Designing the Enterprise Capability for Managing Collaborative Relationships
Post on 27-Mar-2016
DESCRIPTIONWithin many companies today, there is fresh thinking about the management capability they need to succeed with alliances and collaborations. Those that havent yet adopted the discipline are starting and those that have, are refreshing their practice. Common among them is taking an enterprise view of collaborative relationships and consciously developing a capability that is aligned with a broad portfolio of relationships. This paper builds on the portfolio analysis and offers a step-by-step process for assessing what the capability should be, the scope of relationships to be included, as well as the organization design, staffing coverage model and roles and accountabilities of those with alliance management responsibility.
C o l l a b o r a t i v e N e t w o r k s n A l l i a n c e M a n a g e m e n t n C o l l a b o r a t i v e A b i l i t y
Volume 3 in the White Paper Series Alliance Management at a Crossroads
Designing the EnterpriseCapability for Managing
Collaborative RelationshipsJanice Twombly, CSAP and Jerey Shuman, CSAP, PhD
D e s i g n i n g t h e E n t e r p r i s e C a p a b i l i t y f o r M a n a g i n g C o l l a b o r a t i v e R e l a t i o n s h i p s
The greatest change in the way business is being conducted is
the accelerating growth of relationships based not on
ownership but on partnership.
D e s i g n i n g t h e E n t e r p r i s e C a p a b i l i t y f o r M a n a g i n g C o l l a b o r a t i v e R e l a t i o n s h i p s
Contents The Evolving Role of the Alliance Management Professional 3 A New Perspective on Managing Collaborative Relationships 5 The Portfolio: Defining the Universe 9 Designing a Collaborative Capability 12 Three Scenarios 17 The Alliance Management Professions Golden Opportunity 25 Recent Whitepapers on Alliance Management and Collaboration by The Rhythm of Business 27 About The Rhythm of Business 28
D e s i g n i n g t h e E n t e r p r i s e C a p a b i l i t y f o r M a n a g i n g C o l l a b o r a t i v e R e l a t i o n s h i p s
The Evolving Role of the Alliance Management Professional Weve titled this series of white papers, Alliance Management at a Crossroads and have described this crossroads as either gaining acceptance of the unique value an alliance management capability provides or else becoming marginalized: useful in certain circumstances, but clearly a niche. It has long troubled us that although companies routinely generate 30-40-50 percent and more of their revenues through alliances and increasingly give partners responsibility for what were once core functions, the practice of alliance management is not more widespread. Based on the membership of the Association of Strategic Alliance Professionals (ASAP), the profession and the fact that there is a discipline is still a best kept secret. Its global membership is largely information technology and biopharmaceuticals, with a smattering of insurance, consumer goods, media, and industrials. Yet every industry has alliances. Some of this is due to the profession not doing a good enough job of promoting itself. Based on our research and experiences, only a minority think about it as a profession. In biopharma, an industry that depends on alliances, only 25% of alliance managers surveyed see it as a profession! (See The Practice of Alliance Management in the Biopharmaceutical Industry, The Rhythm of Business, November 2010). Political and turf issues also get in the way. After all, would an executive who has a team responsible for designing and manufacturing the companys hottest new product, or creating a distribution system in China, want to cede any degree of responsibility, that is, control, of his or her critical external relationships to someone from a centralized staff group called alliance management? Of course not unless the benefit is obvious. Most importantly, there is a defensive barrier. If alliances and collaboration are how business is done today, then any good executive or manager has to succeed in this environment. Yes, and. The complexity and boundary crossing that comes from collaborating with external parties requires competency, processes, policies and tools that arent required when working within the confines of a single enterprise. It adds an additional component to the endeavor. Both the collaboration the negotiating, clarifying, coordinating, leveraging, communicating, trust building and the work of the collaboration the project, the customer solution, the research must be managed. Sometimes these two needs are in conflict. Therein lays the current opportunity and danger for the alliance management profession.
Alliance Management at a Crossroads
Gain acceptance of the unique value an alliance management capability provides or else risk becoming marginalized: useful in certain circumstances, but clearly
Alliances and collaborations are so pervasive in business that alliance management does not have the luxury to play catch up and get someone with a variation of the title, alliance manager assigned to every significant alliance or collaborative relationship. By default, managers with other titles and duties already have alliance responsibility for many of these relationships. Sometimes it is specifically assigned and included in his or her performance objectives and compensation. Most often it is not even acknowledged that the manager must assume this additional, significant responsibility. Alliance professionals opportunity is to infuse the discipline throughout the enterprise. In the process, others are empowered to apply the tools and techniques in their specific situations, freeing alliance management specialists to provide hands-on leadership of the complex, truly strategic relationships that cross multiple boundaries within the company, as well as beyond it. With a consistent approach across the enterprise to working with external partners, some of the complexity inherent in these relationships is lessened, meaning that management risk is reduced and value is more readily realized. How can a company take the next step in building an enterprise collaborative capability? Different companies and industries are at different stages and thus have to consider different starting points for developing a common approach to managing collaborative relationships. Start by assessing the current status. It likely falls into one of three broad categories that demand action: Alliance management is informal and ad hoc or not focused enough on business value. An increasingly complex portfolio of alliances is not performing as planned and/or are ripe with conflict and disagreement Siloed approaches to alliances within different business units or geographies are complicating the management of collaborations that cross internal boundaries A strategic growth initiative that depends on partnering with external parties has been announced, but there is no process in place for deciding when to partner, with whom, and how to realize value from it Any of these circumstances presents a springboard for establishing an enterprise capability for managing collaborative relationships and instilling the discipline of alliance management as part of how business is done. This paper presents a simple process through which an organization can determine its alliance management needs and design the necessary capability.
