Channels & Alliances - building the money machine. Part 1: trust & process

Some years ago a product development engineer said to me...

'The trick in business is to find something of huge potential value that is very difficult to do, to the degree that many try and fail.  Then learn how to do it well.  This offers transformational competitive advantage; it will also make you rich'.

If you think about it there are many examples of this.  Pick an industry,  think of the market leaders in that industry and think how they got there.

In this case my friend was referring to designing products.  It occurred to me that the area in which I work is also a candidate his list.  Building an effective community of channels and alliances can transform a business, drive exponential growth and be the business driver that enables an organisation to quickly pull away from competitors.

Many of the most successful companies have found that establishing these relationships is nothing less than a money machine.

The ability to effectively partner is a strategic capability.  Not many have it.

First, a quick word on two cultural pitfalls companies fall into in this area:

1.   For organisations for whom the investment in partners has never brought a return, the everyday value of partnering in general is dismissed; even when those with whom they compete are accelerating away from them powered by a healthy and positive community of business relationships.

2.  Once built the partner community can be taken for granted.  They are left poorly maintained and protected.  Decisions are made that damage these relationships.  The value they bring is only properly recognised when it breaks.  When all is going well the vital role the channel plays is often played down.  When times then get tough a lot of emotional sound and fury is directed at those partnerships.

When things go wrong look in the mirror first.

The crucial fact is that building the money machine requires investment, time and the right team of 'engineers and mechanics'.  To labour the point, an alliance / value added channel relationship when correctly constructed is a money machine.

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Organisations embark on these relationships for many reasons.  Put broadly, organisation are seeking to create value (traditionally for those who own the business):

• They improve the firm's performance
• They create and extend resources and capabilities
• They facilitate organisational learning
• They increase the nature and scope of the strategic network

However the ongoing management of the relationship and the judgement of success is restricted to one single criterion.  Is it making money?  Or will it make money soon enough?

Channel and alliance relationships are evaluated by scrutinising their ability to create new, profitable and sustainable streams of revenue.  Is the money machine working?

Often an organisation 'needs' a return but often invests late (or not enough).  This creates a business plan gap.  Scaling business revenue through partnership is quicker and cheaper than through internal development or acquisition (and much less risky).  The quickest collaborations are often driven by a single opportunity.  This is determined by the length of a sales cycle.  This can still be many weeks or months.   The larger, more multi-faceted and more strategic relationships take a bit longer.

For most companies the channel is a quick, agile and potentially disruptive way of growing sales. But it needs investment, expertise and a realistic view of timescales.

At this point it is worth mentioning the organisation whose revenues are growing scarily fast.  Do they need a channel?

In this fortunate situation sales will outpace the firm's ability to scale to support a growing and demanding client base.  The firm just cannot hire fast enough (compromising quality) and once adequate systems and processes creak or break; all business functions are stressed.      There was a time in my career when I was spending 25% of my time interviewing (and that firm had a great channel).

Customer satisfaction suffers and future success is put at risk.  How many companies have burned brightly and beautifully for awhile, attract a lot of wonder and attention and then just as quickly burn out and disappear?

It is easy to forget (or underestimate) the non-sales value of the partner network:

• They improve the firm's performance
• They create and extend resources and capabilities

Here is a quick and real example.  I worked with a partner that for many years looked after a piece of my employer's client base.  Foolishly an edict was sent out that from a specified date in the future we would service that base directly.  Naturally that would save us the margin we were paying to that partner.    The response from my partner was,   '... who in your organisation will scope, check, offer advice on design and configurations and issue the 6,000 quotes we are currently managing in a year on your behalf?'

Of course, my company had no-one to do this.  The issue was kicked down the road.  My partner didn't even mention credit checking and the cost of money due to delayed payments.   

These are the quantifiable issues.  As the channel person I had some relationship fixing to do. Trust had taken a knock.  My partner no longer trusted our intentions and certainly doubted our competence.

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Like any machine when it runs smoothly the channel and alliance community can deliver continuous output with the minimum of supervision.  Looking after such a machine requires an oil can and an intimate knowledge of how it works so that it can be fixed quickly should it break. Those responsible also need to predict issues and keep the machine fined tuned and serviced.  Constant supervision is required.

It is useful to have have a prompt feedback mechanism in place.  Changes in ownership, structure, personnel, policy and the business environment will have an impact on the success of the relationship.  Any one of these may require a response and it is best to identify this early.

Those not familiar with the machine just see what it delivers and the 'effortless' way it delivers it.

Many (perhaps the majority of) alliances and channel relationships fail.  The most common reason is that organisations do not appreciate the time and investment required to design and construct these invaluable partnerships.  It is very valuable and hard to get right.

It has to be done properly.

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Briefly here are the design considerations:

-  The nature and scope of the alliance must be agreed in detail.

-  The necessary resources must be identified and a medium to long term commitment of those resources must be won.

-  How those resources are configured must be identified in detail and again commitment must be established that this configuration will be in place over the necessary period.

Premature changes in resource levels and configuration is probably the most common cause of alliance failure.

