October seems to be the month of strategic alliances in the Old Pueblo. From the Arizona Tech Council partnering with City of Tucson Mayor Rothschild for the 2013 AZTC Tucson Tech + Business Expo, the Tucson Hispanic Chamber's Beyond Start-Up program with the City of Tucson, to Strategy1 joining forces with seven other organizations for IdeaFunding 2013, southern Arizona is teaming up to provide greater value to businesses like yours.
What can your company learn from this? When you are looking to grow your business, expand your market or add new products and services, you have three basic options:
- Internal expansion, though your company may lack the resources to "go it alone".
- Acquisition or merger, both of which require significant financial resources and have a very high rate of failure.
- Forming alliances or partnerships, whereby both companies are able to leverage resources in creative ways.
A strategic alliance is a collaboration in which two or more individuals/companies join forces and leverage their respective strengths to pursue an agreed upon common goal/objective, or to address a stronger competitor. Each lends its respective "talent" to the alliance. However, each remains independent.
Alliances may take many forms, from a loose informal agreement - such as joint purchasing - to a formal equity partnership or joint venture. Most alliances involve products, markets, and technology (or combinations thereof) as illustrated in this diagram from "Business Alliances Guide".
Alliances may be relatively flexible, perhaps beginning with a simple joint marketing arrangement which eventually may be modified and become "multipurpose" as marketplace conditions change. Also, an alliance may be established for a specific project and then discontinued, or remain "evergreen" until one or both partners decide to terminate it.
Companies should consider entering into alliances to achieve specific strategic goals, leverage resources, and reduce risks while increasing rewards. Alliances should not be a happenstance occurrence.
- You find the right partner. This is no different than looking for a marriage partner. First you "date," then get engaged after getting to know each other. That being said, there must be a clear provision for divorce.
- Good "chemistry" is vital. Your strategic goals, sense of direction, philosophies of doing business, management styles, and cultures should be compatible.
- There needs to be a spirit of trust, cooperation, and integrity between parties. A cooperative working environment, an agreed upon decision making and conflict resolution process and excellent communication is essential for a strong alliance.
- The alliance must be of significant importance to the senior management or business owner who will "champion" it and not address it "only as time permits".
- Above all, both partners must be "winners." No plan or formal agreement will compensate for this fundamental flaw.
Remember- "Coming together is a beginning; Keeping together is progress; Working together is success." ~Henry Ford