Alliance professionals opportunity is to infuse the discipline throughout the enterprise, empowering others to apply the tools and techniques in their specific situations, freeing alliance management specialists to provide hands-on leadership of the complex, truly strategic relationships that
cross multiple boundaries.
A New Perspective on Managing Collaborative Relationships The seed for proactively managing partners is planted when a division, function, or geography accumulates a sufficient number of external, collaborative relationships. Perhaps it runs into some difficulty and assigns someone to oversee the partnerships to correct the problem. Over time, this often develops into an alliance or partner management group. This opportunistic process occurs as needed throughout the enterprise, resulting in multiple groups, each with its own approach to managing its relationships. Fragmented, bottoms-up efforts result in pockets of expertise and excellence, but rarely is it knit together into an enterprise wide capability. Some companies have a global alliance management group. However, they generally are limited in the scope of their responsibility to specific types of relationships, such as co-development and co-commercialization relationships. There are some exceptions to the norm. For example, Eli Lilly & Company has a Chief Alliance Officer with a broad scope of responsibility. At pharmaceutical giant Sanofi, the alliance managers are networking themselves across business units and geographies to learn from each other and drive key practices. At IBM, an alliance management community helps share ideas and tools and provides access to external experts. The objective of their efforts in linking up is to share learning and grow the capability across the enterprise The business world has reached the point in the opening of corporate boundaries and the proliferation of collaborative relationships that a common methodology and tools are well advised to drive financial value, manage complexity and increase effectiveness. An organization-wide capability for managing collaborations provides this consistency. It also means dedicated management of certain external parties as well as employees who can assume that responsibility as part of their jobs. It includes executives equally versed in serving on alliance governing committees as they are in contributing to internal decision making bodies. Financial executives must account for alliances as a discreet scope of business. Similarly, employees must fluidly move from solely internal teams and projects to partnered efforts, with a full understanding of how that boundary crossing affects their actions. When alliances and other collaborative relationships are managed effectively, the risk their complexity poses is minimized and all the forms of value they are intended to produce are available to be turned into the desired strategic and financial outcomes. Decisions get made, communication flows, work is shared, and resources are provided and used to achieve joint objectives in a timely manner. In addition, points of conflict are anticipated, analyzed, negotiated, and resolved. Silos and geographies are joined. Stakeholders are aligned around whats right
A common management methodology and tools are well advised to drive financial value, manage complexity, and increase effectiveness. An organization-wide capability for managing collaborations
provides this consistency.
for the alliance, understand how that benefits the company and themselves, and are willing to get behind it. The costs of not managing alliances and collaborative relationships effectively are simply too great to ignore. They can include arbitration and litigation, stalled development efforts and lost time to market, as well as an inability to compete for desirable assets, capabilities and access. Every alliance manager knows that successful partnering efforts are a lot of work. Alliances and other collaborations are a means to an end; a strategic choice about how to achieve objectives. When practiced appropriately collaboration is a set of behaviorsa way of working that involves coordinating specific activities and communicating certain information to leverage resources in the purposeful pursuit of objectives. It requires an environment of trust and transparency. Collaboration opens up the possibility of accessing the resources, knowledge, and relationships other people and organizations have and using each partys resources for mutual benefit. It also raises the specter of counting on someone who has a limited stake in your success. Thus, it is a sophisticated ability that depends on much agility in utilizing a range of skills through an iterative process of achieving desired outcomes. To be worthwhile, over time the value of what one receives must be greater than the cost of receiving it. And because collaborative relationships must provide benefit for all concerned, each party must perceive that the benefit (the get) is greater than the cost (the give). However, what is important and useful to one party to the collaboration may be of limited use and value to another party. Additionally, if that value isnt available to be realized in a timely manner, value is lost. Only the recipient can assess value, as it is personal, relative, and time sensitive. Something may be of negligible value to the party offering it, but it may be exactly what the recipient needs and vice versa. The value in an alliance or other collaborative relationship represents the get as determined by the recipient of the value. Management complexity is indicative of the time and effort that must be expended. It is the give the recipient must spend in order to realize the get. In this manner, it is possible for each participant to assess the relationship from its perspective and for both to recognize net benefit. This is the essence of what is meant when alliances and other collaborations are win-win. Each party must believe that the value received from the collaboration is greater than the time and effort it takes to get it. Real collaboration is not black or white; it exists on a continuum that ranges from a little to a lot. Generally, the greater the value sought, the more collaboration required for achieving desired outcomes, and absent specific action, the more complex the management of the relationship. Collaboration takes time and effort to produce results, so it is essential to match resources to the expected benefits. When this
Collaboration takes time and effort to produce results, so it is essential to match resources to the expected
alignment is not acknowledged and a relationship improperly located on the continuum, confusion often results. Some get too much attention, wasting resource; others dont get enough, potentially creating unnecessary risk and leaving value on the table. Lines of responsibility become fuzzy and accountability suffers. The lack of a repeatable, consistent process for handling complexity and realizing value increases risk. Need for an Enterprise Capability In the past decade, collaboration has become ubiquitous. While not all business relationships are collaborative, there are enough that need to be (see Figure 1) so that an enterprise capability for managing them has become a necessity. However, when labels such as alliance, preferred supplier, outsourcing partner, and channel partner are used, they can hide the collaborative management needs of the relationship.
