Are your strategic alliances working for you?

By Robyn Henderson

Strategic alliances are definitely becoming a competitive advantage in this tight economic market. Let’s clarify the difference between a strategic alliance and networking. The basis of networking is giving without expectation – doing something for someone not to get something back – but because you want to help someone achieve what they want. It may be a tiny piece of information to you – but a very relevant piece of information for that person. You make a decision to share the information not expecting anything in return. No money exchanges hands, you share the information and that is it.

On the other hand, strategic alliances occur when two or more people come together in a pre-defined situation and both expect a return on a relationship or project etc. e.g. a company sponsors a conference or an event hoping to gain business from that alliances. Their expectation is that the other party will endorse their sponsorship and assist them to gain new business by giving them access to the members or attendees. In this example there are no guarantees but an above average expectation of mutual gain.

Another example might be where an accountant, banker and real estate agent form an alliance, meeting regularly and cross network clients – facilitating a regular stream of referrals for all concerned.

All of these alliances are built on a high level of trust. Some have a predetermined conclusion e.g. the convention ends and the sponsorship ends. Unfortunately, some alliances dwindle out and fade away without a formal conclusion and sometimes this builds resentment with one or more parties. So let’s look at some ways to avoid strategic alliance pitfalls.

  • Watch out for different personal habits e.g. mixing non-smokers with heavy smokers, people who run late with people who are always on time or early. This may not sound like a small point but over time can become a very irritating habit and ultimately sabotage the alliances
  • Ensure all parties are prepared to lose or invest the same amount of effort or money. There is no shortage of great ideas for alliances, but there can be a shortage or limit to potential financial commitment. Again resentment can creep in when one party is expected to contribute more than the other with no obvious advantage
  • The alliance is open ended. Using the example of the accountant, banker and real estate agent – lets say the banker and the accountant initially gain most from that alliance, but seem to be unable to refer home buyers and sellers to the real estate agent – who may eventually become resentful and stop giving the referrals. A way to avoid that situation would be to initially come together in an informal referral network for a set amount of time. By tracking the referrals over a three month period and assessing the return on effort/investment of time at the end of that period, the group can then decide if they are going to continue the arrangement or disband. The real estate agent will also have an opportunity to express his disappointment and maybe suggest ways that will make it easy for the others to speed up the referrals.
  • Be prepared to cut your losses. If you have given an alliance your best shot, exhausted your budget and still no results. Then you have to really look at your options with this alliance - whether you continue or walk away. Is the market ready for your project? Have you missed the market? Have circumstances beyond your control affected the potential number of buyers e.g. market crash, natural disaster etc. Are you prepared to broaden the potential allies to create a cash injection or alternately open new networks to you? Sometimes all you need is a month or so away from the project/alliance to allow for fresh ideas and recharging of energy – maybe even waiting until the market catches up or a market downturn adjusts. Having honest and direct communication at these times is very important to ensure longevity of the alliance. Plus how you manage a difficult or tricky situation is often discussed amongst your allies networks as well. Many people don’t realize the ramifications of this when they abuse trust or deal unethically with a ally – they not only destroy the one connection, often their destroy any future connections with their allies networks as well.

My final tip would be to aim for quality alliances, not quantity. Alliances come in all shapes and sizes – electronic, physical, global, local, national – social, business – the options are endless.

Start small, communicate well, aim for mutually beneficial results, work project by project always in an ethical manner and you will enjoy a lifetime of valuable connections.