Should one or both organisations become impatient or frustrated that a much heralded and publicised collaboration has not come into production quickly enough common responses are:

1.  Change the people involved
2.  Withdraw resources or investment
3.  Move the responsibility for the alliance to another part of the organisation

All of the above will stall or even wreck the development of the machine. No engineer would recommend changing the design of a car half way through construction.

4.  Allow cynical attitudes to proliferate about the value of the alliance or the channel network.  The cultural narrative becomes negative.

What is not understood is that the organisation at most risk from being damaged by this is your own.  Internal communications must give credit to partners for successes and progress.  A small but important example of this is the internal win notification process and client references.  Too often (still) vendors do not mention participating partners in customer wins.  If they do it is just a line item.  In many cases the sale would not have been made without the partner's relationship with the customer or the resources the partner brought to bear to the sale.  I rarely see this mentioned.  To do so is enlightened self interest.  Not to do so is a mistake.  Give some credit and win more business.

Response 4 will destroy any chance of creating what is absolutely necessary if the machine is to run smoothly; the development of 'social capital'.

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Successful partnerships are a blend of process and trust.

As mentioned trust has 2 components:  

Each trusting the intentions of the other.

Each trusting the competence of the other.

This is how you (both companies and individuals) proactively demonstrate and develop deep levels of trustworthiness:

1. Explicitly recognise the importance of the establishment of trust – absolutely necessary and not to be assumed.All the other 11 principles are defined to deliver this. Explicit ways of demonstrating trust should be sought on both sides.


2. Integrity – not to be assumed. A successful relationship will involve many individuals with differing objectives and pre-occupations. People, cultures and organisations have nuanced notions of integrity. Therefore this notion must be communicated clearly, consistently and often both with the partners and internally.


3. Consistency – in approach, planning and personalities. Nothing destroys trust better than inconsistent behaviour. Channel managers (especially alliance managers) should not be re-assigned too often. Their longer-term commitment is required. Frequent changes in alliance manager are both a symptom and a cause of an alliance that does not work. 


4. Communication that is both open and discrete. Sharing information should be the default. Privileged and confidential information should be the strict exception. The level of open-ness in a relationship is a good guide to its overall state. I.e. if one makes a ‘good’ decision there will have no difficulty explaining it to all interested parties. Do not make decisions that you would rather not publicise. They are suspect. This is the ‘touchstone of decision-making’.


5. A pre-occupation with the customer. No decisions should be made which creates a conflict between the interest of the relationship and that of the customer.


6. A spirit of enlightened self-interest. Look for ways to add value to your partners' business that may not directly benefit your organization.


7. Open and honest resolution of disagreements. Wherever possible disagreements should be anticipated. An advance declaration of actions with an explanation if necessary will prevent surprises and defuse possible disagreement.


8. Viewing conflict as an opportunity – embracing conflict as an opportunity to move a relationship forward, acknowledging conflict as an indicator of mutual commitment.

Often ‘heat’ and emotion when conflict occurs indicates that the relationship is important and valued. The participants care.  Ambivalence is not good.



9. Empathy. Relationship participants should be constantly assessing situations from the point of view of their alliance partners.


10. Pragmatism and flexibility.


11. A shared view of objectives, environment, intentions and expectations. 


12. Accepting the concept of unequal ‘balance of reciprocity’. This describes most relationships where individual activities rarely benefit both parties equally.  This is OK.  The more your partner benefits from doing business with you the more relevant you are and the more they will invest.



Nuff said for now....

Improve your sex life - something to bear in mind on your way home from work.

The tear in the wet suit was turning the water red in picturesque swirls.  Not knowing the nature of the wound the only thing to do was to kick through the fins even faster.  There were 6 of them in pursuit as they negotiated the coral reef .  Helpfully they were kitted out in black which singled them out as unfriendly.  There used to be 8 but 2 managed to lose their lives at the wrong end of a serrated fishing knife (standard MI5 issue)  a little earlier in the skirmish.

(Author's note:  We shouldn't give a thought to the countless unnamed human beings violently and imaginatively dispatched daily by Hollywood directors for whom every violent death is just set dressing.  We are never shown the scene when the mother of bad guy #2 is informed of his demise.)

Anyway back to action, much more fun.  Our hero is miraculously managing to avoid an everlasting supply of quickly reloaded harpoons.  It is lucky that these ruffians don't have the training, wit, charm and good looks of MI5 agents or the whole operation would have failed hours earlier.  In the hands of British Intelligence one harpoon would certainly have taken out at least 2 assailants with a well placed and much practiced 'in-off' shot.  Training always emphasised the need to deliver savagery with style.

Ironically the day had been a success.  The horribly deformed (placing any sympathy well out of reach) billionaire villain had been dissolved in his own acid bath (don't ask).  The 2 nuclear warheads had been inactivated with seconds to spare.  The city of Los Angeles had been saved  (why is it always Los Angeles?   There are prettier cities). Our agent had achieved this using only guile, an Omega wristwatch, a first class British Airways ticket, a Nokia mobile phone, a well placed Coca-Cola billboard, a Cisco telephone and a fake duck (don't ask).