From a collaborative standpoint, what matters is that the appropriate management processes and resources are applied to manage the complexity and risk of a relationship and support the collaboration required to realize intended value. This perspective on collaborative relationships, which we refer to as the value/complexity profile of a relationship, allows its collaborative needs to be met irrespective of the legal or contractual nature of the relationship. It also provides a frame for a management capability that can be developed, implemented, and adapted across an enterprise and within specific business units without upending existing organizations or requiring significant new resources.
Figure 1 A Network of Relationship TypesThe value/complexity profile of a relationship, allows its collaborative needs to be met irrespective of the legal or contractual nature of the
Building any capability for managing collaborative relationships is a grand undertaking, requiring incremental steps to get from reality today to the desired vision. It is wise to start where the need is greatest, be it in a specific function, geography, business unit, ecosystem or within enterprise-wide alliances. Start with the objective in mind and build support for the vision as well as the first step Treat it as the change initiative it is Gain executive endorsement, as well as support from affected managers and teams Determine the scope for an initial effort Enroll champions Demonstrate measurable benefit Improve the process; spread the word and expand the effort Over time, it simply becomes part of how business is done. (See Figure
2.) What is essential is that at whatever scope the building process begins, it begins by dynamically matching the ability to do business through alliances and other collaborative relationships with the value/complexity profiles of the collaborations that comprise the relevant portfolio.
Ability to Execute
Cycle 1Establish Baseline
Cycle 2Develop Collaborative Capability
Cycle 3Achieve Significant Strategic
and Financial Benefit
Introduce Refine Embedded in Culture
Figure 2 Embedding the Capability
The Portfolio Defining the Universe Every collaborative relationship is unique. Practicality demands organizing them into meaningful categories or segments to which common management processes and tools can be applied. Each category creates a portfolio of relationships to further analyze and align its value and complexity characteristics with management resources. To determine the scope of relationships that should be included, recall that collaboration requires the leverage of resources through coordinated activities and sharing of relevant information for a specific purpose within an environment of trust and transparency. Thus elements of this definition must be present for a relationship to fall on the collaborative continuum. Once it is placed there, the value/complexity profile will point to the level of collaboration required. It is useful to divide the overall portfolio into collaborative relationships with a similar purpose and along the lines of how the business is organized. For example, all the relationships intended to service customers in a specific geography or all relationships that are part of the product development process might be grouped together. The delineation could also be functionally driven. For example, research partners, commercial partners, development partners, etc. could each be looked at as a specific portfolio. Some companies have organized themselves in ways similar to what is depicted in Figure 1, with a specific set of customer needs being the key organizing principle. In these situations, traditional functional and geographic boundaries should be ignored and all alliances and other collaborative relationships that are needed to satisfy a certain customer need are examined together. Cisco calls this their solution approach to the marketplace. Often referred to as ecosystems, an example of this that hasnt worked so well because the collaboration required wasnt appreciated nor properly managed, is the global network of suppliers and partners put together to design, develop and manufacture the Boeing 787 airliner (See Collaborative Networks are the Organization, The Rhythm of Business, July 2009). In pharmaceuticals, the network might encompass all the relationships necessary to commercialize and support patients with a specific chronic disease. Or perhaps it is all the researchers, inventors, entrepreneurs, and suppliers that have technologies a consumer goods company may incorporate into its product development for home and garden cleaning and maintenance. Once a scope of included relationships has been determined, the resulting portfolio(s) is analyzed to establish its current value/complexity profiles. Defining what constitutes value and complexity is the linchpin in this portfolio assessment. A thorough understanding of company strategy and the role of alliances and partnering in achieving that strategy is required. Keep in mind that the only good reason for an alliance or partner relationship to exist is that it helps an organization accomplish what it is trying to achieve more
Once a scope of included relationships has been determined, the resulting portfolio(s) is analyzed to establish its current value/complexity profiles. Defining what constitutes value and complexity is the linchpin in this portfolio
economically and faster than it otherwise could. If that isnt true, the alliance will waste resource and shouldnt exist. Once criteria to measure management complexity and potential value have been determined, they are scored and mapped to a Matrix. (See Figure 3). For a more detailed discussion of the Value/Complexity Matrix see the section, Assessing the Alliance Portfolio, in Volume 2 of Alliance Management at a Crossroads, How Alliance Management Delivers Value: Moving Beyond Best Practices (January 2011). It provides an overview of our process for assessing a portfolio of collaborative relationships. Once this is done for each alliance, stand back and analyze the makeup of the portfolio.
The relationship between potential value and management complexity offer a Return on Investment metric that we call Return on Collaboration (RoC) (See Figure 4). The RoC is a measure of net benefit from an alliance or other collaborative relationship calculated by comparing the potential value relative to the investment of the time and effort to manage the complexity of the collaboration.
Individual RoC scores can be aggregated into logical sub-groupings, such as by category type, product family, region, or lifecycle stage to provide an additional level of analysis of a given portfolio.
Figure 3 Sample Value / Complexity Matrix
Figure 4 Return on Collaboration
Return onCollaboration =
Potential ValueManagement Complexity
Return on Collaboration
Readers of our earlier papers may recall the metric Return on Relationship (RoR). Return on Collaboration (RoC) is the same metric, just with a new, more precise name.
