the alliance.
For example, if you handle all the marketing responsibilities, what is your
strategic partner bringing to the party? Perhaps they're offering
expertise that your customers value.
What to do
- Before you agree to collaborate, make a list of the benefits you each expect
from the relationship.
- Share the list with your strategic partner.
- Periodically compare the results you both hoped for with the results you
actually got.
Skin in the game - everyone needs it. The worst alliances we see are
usually those between a very small company and a much larger company. What
typically happens is that the little guy pours blood, sweat and tears into
making it work, while the bigger company views the relationship as just one of
many things they've got going on. Deadlines slip, the quality of the work falls
short, the people you work with constantly change...and on and on.
However, the larger company can actually have greater risk under certain
circumstances. For example, sometimes smaller businesses and individual
practitioners over-commit and then fail to deliver on their promises, leaving
the bigger company holding the bag.
We worked with a large and established health club several months ago who had
partnered with a regionally-popular health speaker. When the speaker
dropped the ball at the last minute, they had to scramble to avoid infuriating
several hundred members who had already signed up for his seminars.
What to do
- Develop a Plan B that describes what you'll do if your strategic partner doesn't
deliver.
- Think about the worst case scenario if things don't work out with the other
business. Can your business bounce back?
- Consult an attorney for advice on how to document your relationship with the
other business. That's especially important if you're sharing confidential
information or intellectual property like program design and content.
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