Having located the US nuclear submarine 007 heaves on the hatch and manages to manoeuvre into the airlock as the harpoons bounce harmlessly off the hull.  The hatch below opens and the exhausted agent falls exhausted onto the floor along with a lot of water some seaweed and a single fish.

'Welcome aboard Miss Reliant, what kept you?' The captain had seen the films.

Robyn Reliant wriggles out of her wet suit and is handed a much needed cocktail.  She straightens the dress she was wearing the night before when it all kicked off.

A junior officer hands her a towel and the captain apologises,  "I am sorry you had to get so wet".

"That's fine.." she replies, "..my Martini is dry".

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Later that evening Robyn is meeting a fellow agent in the bar of a hotel the rates of which are well beyond the budget of the British taxpayer.  Over the past few weeks they have worked closely together and they naturally hated one another at first. This hatred turned into begrudging respect and there is now an inevitable sexual tension between them that neither has yet openly acknowledged to the other. Robyn is tired and elated and is in 2 minds as to how the evening should end.

She slides onto the bar stool next to her colleague.  They exchange glances and raise their glasses.

He asks, "How was your day?"

She replies, "Well actually..."

He interrupts,  "Well you wouldn't believe the bloody awful day I've had, first of all the traffic this morning was a nightmare...."

20 minutes later she thanks him for the drink and leaves.

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The evening could have gone a whole lot better.

  

How to be Lucky - Part One: Individuals

This brief article is based on an elective I have presented many times for the Open University Business School.  The main idea is not mine.  I have searched for the article from which it is thieved (30 years ago). If someone can direct me to it I will be happy to give the authors full credit.

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The word 'luck'is banned from the business lexicon.  There is no such thing as luck (apparently). Successful people are never lucky.  Success springs from talent, diligence, attitude, tenacity, cunning, knowledge and experience; I will not go on. If success required an element of luck the business section of airport bookshops would be replaced by scratch card vendors.

If you suggest that a successful colleague was lucky someone is bound to harumph and quote (usually misquote) Gary Player.  This erroneous notion is nicely explored in Malcolm Gladwell's book, Outliers if you're interested.

However, I will stick with western capitalist myth that all success and wealth is richly deserved and has nothing to do with accidents of birth, genetics, gender, race, geography, parenting, connections, other people's work or kismet.

This short piece describes 3 behaviours that can seriously up your chances of fortune smiling on you and not laughing in your face.  Each behaviour has a successful sponsor from history so don't try to argue with it.  I have not included advice from any unsuccessful people. First, because clearly such people lack the moralilty, intellect or diligence to make the advice they offer valuable and secondly we don't know their names.

Behaviour 1:  The Kettering principle.

'Chance favours those in motion'

'Keep on going and the chances are you will stumble on something, perhaps when you are least expecting it.

I have never heard of anyone stumbling on something sitting down.’

Charles Kettering said this.

He was a successful businessman and inventor in the early 20th century. He owned 186 patents.

Good inventions:  electric starters and lights for cars.
Not so good inventions:  putting lead in petrol and CFCs in fridges.

To be fair he  had no idea he was poisoning the air we breathe and making the earth uninhabitable. Chuck may have seen these developments as fortuitous.  Perhaps they were not so lucky for the rest of us.  Still, we don't need to crank the car in the morning.

His advice was to keep busy.  Get out of bed.  Communicate, consult, collaborate.  Be interested in everything and everybody.  Be energetic. Explore. Persist.  Experiment.  Basically get out there and get involved, not necessarily with a specific purpose in mind.

This may seem obvious but this is the pre-requisite for our next 2 behaviours.



Behaviour 2:  The Pasteur Principle.

'Chance favours the prepared mind'

‘Dans les champ de l’observation, le hasard ne favorise  que les esprits prepares’ 

Louis Pasteur said this.

Louis P was the French Alexander Fleming (and vice versa if you see what I mean).  These 2 biologists changed the course of humanity.  

The principle is that individuals should be constantly developing knowledge,  making observations and looking for associations.  Always look for linkage between seemingly unconnected phenomena and disciplines.  Here lies the motherlode, the wellspring of creative ideas and innovation.

Louis said it and Sir Alex is the great example.  He was a messy chap.  He didn't tidy up his lab before the August Bank Holiday. Over the doubtless warm long weekend something unpleasant developed in one of his petri dishes.  On his return he exclaimed "that's funny", made a connection and the world was given penicillin.  There are many examples of this variety of 'luck'.  Dr Spenser Silver invented a glue that was not sticky enough; the Post-It Note was born.  In 1960 2 guys came up with light amplification by stimulated emission of radiation .  At the time the laser was an invention looking for an application. And then someone suggested using it to torture Sean Connery, job done.

Both of these inventions were 'solutions looking for problems to solve';  it took the creative mind to bridge the gap.

So stay awake, never stop learning and don't let stress and the urgent things in life close down your creative faculties. 

       

Behaviour 3:  The Disraeli Principle.

'Chance favours individualised action'

‘We make our fortunes we call them fate’ 

Benjamin Disraeli said this.