In our experience, alliance and collaboration managers are shocked to see the number of relationships and which relationships fall to the left of the 45 degree line. These are relationships where the give is more than the get. That may be the right balance for certain collaborations that are in a development stage, where one is consciously investing. The positioning of portfolios is not static. A relationship that has a RoC of less than 100% today may become much more positive as it achieves certain milestones or specific action reduces complexity. It may also mean that the relationship is a resource sink, requiring too much management time and attention for the return it offers. Assessing the portfolio from this perspective also provides a window into the resources needed to manage it. The quadrants of the matrix suggest logical groupings of value/complexity profiles to inform management needs. How Alliance Management Delivers Value: Moving Beyond Best Practices discusses how the profile of a relationship offers insight into a management strategy and a specific alliance management work plan, as well as cross-portfolio initiatives. The next section of this paper describes how to use the value/complexity profiles of the portfolio to shape the design of the capability.
Designing a Collaborative Capability Agility is an essential characteristic that large organizations strive to achieve. The ability to move with a quick, easy grace symbolizes entrepreneurship and innovativeness. When applied to the design of an enterprise wide capability, agility means having a set of policies, principles, values and guidelines that allow executives and managers to make decisions within their domain of control, confident that they are acting in a way that is consistent with the direction of the company and responsive to the specific needs of their customers and stakeholders. Resilience is also important. The ability to bend as needed while remaining true to form allows new opportunities to create value be tried. It helps in innovatively handling complex and risky situations. Thus the first consideration in designing an enterprise capability for managing collaborative relationships is to ensure that it has the agility it needs to be creative and embrace collaboration as an entrepreneurial behavior, while having the resiliency to maintain the integrity of guiding principles, policies, and values. Capability Components An alliance management capability has three components (See Figure 5):
Hands-on management of the portfolio to realize the strategic intent of individual relationships through aligning stakeholders, effective governance and pro-active value creation
Figure 5 Components of the Capability
Strategic IntentStakeholder Alignment
AllianceManagementExcellenceProcesses and procedures that
ensure continued improvement of
Individuals trained and skilled in
working in collaborations
The first consideration in designing an enterprise capability for managing collaborative relationships is to ensure that it has the agility it needs to be creative and embrace collaboration as an entrepreneurial behavior, while having the resiliency to maintain the integrity of guiding principles, policies, and
Education, coaching and mentoring to develop the ability of people to work on alliance teams and in governance roles Development and continuous improvement of alliance management processes and tools Alliances touch every corner of most companies today. Enabling the organization to compete and win through alliances is essential. Effective alliance management yields three forms of value: Financial new opportunities to grow revenue or share costs Alliance effectiveness reducing the cost of time Risk mitigation avoiding unnecessary costs The capability that delivers on these objectives must be aligned with the alliance portfolio. Thus, no two are the same and there is no right or wrong answer to the design of it. Professional level understanding of what it takes to succeed in alliances is a necessary ingredient. Key strategic decisions that shape the organization design of a companys partnering capability and how it manages all of its alliances and other collaborative relationships include: What should be managed at a corporate level and what should be managed within a function, geography, or business unit (including customer-driven networks)? What is the appropriate balance between empowering functional managers to lead collaborations as part of their job and a centralized specialized alliance and partner management group? What are the roles and accountability of someone with responsibility for managing an alliance or other collaborative relationship? Once a set of answers for the above is arrived at, then the knowledge base, policies, processes, and tools that comprise the collaboration management system may be designed. The likely dimensions of these decisions are represented in Figure 6, the Capability Design Model.
Collaborative capability must be aligned with the alliance portfolio. Thus, no two are the same and there is no right or wrong answer to the design of it. Professional level understanding of what it takes to succeed in alliances
is a necessary ingredient.
Each factor represents a continuum of choice that is blended as necessary to provide a unique capability aligned with the portfolio or set of portfolios. Locus The locus describes where in the enterprise certain relationships are managed. It also assigns ownership of the desired consistency of methodology, the skill level of executives and employees, and the management system. The possibilities for locating the core of the collaboration management capability range from functionally, geographically, or business unit based to aligning with a corporate group. In addition to providing the management necessary for the near-term existing value/complexity make-up of the portfolio, anticipated future growth has to be taken into consideration. Staffing The key decision to make about staffing the partnering management capability is the balance needed between people fully dedicated to the role and people for whom it is just part of the job. If partner management is just part of the job, the individual is generally responsible for the more task-related work and less so for thinking strategically about how to reduce complexity and expand value. Dedicated alliance managers likely have responsibility for more than one relationship and should be specially trained. Among certain types of collaborative relationships, the scope of the relationship may be so significant that a manager has responsibility for just one partner. On the other hand, some portfolios are growing so large that many interactions
are being automated and steps in the alliance management process are becoming the basis for assigning responsibility. Full-time alliance managers also have responsibility for the knowledge base, processes and tools. Role and accountability The role and accountability of the collaboration manager varies from being more closely aligned with the underlying asset, product or program to being more closely aligned with the alliance. If a manager is accountable to the program or product, the existence of the alliance adds another level of complexity to what it takes to achieve the goals of the program. If a managers role is to be accountable for the alliance, he/she is responsible for ensuring that the alliance is being properly utilized to achieve strategic objectives. Within these dimensions, the managers role generally takes one of three foci, as described in Figure 7. In certain instances, the alliance management capability requires all three roles.
At the top of the pyramid are alliance owners. These are the entrepreneurs that are responsible for making the alliance a business. This is most common in commercial relationships, less so when the objective is research or development. At the base of the pyramid is the administrator the person who manages the core business of the alliance as part of his or her duties, but is not charged with realizing value or proactively minimizing risk.
