Does Your Company Need Friends With Benefits?
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."
Is your company looking to do more alliances? What do you look for in a potential partner?