He is the former British Prime Minister and author of romantic fiction.

Companies and products need some form of differentiation to be successful we are told.  So do people.  

Good fortune favours those who behave in distinctive ways.  They have something that sets them apart. They have a unusual skill or achievement. Fortune is a process where someone is singled out. 

An individual may be the greatest musician, novelist, inventor, business leader (you get the picture) but if no-one notices they are left spectating not participating.  I often wonder how much unrecognised talent has gone to waste in human history.  I don't need to wonder how much 'untalent' we have have to tolerate in all spheres of human activity (with the most disastrous consequences).  I won't mention any names but feel free to vent.

Plato described a ship in a storm where the loud and authoritative captain uselessly lashes himself to the wheel while to 'true navigator' lies bound and gagged in the hold.  

So here's the question.  If Benjamin D is correct then we should not be facing a  diversity issue in our established organisations.  If distinctiveness were a asset in attracting good fortune why are many of our leading companies and institutions full of white middle aged men?  Do people need to be distinctive in the right way? Ie in a way that is not distinctive at all?  

Perhaps the distinction created by gender, ethnicity, sexual preference or background is a bit too distinctive for some?  Over half of our available talent pool is still being largely overlooked.  Of course progress is being made.  If Ben D was completely right would we be having to work so hard at it?

So that's Part One.  Let me know your thoughts.  There is a lot more to say and this subject can lead us in many directions and discussions.  Part Two will deal whether this can be applied to organizations.

   

Lost in a crowd?

One alliance manager, one account, hundreds of people to influence and support. How?

A medium sized company strapped for cash is trying to develop a sales relationship with a huge, complex and multifaceted systems integrator.

The 'strategy' at a local level is to allocate an alliance manager armed with a pat on the back, massive expectations and a career jeapardising degree of corporate scrutiny.

The only approach our luckless pilgrim can adopt is to try and win a leading deal while elbowing into events and meetings where the target communities gather.

The risk of prolonged slow and agonising failure is too high.

The problem explored.

The everyday development and management of channel and alliance relationships requires the establishment of 2 things (as a minimum):

1. Visibility - being a constant and iterative presence that makes the relationship a part of the working lives of those in partner organisations.

2. Responsiveness - developing a reputation for providing relevant, timely and accurate support when it is required.

A large number of organisations fall short of these fundamental goals. A lack of visibility is often a resource issue and poor responsiveness betrays flaws in channel management and organisation.

Many suppliers see acquiring relationships with the larger players in their markets as a business development panacea. It is here that the twin goals of visibility and responsiveness become much more problematic.

First, the large companies are just that, large. The communities of individuals to whom you need to be visible can run into hundreds if not thousands of people.

Secondly those with whom suppliers have smaller relationships (the typical channel) share a core business. In larger partner relationships the solution is only one of many that the larger player is offering or is just a component of a much broader core solution. This means that the focus and expertise of those that need to be engaged lies elsewhere.

This exagerates your need for visibility and their need for responsiveness. Couple this with the numbers concerned and you have a big obstacle to success.

An efficient response.

This is a 'one to many' issue. Therefore it lends itself to marketing disciplines rather than sales. However this is marketing to a few hundred people at the most. Their names and contact details are known. There is a willingness and a very good reason to talk to engage. Their company policy encourages them to do so. The partnership is not visible and no-one knows to whom to turn should they need to.

This requires precision marketing.

The approach has two components. The first is a web portal. It was private to the relationship. It is a 'shop window' and a 'virtual account manager'. It is not a generic partner portal.

1. It is jointly owned and funded. It's design and content is determined by both organisations.

2. It only deals with the solutions and issues relevant to the relationship.

3. Large companies speak a unique language; the portal reflects this.

4. It is limited in scope. This means the site was easy to navigate.

5. There are fewer issues of confidentiality. Case studies and competitive information are less sensitive.

6. It can respond quickly to opportunites and events.

7. It has to be engaging, its format eye catching, entertaining and fun. This needs the creative input of a marketing agency. This cannot be done in-house.

8. The 'editor-in-chief' is the alliance manager. The alliance manager must keep it current and relevant. It becomes part of the role and appraisals embody the efficacy of the portal.

9. Avoided the 'men in suits'. Messaging comes from those for whom the portal is designed to serve rather than senior executives. This makes it more relevant, accessible and engaging.

10. Posted a comprehensive 'rogues gallery' of the faces of useful contacts from both organisations (in 3 D) and advice on when to use them. Implement a 'click to talk' facility over each picture along with other collaboration technologies.

11. Set up a report facility. Capture who visits the site, how often and where they go. This offers a leading indicator of progress and a list of who the key early advocates are. These can then be fed 'royal jelly' to enhance their influence with their colleagues. Again, this can be used for alliance manager reviews.

12. Every page should have a feedback section.

13. Use the platform for introducing social networking facilities. The portal is owned and run by all in the relationship creating a positive social fabric of visibility and responsiveness.

14. Place features on the portal to encourage 'word of mouth' promotion of the site.

This is half the job.