Figure 7 Alliance Manager Roles
Alliance Administrator accountable for the project management
of alliance related issues and administrationof alliance governance
Alliance Facilitator/Enabler accountable for achieving specific
alliance related objectives that supporta business leader or alliance owner
Alliance Ownershared accountability with business
leader for achieving the overall goals of the alliance
If a manager is accountable to the program or product, the existence of the alliance adds another level of complexity to what it takes to achieve the goals of the program. If a managers role is to be accountable for the alliance, he/she is responsible for ensuring that the alliance is being properly utilized to achieve
The facilitator and enabler sits between the two extremes. This individual is primarily accountable for alliance efficiency and effectiveness. It is one of the most challenging positions and also one of the most valuable. It is the ultimate influence without authority position and essential for alliance success. Knowledge Base, Processes and Tools (The Management System) Before the necessary management system to support the collaborative capability can be determined, the three strategic decisions outlined above must be made. Organizing the job of the alliance or partner manager according to its purpose taking complexity and risk out to realize intended value, as well as point the way to new opportunities enables the management system that supports this goal to be both agile and resilient. It can be scaled and adapted to fit the needs of the organization, based on its structure and specific roles and responsibilities, without losing its focus on value and complexity. As depicted in Figure 2, a capability is not created overnight. It takes on-going work and development in perpetuity in order to keep pace with changes in the business. It will roll out over time, as people can be recruited and trained in the role and as new needs are identified within the company. Whether or not there is a formal alliance or partner management function, someone or some group must have responsibility for developing and implementing the collaborative management system and growing the capability. Organizations that dont yet accept alliance management as a specialized discipline and simply expect it is part of the job will likely (but not necessarily) be more ad hoc in their approach and rely on the general abilities of its mangers plus a handful of best practices. This is only recommended in the very early stages of building a capability as the realization that one is needed inevitably sets in! The specific components of a management system are outside of the scope of this paper. In addition to supporting the defined locus, staffing, and role and accountability decisions, the management system must align with the alliance lifecycle and encourage an iterative process of planning the work, doing the work, and evaluating outcomes. In this way it forces a learning mindset which is key to the success of collaborative efforts.
Three Scenarios Whether adding formal alliance and partner management for the first time or evolving an existing capability to meet current needs, the capability design model (Figure 6) guides an examination of the various factors. The following discussion describes how the model might be applied in three scenarios. Scenario 1 Portfolio growing more complex or problematic and no alliance management capability, or a capability that is not delivering needed value Scenario 2 Building an enterprise capability across multiple existing alliance and partner management initiatives Scenario 3 Implementing a new strategic initiative that requires partnering for the first time
Scenario 1 Alliance management function does not currently exist or is not delivering needed value The need to provide specific management for collaborative relationships may be recognized when mistakes are made in an increasingly complex set of alliances, or if work is getting bogged down and the alliances are otherwise not performing as expected. Time is slipping away and the costs are adding up. Legal letters are flying back and forth. Every day is a fire drill. In this instance, someone is assigned to take charge. Generally, that individual is part of the group responsible for creating the relationships in the first place. For example, business or corporate development if licensing of an asset is involved, marketing if it is a joint customer solution or geographic management if local distribution or service is the objective. In these instances it is most likely that the capability will become part of that group. It may or may not include a specific alliance or partnering management function. The essential question arises: Is where the capability naturally born the best place for it to be based? Strategic decision #1 - Locus The most complex collaborations encompass development and commercialization efforts, perhaps have a relationship that crosses different business units, or includes arms-length buying and selling as well as joint development work. In these instances and on an infinite variety of collaborative relationships, it is better to have an alliance or partner manager situated in a corporate location, so that he or she can take into consideration the needs of the multiple players without owing allegiance to any single function or business unit.
If this initial foray is expected to lead to responsibility for additional types of partnering agreements, starting off with a corporate reporting structure provides greater agility. The downside is that the business managers may object to having someone from corporate here to help. At the other end of the spectrum, if the collaborations are contained within a function of the business, such as R&D or Commercial then the partnering management capability should be as well. Similarly, if for example, alliances are geographic in nature, orient partnering management with this perspective. Most organizations require a blend of these extremes. Some relationships are managed corporately and some are managed by the relevant business or geography. Defining the distinction should be simple, clear, and based on how much boundary crossing the relationship requires inside the organization. The answer to whats global and what is local is generally the most important factor influencing the second strategic decision: Whats the balance between managers who also have responsibility for the alliance(s) and partners related to their work and full time alliance managers who only tend to alliances? Strategic decision #2 - Staffing The value/complexity matrix offers insight into how to staff an alliance capability. This is often referred to as a coverage model. There is no escaping the need for a passionate leader when developing an alliance and partner management capability. Someone must clearly see the need and have a vision of the capability required. Passion for the mission is necessary to survive the many political and resource battles that inevitably appear whenever a new speciality management discipline upsets the status quo. For the leader, it is more important to have a broad scope of responsibility than to have a large organization. This statement is anathema to traditional management structures. It is an essential difference in managing in a collaborative network environment. In collaboration, authority decreases as responsibility for achieving results increases. Depending on the initial scope of the alliance management effort it can be beneficial to look at staffing for relationships that cross multiple boundaries separately from those that are more contained. In that way, similar relationships are being compared, leading to better evaluation. Once the portfolio(s) has been analyzed, a picture emerges of the management needs. In most companies the number of relationships to be managed will be greater than the capacity of the full-time alliance specialists available, thus decisions must be made about how to allocate responsibility. A rule of thumb is that collaborations that are more than half way up the complexity scale require an alliance management
Some relationships should be managed corporately, some by the relevant business or geography. Defining the distinction should be simple, clear, and based on how much boundary crossing the relationship requires inside
specialist. Those that are less than half way can be managed by someone with other functional responsibilities, provided of course, the partner management aspects of his or her job are acknowledged and the person is trained and supported in managing the relationship(s) in accordance with a consistent methodology (see Figure 8).
