Does Your Company Need Friends With Benefits?

Last Updated Apr 15, 2009 9:19 AM EDT

Chrysler is under orders from the Obama administration to create a mutually beneficial partnership with Fiat or risk losing government funding. These days, we all should be thinking about potential alliances, says Harvard Business School professor Rosabeth Moss Kanter.
"For startups and smaller organizations, alliances can reduce costs of duplicative activities while enabling parties to pursue their own paths. Smaller organizations can ride a network wave into places they could not reach on their own. Non-profit organizations can form strategic alliances to market to prospective donors or share back-office functions."

In her Harvard Business Publishing post How to Strike Effective Alliances and Partnerships, Kanter calls these arrangements the equivalent of "friends with benefits." Partners combine forces to achieve mutually agreeable goals, but in absence of long-term commitment.

Sounds simple, but the truth is these short-of-marriage arrangements are a bear to execute. Sometimes the lack of commitment itself keeps the parties from taking full advantage of each other. Or it may be the the partners do not really make a good strategic fit together.

So Kanter lists eight keys that make a successful arrangement. These include:

  • Individual excellence. "Both parties must have strengths on their own, because weak players cannot prop each other up."
  • Investment. "One sign of commitment is a willingness to invest something in the partner's success, such as equities or personnel swaps (business 'hostages for peace')."
  • Institutionalization. A formal structure and governing board ensures objectivity, and that alliance interests are considered, not just each company's interests."
Read Rosabeth's post for more insights into what makes a great partnership.

Is your company looking to do more alliances? What do you look for in a potential partner?

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.