The other element is to adopt a policy of driving this small and defined community to use it. This requires a campaign mentality. Because of the numbers involved the cost of this is low and the scope for creativity and variety is high.

The Cost.

The programme will require an investment. And here comes the need to make a decision. Is there a willingness to make the alliance work? If the answer is yes then with this willingness comes a commitment to invest. Merely the appointment of an account manager, however talented, does not offer enough of an assurance of success.

The approach outlined builds a operating context for the account manager. It enables him or her to influence and support a large number of people freeing up time to develop and close specific opportunities.

The cost of implementing this approach is a fraction of the cost of adding just one additional person to the account.

In turn this cost is just a rounding error in the cost of a protracted engagement that ultimeately fails.

Chemistry

The establishment of a organisational chemistry in alliances - the fast track to success.

The word chemistry has been adopted by the business alliance community. It has been said that in selecting an alliance 3 things have to be present; a long-term win, a short-term win and cultural chemistry. Corporations, consultants and writers generally acknowledge that business relationships thrive where personal and cultural chemistry has been established.

This posting seeks to deconstruct the notion of chemistry and looks at how organisations might increase the chances of creating this hugely powerful business enabler.

First, we will look at why it is so important. Then we will define what it is. Finally, and most important, we will explore how we can develop chemistry within alliances.


Why is the establishment of chemistry so important?

Identifying, establishing and developing chemistry is a critical feature of alliance management.

Why should this be?

In short it is the short cut to results. How so?

Chemistry defines a healthy and complex cultural and inter-personal fabric. Within this fabric alliances can develop and execute on plans, exploit opportunities and face challenges positively.

Chemistry is the thread that runs through the 12 guiding principles of alliance management (see previous posting).

Amongst these 12 guiding principles the dominant notion is trust. For two or more individuals who enjoy a special combination of styles, ethics, personalities, humours, interests, pre-occupations or ambitions trust comes with the package. A betrayal of that trust would be unthinkable. This in turn spawns a form of integrity. Integrity that flows from shared and understood principles.

Communication is facilitated. Often much communication is unnecessary. So much is just understood. This leaves the alliance the time to focus on the achieving extraordinary results. These are the difficult objectives that deliver unassailable competitive advantage, the ‘stretch initiatives’.

Conflict can be heated. But neither party will sacrifice the relationship on a single issue. There is too much to lose. Conflict will be resolved.

Chemistry delivers the principles of respect and enlightened self-interest.

Broadly speaking chemistry brings better results quicker. Chemistry by-passes process. Chemistry motivates. Chemistry facilitates playfulness. Chemistry delivers commitment and diligence. It delivers positive, motivated and productive teams. It brings fun. It brings efficiency. It creates happy and fulfilled people.

In summary, it is good.


What is chemistry?

This word ‘chemistry’ is a two-edged sword. To those who have experienced this complex state it offers a label and is an excellent description. It is true to say that those who have worked in a business relationship that has that special feeling recognize it immediately. Likewise its absence is starkly obvious.

To help establish what chemistry is, let's look at what it isn't.

Every alliance relationship is unique. Let’s look at five broad categories of relationship state. The first four define what chemistry is not. The five identified here are:

1. Politeness
2. War
3. Process only
4. Partial chemistry
5. Sunlight and love (chemistry)

Politeness.

This is the 'low stress absence of chemistry' state.

This is comfortable but unproductive. The relationship is friendly and business-like. The nature of the alliance is defined and planning has taken place. The clues for this state are lots of long and positive meetings that involve large numbers of relatively junior attendees. Watch out for the word ‘workshop’. The boat is never rocked.

There is a bias away from execution. Workshops are deemed to be productive and encouraging. Time passes and no real results are achieved. Effort is applied to process definition. Short cuts are rarely sought.

This is the equivalent of the student who spends all his revision time building and updating his revision timetable. The examination arrives, he has worked very hard but has actually done no revision.

This situation can continue as long as the organizations involved will tolerate it. This can be a surprisingly long time.

There is a variant of this state. There are occasions where an alliance relationship is delivering real value and benefits but this has nothing to do with the team that is responsible for the alliance. The team plans and meets in isolation. This can make polite process difficult to spot. The problem here is twofold. First, the team is a wasted resource as they are actually not influencing anything. Secondly, the alliance will have no direction or driver. The alliance will be acting tactically. The participants are not engaged. This suggests that the relationship is not delivering all it could and may have a short life-span.

These alliances are thought to be good until the real world barges in. Issues will arise which cannot be avoided. Conflict will test the relationship. The signature of the politeness relationship that is dying is a mutual attitude of supervised neglect. Nobody really cares.

War

This is the 'high stress absence of chemistry' state.

Thankfully this is unusual. There is a positive aspect to constant conflict. It means that the relationship is important to both sides. War is often a symptom of a clear reliance one upon the other combined with a fundamental clash of cultures and mis-trust. If this reliance was not present the pain of war would be avoided; both sides will go their different ways.