Keep in mind that a specific management strategy in place for a particular collaboration may necessitate different staffing. For example, if a relationship is in the high potential value and low complexity quadrant, consider how well and efficiently the value is being realized. Would being more aggressive in the management of the relationship reduce the cost of time or open up new avenues of value creation? If so, assign a full-time alliance specialist. If it is producing without issue, or if there are no additional opportunities to create value, the alliance management resource is likely better used elsewhere in the portfolio. If the capability relies on part-time managers, it is essential to acknowledge the challenges and limitations that come from having to manage both the work of the collaboration and the collaboration, itself. Sometimes, these two perspectives can be in conflict with one another, which is why it essential that the collaboration management requirements are a stated performance objective of the individuals job. If it doesnt have appropriate priority, it wont receive the attention it requires. Regardless of the balance between full-time and part-time alliance managers, the full time managers must provide support for their
5 15 25
Managed by an alliance management
Figure 8 Sample Coverage Model
Managed by a functional manager
with alliance management responsibility
Managed by a functional manager with
alliance management responsibility supported
by an alliance management specialist
Managed by an alliance management
A rule of thumb is that collaborations that are more than half way up the complexity scale require an alliance management specialist. Those that are less than half way can be managed by someone with other functional responsibilities, provided of course, the partner management aspects of his or her job are acknowledged.
functional colleagues. The support can come through coaching and mentoring. It can also come through providing assistance at certain critical junctures, such as during the start-up process or in managing the transition from one lifecycle stage to another, i.e., development to commercialization. Strategic decision #3 Role and accountability When initially starting an alliance and partner management effort, clearly defining the role and accountability is a major task. So too, is differentiating it from other, pre-existing roles. The more complex and valuable the portfolio, the more hands-on alliance managers need to be. Many factors must be considered in determining the proper roles. Start by examining who currently has accountability for alliance performance. In many cases, the answer is no one at least not explicitly. That is a void that can be filled by a dedicated alliance manager who assumes the alliance owner role, including financial responsibility, as presented in Figure 7. A business lead may also be encouraged to take responsibility. If a business head has responsibility, then the alliance manager should partner with that person, serving as facilitator and enabler. This role is most common when achieving the financial goals is primarily someone elses responsibility. The alliance manager takes partial responsibility for financial outcomes, especially as it relates to the partners commitments; however he or she is generally not driving revenue. His or her role is to manage the collaboration, realizing certain objectives related to increasing value or reducing complexity. In this role, more than any other, it is essential to define what the alliance manager does and does not do to avoid confusion. For example, he or she will not manage the development project, build marketing strategies, or determine the sales force needed. He or she will coordinate the start-up process, manage the governance, align internal stakeholders around the companys interests relative to the alliance, prepare for contingencies, ensure the alliance has sufficient resources, and represent the partners interests internally. If this role is not clearly defined at the outset of an alliance management program and continuously communicated, it invites others to chip away at it or keep it from being accepted. When an individual has product or program responsibility in addition to the alliance, he or she may handle certain elements of governance and may administer some contractual commitments that are embedded within his/her job. It is unlikely that the manager will have the time to devote to value creation efforts, or attempts to clarify decision making, create alliance processes or evaluate how well the alliance is working. Clearly, this role is best utilized if the partnership is not especially complex. For example, licensing or technology development agreements where there is little shared work; simple distribution partnerships; support of service partners or independent
software vendors, especially if the partnering efforts are part of a clearly pre-defined program; or consortia where most of the work is done by that bodys staff. It can also be an entry level position in a well-staffed alliance management function. At the other end of the spectrum, some organizations that have not grown their capability limit alliance managers to this administrative role, focusing only on contract management. Traditionally, most alliance management functions begin with one or two people dedicated to key alliances. Given the scope of alliance and partnering activity today, it is advisable to blend a mixture of roles to ensure all alliances and collaborations are proactively managed. Scenario 2 Building an enterprise capability across multiple existing alliance or partner management initiatives The basic design considerations discussed in the prior section are all relevant when building an enterprise capability. Where the capability is housed, the balance between full-time dedicated specialists and functional managers with alliance responsibility, as well as the roles assumed by the various parties must all be determined. The portfolio (likely multiple portfolios) provides the basis for making these decisions. The following considers some of the circumstances that may be encountered when attempting to unite multiple management groups and approaches under a common umbrella. It is not uncommon to find multiple approaches to managing relationships within a single company because of their often organic beginnings. The limits of this model become apparent when alliances become global or the relationship with the partner is so complex that it touches many functions, each with their own ideas about who owns the relationship and how it should be managed. When the decision is made that the enterprise is ready to benefit from common management processes, deciding locus is perhaps the most political of decisions and the one with the greatest number of options. The most obvious option is to establish a corporate group that has responsibility for directly managing enterprise-wide relationships and keep the management of alliances that dont cross internal boundaries within specific business units, functions or geographies. The corporate group, sometimes taking on the role of a Center of Excellence also has primary responsibility for: Building and implementing the management discipline Growing the requisite skills and abilities throughout the enterprise Creating job descriptions, competency requirements and performance measures for anyone assuming alliance or partner management responsibilities Developing and implementing management processes and tools
