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:
1) Conflicting visions
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
2) Conflicting values
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
3) Unequal resources
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
4) Unequal rewards
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
5) Unequal risk
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