An important healthy relationship may have been neglected. The chemistry that was once there has quietly leaked away. The organizations go to war. Suspicion replaces trust. An adversarial approach exists. In order for one party to win the other has to lose. There are battles to win the upper hand. Commonly one side starts referring to themselves as ‘the customer’. The number of misunderstandings rises. Human error becomes conspiracy. Stress stifles motivation and clear thought. The ability to execute on initiatives disappears. The alliance is unable to steer through hard times. The alliance is at the mercy of the environment. It is a negative spiral that must be broken. It is no fun.

Process only

This is the state of not having chemistry and not wanting chemistry.

The objectives sought are specific, have fixed boundaries and timescales. Project planning and process are put in place to deliver those objectives. Chemistry would be good but is not needed.

The question here is that can this be regarded as an alliance? It is probably more a collaboration. This begs a further question that if the relationship is to be moved from collaboration to alliance perhaps something more than process should be sought. It is a question of management judgement. Process can be a slow and cumbersome basis for a relationship. Where speed, creativity and flexibility are required it might not be enough.

Sometimes the oft- discussed notion of ‘co-opetition’ falls into this category. Two firms collude for a specific purpose but cannot go further because they are fundamentally competitors.


Partial chemistry

Alliances are often formed between organizations that are themselves large and complex. Naturally this means that an alliance can exhibit some or even all relationship states simultaneously. A possible useful approach to this complexity is to treat each entity separately whilst all the time attempting to encourage the cross-contamination of the good practise and experience.

Sunlight and love (chemistry)

Chemistry is not perfection. Whilst chemistry can obviously grow between individuals, this rarely can be applied to organizations that are often complex and large. But first you must define the phenomenon realistically and look for the clues.

The alliance is delivering planned results consistently and predictably (and usually a bit /lot more). There are ambitious plans for future initiatives. Execution outweighs analysis and planning by a very large extent. All functional areas share a relationship style. Conflict and differences are handled quickly and unemotionally. Communication is frequent, short and effective. Scheduled reviews take on a lower importance. If these observations exist there is a good chance that the alliance has entered the chemical zone.

It is subtle and complex. So apply a simple rule when looking for this precious state of affairs. Ask those that work within the alliance regularly whether or not they enjoy the experience. Ask them whether or not they dread dealing with those in the other organization. When they are left a message how long does it take for them to call back? The signs of chemistry are written on people’s faces. The actions they take and the language they use are full of clues.


Developing chemistry

It is arguable that some alliances will never achieve this state. A view of whether or not chemistry can be created depends very much on the view one takes as to how it comes about.

Once again chemistry is subtle and complex. It often defies rational scrutiny. In some cases a cultural chemistry is expected. For instance, two firms that have developed and grown in California’s silicon valley over the same period should be expected to exhibit the same values and outlook when doing business. However, to really exploit the advantage of alliances one should not restrict alliance candidates to organisations that a born of the same cultural ‘egg’.

Customers may wish to formalise an alliance with suppliers. This may represent an opportunity for them to develop new and future business strategies. This moves a relationship away from just a sell to / buy from situation. It moves to a sell with and together relationship.

There are five broad categories of how chemistry is achieved in alliances.

1. Organisations naturally enjoy a synergy of cultures for whatever reason. This is good alliance selection and sometimes just good old luck.

2. Certain behaviours increase the chances of chemistry developing.

3. The identification of pockets of chemistry and in recognising them, they are nurtured and built on.

4. Chemistry is born from individual relationships.

5. Chemistry follows people with certain personality styles around.



So how can we give chemistry the best chance of developing?

Below are some strategies and activities that can be employed to move an alliance closer to a healthy chemistry.

1. Individuals that ‘click’ is really important (chemical source 4). Two strong motivated, charismatic and influential people can carry whole organizations towards our goal. More than two is better. On the other hand the two people who do not get along can kill what could be a good alliance. Picking the right individuals is key.

2. There are some cases where the choice of alliance to deliver strategy is very broad. There are a number of candidates for an alliance. In these cases the alliance with the chemistry selects itself. Alliances where there is none can de-select quite early (chemistry source 1).

This begs the question should alliances be initiated top down or bottom up?

3. Work hard and been seen to work hard (chemistry source 2). Nothing builds respect like individuals who are prepared to put in extra effort to make an alliance work. Whatever misgivings that may be present can be compensated by diligence.

4. Recognize and focus on the ‘soft issues’ (chemistry source 2). Lead by example. Demonstrate trust. Look for ‘leaps of faith’. Give. Identify and promote good behaviours. Play a scrupulous and explicit ‘straight bat’.

5. Find those individuals who work well together and sponsor them within both organizations (chemistry source 3). It also gives them more power to deliver more of the same. If they become more influential the alliance will benefit.

6. Really get to know the other organization (chemistry source 2). Accumulate all the information you can. This includes everything from corporate strategy to what are the hobbies, interests and motivations of individuals. What does the political landscape look like? Who in influential? Who is not? This minimizes gaffs and offers effective issues and individuals on which to focus.

7. Identify and share explicitly your guiding principles. This way your alliance ‘partner’ will feel more secure. They know where they stand and will be able to predict how you will behave. Consistent and predictable behaviour builds trust.