Collaboration management remains with the business units, functions or geographies for all relationships within their jurisdiction. In this manner, they have local control over their critical relationships and benefit from the development of the discipline and other centralized administrative functions. Each business unit must manage its own portfolio in accordance with the value/complexity profile, so it is entirely possible staffing requires a certain number of dedicated alliance managers in the local units as well as spreading responsibility to others. Done well, this model of both a corporate group and managers embedded in business units can yield strong results. It is a model that is fairly common (in various forms) across those enterprises that are leaders in the field. In information technology environments, where the global account manager model is common, the worldwide manager may have a team of local partner managers that report to him or her. Roles and accountability vary, depending on each geographic or business groups portfolio. Most likely, all of the roles previously discussed would be present. The challenge in integrating separate alliance management groups becomes apparent when the philosophies and practices among them are very different. For example, if a group based in a geographic subsidiary has a robust, hands-on practice where the primary role is enabler and facilitator and the lead affiliate assumes only the administrator role, it can be challenging to find common ground. Indeed, there may be cultural barriers to adopting a common, global methodology that have to be carefully worked through. If a Center of Excellence model is not realistic, look to a governance model not unlike that used for alliances. Form a collaboration management steering committee made up of the leaders of each local group. Charge it with deciding what should be common and what retains unique features. Elect a chair on a rotating basis and ensure that there is a senior executive sponsoring the effort. If the enterprise is generally structured in a de-centralized manner, a variation on this option is the most effective. Of course, every functional or business unit group that has established alliance management must participate and must allocate resources to it. However, in doing so, each benefits from the resources of the other. Scenario 3 A new strategic growth initiative that depends on partnering A third scenario arises when a company that has not partnered much in the past decides that partnering is central to a new strategic growth effort. This can happen in many ways. For example, a company might decide to build a network of partners that expands the solutions it offers to customers. It may partner for research and product development or market access. It might be described as a collaborative innovation effort. It could take the company into a whole new business.
Any of these initiatives should trigger building a partner management capability if one does not exist. In this situation there is a limited portfolio, if there is any at all. There are likely many existing relationships, mostly informal. If it is a contractual relationship, a procurement agreement is typically the governing document. Thus, the first task is to inventory the existing relationships and to develop a partnering strategy that can be summed up in three simple questions: What is needed and wanted from potential partners? Who should be approached to provide it? Is a collaborative relationship required (joint work, shared information, resource leverage, trust and transparency)? As the answers become clear, a pro-forma portfolio can be developed to define the needed capability. Not all of the relationships should be collaborative. Some are rightly transactional procurement relationships and not included in the scope of a collaborative relationship management capability. The guidance for launching a new alliance management capability is generally applicable to this scenario; however the responsibility for the relationships is likely to be more dispersed. There are two distinct considerations that impact structure and role: If the initiative is widely dispersed throughout the enterprise, a central groups core purpose is to build a Center of Excellence, possibly with responsibility for placing alliance professionals into situations as needed. In essence, the group becomes an internal consultant Training, coaching, and mentoring become a larger part of the role than hands-on management, although there are always some collaborations that are so complicated they require a professional alliance manager One of the requirements for successful alliances and other collaborations is that everyone in the organization involved have sufficient understanding of the nature of the relationship, what it is intended to achieve, how it is operated and governed, the expectations of themselves in interacting with the partner, as well as what is outside of the relationship. Often, people are interacting with multiple partners, each with different rules. A key part of the enabling role is empowering others to succeed.
Evaluating Alternatives The process of designing the capability may yield more than one alternative. Figure 9 offers some criteria that can be used to evaluate different capability design options. Choose criteria that are the most
One of the requirements for successful alliances and other collaborations is that everyone in the organization involved have sufficient understanding of the nature of the relationship, what it is intended to achieve, how it is operated and governed, the expectations of themselves in interacting with the partner, as well as what is outside of the
relevant to the success of introducing the capability. Each option is ranked on a scale of 1 to 5 with 5 being the most favorable.
Alliance management is a philosophy and way of working enabled by a set of processes, tools and metrics, as well as a corporate function and profession. How it is operationalized in any given business must be linked to its alliance portfolio in such a way that every collaboration has the appropriate management. Every companys portfolio is unique and thus the collaborative management capability required will be different in every organization. Additionally, the capability must have agility to adapt as the components of the portfolio evolve and resiliency to remain true to its core of managing complexity and realizing potential value.
Figure 9 Capability Design Considerations
Criteria DesignOption 1Design
Addresses Key Partner Management Needs
Agility in the Face of New Circumstances
Clarity of Roles, Fit in Company
Additional Resource Requirements
Degree of Change Required to Implement
The Alliance Management Professions Golden Opportunity Collaboration has become a preferred way of organizing and structuring work. Strategic alliance professionals have led the way in defining the skills and developing the management practices to succeed in these complex business arrangements. However, their focus has largely been on managing individual alliances. Trained alliance managers have only penetrated select industries. Given the depth and breadth of alliance and partnering efforts in most companies today, the imperative is to develop an enterprise capability for managing collaborative relationships. The opportunity for the alliance management profession is to lead their companies in developing that capability. Most organizations will find they are best served by developing a capability that is agile enough to appropriately manage the spectrum of collaborative relations that make up their universe of relationships and that can adapt as the portfolio changes. This is easier said than done. It makes it practically inevitable that all collaborations cannot be (or should not be) handled by dedicated partnering specialists. The key is that the tasks related to managing the collaboration are acknowledged and recognized as part of the job of the individual who also assumes alliance management responsibilities. Most importantly, these part-time collaboration managers should be supported by alliance management specialists in implementing a consistent partnering management philosophy, processes, tools, and metrics. Figure 10 depicts the alignment that must exist between the organizations portfolio and its collaborative capability to ensure that all collaborations are neither under- nor over-managed and that resources are appropriately used to achieve desired strategic and financial outcomes.
Given the depth and breadth of alliance and partnering efforts in most companies today, the imperative is to develop an enterprise capability for managing collaborative relationships. The opportunity for the alliance management profession is to lead their companies in developing
Creating operating effectiveness throughout a partnering portfolio does not require adding layers of managers. It does require assessing the portfolio and making smart decisions so that there is just enough talent and process to ensure alliances and other collaborations deliver on their intended strategic and financial value. Managing alliances and other collaborations is not only the responsibility of a select few; rather, it is a shared responsibility and a necessary capability of the organization. Therein lays the golden opportunity for alliance managers and the profession. As alliances increase in both scope and complexity, organizations are recognizing that collaborating with external parties requires different ways of working. Some are just in the early stages, perhaps not getting the value they seek from alliances and recognizing there is a management void. Others are rethinking how they manage their alliances or the scope of relationships that must be managed. Alliance managers are being asked to share their tools and knowledge with functional leaders. Or perhaps a strategic growth initiative depends on building a network of partners. In all of these instances, alliance managers should take the lead in designing the capability that makes sense for their organization by following this simple process: Determine the scope of relationships to be included in the overall capability If there is more than one type of collaboration covered, define the distinct portfolios and determine what constitutes management complexity and potential value in each Map the portfolio Use the portfolio to guide designing a capability that addresses where the capability should be located; the balance between full-time dedicated alliance and partner managers and functional managers who also have alliance responsibility; and their roles and accountabilities With that, build peoples skills and develop the knowledge base, process and tools Improve the process; spread the word and expand the effort The resulting capability ensures that the discipline of alliance management is infused throughout the enterprise. As experts in a critical discipline, alliance managers become the backbone in realizing success in all collaborative endeavors.
Recent Whitepapers on Alliance Management and Collaboration by The Rhythm of Business How Alliance Management Delivers Value: Moving Beyond Best Practices, January 2011 http://www.rhythmofbusiness.com/uploaddir/4402f603HowAMDeliversValue.pdf The Practice of Alliance Management in the Biopharmaceutical Industry, November 2010 http://www.rhythmofbusiness.com/uploaddir/02aedc27AllianceManagementinBiopharma.pdf Collaborating to Win: Measuring Collaborative Ability, June 2010 http://www.rhythmofbusiness.com/uploaddir/53c4de5cCollaboratingtoWin.pdf An Introduction to Strategic Alliance Management, May 2010 http://www.rhythmofbusiness.com/uploaddir/53c4de5cCollaboratingtoWin.pdf The Real Power of Collaboration, October 2009 http://www.rhythmofbusiness.com/uploaddir/9e433b71TheRealPowerofCollaboration.pdf Collaborative Networks Are The Organization: An Innovation in Organization Design and Management, July 2009 http://www.rhythmofbusiness.com/uploaddir/83610c25CollaborativeNetworksAreTheOrganization.pdf Modeling and Replicating Effective Collaboration: A Case Study of The Harvard Stem Cell Institute, August 2008 http://www.rhythmofbusiness.com/uploaddir/2712fdd3HSCI_whitepaper.pdf Collaborative Network Management: An Emerging Role for Alliance Management, April 2008 http://www.rhythmofbusiness.com/uploaddir/ff98fdb5Collaborative_Network_Management.pdf
About The Rhythm of Business The Rhythm of Business partners with global companies to advance their alliance and collaboration management capability. For more than 25 years, principals of the firm have built collaborative business models, developed and operated alliances and supplier networks, and consulted within both corporate and civic sectors on building and using collaborative relationships to achieve strategic and financial objectives. Engagements include designing and implementing an alliance management capability, evaluating individual alliances and the alliance portfolio, intervening in troubled situations, and working with good collaborations to become great collaborations. We build and customize learning programs for alliance managers, team members, and executives. Through comprehensive management frameworks, skill development, and measurement and analysis tools, the firm enables individuals and organizations to innovate and grow through collaboration. Co-founders Jeffrey Shuman, PhD and Janice Twombly have co-authored numerous books, articles, and white papers and regularly speak at a variety of venues around the world on the ongoing transformation of organization structures to collaborative networks. They hold the Certified Strategic Alliance Professional (CSAP) designation conferred by the Association of Strategic Alliance Professionals. Twombly is a member of the Executive Committee of the Association. Their methodologies inform Shumans popular MBA courses on Managing Collaborative Relationships and Entrepreneurial Thinking at Bentley University where he is professor of management. The Rhythm of Business, Inc. 313 Washington Street Newton, MA 02458 USA +1 617.965.4777 firstname.lastname@example.org www.rhythmofbusiness.com 2011 The Rhythm of Business, Inc.
Rhythm_Cover Volume 3Crossroads Paper 3 pdfThe Rhythm of Business, Inc.313 Washington StreetNewton, MA 02458 USA+1 email@example.com
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