8. Set expectations clearly. Publish and promote the 12 guiding principles (see previous posting). These can be adapted for emphasis depending on the alliance.

9. Recognise and value of good luck (chemistry source 3). Don't rely on it. Monitor and consider the suggestions above. Times change. People move on. The business environment changes. Be vigilant. Recognise and value what you have. Nurture it.


What are the obstacles to chemistry?

There are many. Some are subtle. Some are obvious. Here are a few of the more general ones.

1. Prejudice – intellectual, racial, sexual, age and rank.
2. Snobbery
3. Lack of respect
4. Lack of trust
5. Perceived lack of commitment
6. Personality clashes
7. Badly handled conflict
8. Conflicting personal agenda
9. Factional infighting – politics and conflicting agenda
10. Inconsistent behaviour


Each problem once identified will influence which is the mix and emphasis of some of the solutions outlined above.


Chemistry and competitive analysis

Competitive analysis should also include information and intelligence about the nature of the relationships between your competition and their alliances.

Look out for the clues of chemistry amongst these relationships. Chemistry is an excellent barrier to place between your alliances and your competition. The reverse applies. Are you ‘locked-out’ of a relationship?

Is there a part of you competitor’s business that is experiencing irrational success? Are they working alone? If not, you may have found their match made in heaven.

Business is a social science. The social elements are hardest to manage. They can be mysterious. But where there is mystery, there lies opportunity.

The Developmental Stages of Alliances - Operating States

Alliances portfolio management. Managing the alliance life-cycle.

Project management often refers to a project’s ‘operating state’. The same can be argued for an alliance. How an alliance is managed is largely influenced by its 'operating state'


Operating state one – just an idea

This is the stage where an alliance is considered possible and valuable but no actions are being taken and no decision has been made to act upon the idea. In order to move the idea into the next state, that of planning, the idea must be promoted amongst the appropriate individuals and a decision must be made to implement a plan.

Operating state two – planning

In this state the alliance is formulated by a team of formally appointed individuals. It is visualised, rendered real and designed. The goals, objectives and strategy of the alliance are defined, along with specific, measurable and do-able short and long- term results to be produced.
The team creates a vision for the alliance. Structures are put in place to enable the alliance to be realized. Individuals take on specific responsibilities and make promises. Communication channels and group structures are established. Timelines are defined along with milestones with which to identify progress.

The pitfalls at this stage are twofold. Some teams could get bogged down in detail which will delay or stall progress. Conversely, the alliance can be kicked off before these necessary policies and structures are clear.

The next stage is when people start working on the alliance.

Operating state three – concentration

This is the hardest state to be in. It involves establishing order and compliance around the alliance.

The concentration stage is characterized by rigour:

The alliance team needs to:

- Box itself in
- Give itself and others no alternative
- Follow instructions
- Establish trust
- Tighten discipline
- Own the alliance
- Be clear and work on short term results
- Focus attention
- Keep its word, no matter what
- Avoid unnecessary actions
- Be resilient and tough
- Grind out results
- Put 10 in get 1 out

The pitfall in this state is to relax and allow too much leeway.

To move to the next state the above characteristics need to have become a context for team cohesion and for freedom to be within the team.

Operating state four – momentum

In this operating state, the structure of the alliance gets strengthened. The strict discipline established in the state of concentration can be relaxed, and team members allowed to be more creative and to play full out.

Momentum is a highly energetic, active phase. Spontaneity and inspiration are present in the team. There is also a high level of relationship and communication, and people from outside get interested in the alliance.

It is appropriate in this phase to promote the alliance to the outside, have it be well thought of, and create a demand for it.

It is also necessary during this phase to heal any wounds left over from concentration.
The alliance vision is communicated, and project management style moves from authoritarianism to guidance.

More work is created, but the work is less hard than in concentration. In this phase, when you put in 1, you get 10.

While in momentum, the objectives of the alliance should be reviewed and revised if necessary. Momentum is a pleasant place to be.

The pitfall here is to get too happy being in momentum, and not to stabilize the alliance.

To move on to stability, acknowledge your results and examine what works and what doesn't.

Operating state five – stability

In the operating state of stability, everything needed for the alliance to be fulfilled is present. The alliance is running smoothly, and its structure is fully understood. That is to say, when an expected result is not produced, it is because a change has been made, and the change can be easily identified and corrected.

In stability, accountabilities are clear-cut, how to produce results is clear and the objectives and measures of the alliance are clear and sufficient.

When in stability, it is appropriate to standardize, write up procedures, make provisions, and train people. Long-term structures can be established for the alliance. Team members can be given more authority and take initiatives. The team can be solidified.

Another term for the operating state of stability is "Business as Usual". One of the pitfalls of this operating state is boredom. It is easy to become bored and slip back into momentum, which is a much more exciting operating state.

To move into the next higher operating state, have the team make a bigger commitment.

Operating state six - breakthrough

Breakthroughs are born of breakdowns. When a alliance goes into stability, or "Business as Usual", it is possible to push it into breakthrough by purposely causing a breakdown.

A breakdown occurs whenever there is a gap between a committed goal and what can be reasonably expected to happen, given the current circumstances, according to past experience and current knowledge.

The resolution of the breakdown must be a departure from the past: unprecedented, extraordinary, a breakthrough. And the larger the commitment, the larger the breakdown and the potential breakthrough.

Most commonly, breakdowns are seen as problems. In fact, they are a demand for extraordinary action. They cause people to shift attention and see things differently. This perceptual change is often the opening that lets people see opportunities for previously unconsidered actions.

Some pitfalls of this operating state are:

- Confusing making a commitment with signing a guarantee,
- Managers assuming people can be directed to be committed to a particular result,
- Team members not unequivocally committed to the overall result.

Operating state seven - emergency

A alliance is in this operating state when it is in the process of slipping back one operating state, such as slipping from momentum into concentration.
Left alone, the alliance will continue to slip, eventually to non-existence.

To correct this state, the team needs to declare an emergency, and find out what happened: either it has stopped doing something that worked, or it has started doing something that doesn't. Then, correct it and put in a policy/procedure to keep it in place.

Starter for 12

I once worked for a wonderfully cantankerous sales manager with 4 decades in the saddle. As with many old campaigners his advice was often packaged up in well-honed and pithy (and often stolen) one liners. One of these was...

'If you don't know what to do, do the right thing.'

This fizzed and popped in my mind for a couple of years until I had acquired a team of my own and I caught myself passing on the same advice.

Responsibility for the smooth running of relationships between 2 necessarily self-serving organizations can get complicated. All life is there, not least politics, personality and culture. It defies pure rational analysis. As the scale and the scope of the companies with which you are dealing grows so this complexity increases, often exponentially. So the ability to quickly decide on the 'right' course of action often has to rely on intuition. Companies don't like this. Table a policy based solely on the knowledge, judgement and experience of account managers and watch for the corporate immune response.

So organizations often try to set down policies for dealing with channels and alliances. I am often bumping into discussions about the 'rules of engagement'.* This is one of the alliance management paradoxes. There is a tug of war between trust and process. Companies don't like trusting the local talent and the local talent doesn't want to be tied up in process. But you need both. The answer lies somewhere between the two.

I decided that as a sales manager with a newly hired team I would try to be helpful in this regard. Long before anyone had heard of Jack Sparrow I came up with my Pirates of the Caribbean protocol: ' ... not so much rules as guidelines'. #

The intention was to avoid establishing rules. I offered my team 12 guiding principles against which we would judge our actions and decisions (ideally before they are carried out).





And here they are...


1. The establishment of trust – absolutely necessary and not to be assumed. All the other 11 principles are defined to deliver this. Explicit ways of demonstrating trust should be sought on both sides. Relationships can be viewed as a blend of trust and process.


2. Integrity – not to be assumed. A successful relationship will involve many individuals with differing objectives and pre-occupations. People, cultures and organisations have nuanced notions of integrity. Therefore this notion must be communicated clearly, consistently and often.


3. Consistency – in approach, planning and personalities. Nothing destroys trust better than inconsistent behaviour. Channel managers (especially alliance managers) should not be re-assigned too often. Their longer-term commitment is required. Frequent changes in alliance manager are both a symptom and a cause of an alliance that does not work.


4. Communication that is both open & discrete. Sharing information should be the default. Privileged and confidential information should be the strict exception. The level of open-ness in a relationship is a good guide to its overall state. I.e. if one makes a ‘good’ decision there will have no difficulty explaining it to all interested parties. Do not make decisions that you would rather not publicise. They tend to be suspect. This is the ‘touchstone of decision-making’.


5. A pre-occupation with the customer. No decisions should be made which creates a conflict between the interest of the relationship and that of the customer.


6. A spirit of enlightened self-interest. Look for ways to add value to your partners' business that may not directly benefit your organization.


7. Open & honest resolution of disagreements. Wherever possible disagreements should be anticipated. An advance declaration of actions with an explanation if necessary will prevent surprises and defuse possible disagreement.


8. Viewing conflict as an opportunity – embracing conflict as an opportunity to move a relationship forward & acknowledging conflict as an indicator of mutual commitment.

Often ‘heat’ and emotion when conflict occurs indicates that the relationship is important and valued. The participants care.





9. Empathy. Relationship participants should be constantly assessing situations from the point of view of their alliance partners.


10. Pragmatism and flexibility.


11. A shared view of objectives, environment, intentions and expectations.


12. Accepting the concept of unequal ‘balance of reciprocity’. This describes most relationships where individual activities rarely benefit both parties equally.


For many of my channel and alliance managers this stuff was common sense. But it legitimized it and gave us a framework and a vobabulary. I found it useful, they all said they did too. Hmmm... I thought, then asked, "what sort of sycophants are you?" They replied in unison, "what sort of sycophants would you like us to be?"


* Many business terms reflect the language of war. The expression 'rules of engagment' implies an adversarial relationship in the context of partnering and alliance management. At best this can set the wrong tone. At worst it betrays an attitude that can explain why some collaborations fail.

# If you have'nt seen the film you will be scratching your head, sorry.