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Can Measures Strengthen a Strategic Alliance?

Posted March 30, 2012 9:41 PM by Ted Jackson

Have you ever be dependent upon the success of a strategic partnership to achieve your own organizations mission? How did it work? Did leadership trust one another or did they blame each other for not carrying their weight? Were there shared objectives or competition for scarce resources? Was there respect for the mixture of talent or lack of appreciation for what the partner is doing? Recently, I was asked how a Balanced Scorecard or any performance management system might be used to align a somewhat challenging strategic partner with a strategy. Most think that measures immediately become divisive and foster competition which would only exacerbate a tense relationship. But, I would contend that establishing shared measures to which two or more partners agree is a powerful way to align efforts toward shared objectives.

Does your strategy depend upon a strategic alliance or partnership with another organization? (Note: the use of the terms alliance or partnership references cooperation toward a shared goal and not a legal relationship.) Is it so central that if the alliance does not succeed then you will not achieve your mission?

If this is the case, then why are you managing the strategic alliance differently from the rest of your strategy? Perhaps, you are worried that the mere suggestion of shared measures would strain the relationship. Or, perhaps you are reluctant to endure the inevitable "negotiation process". Whatever your reluctance, it seems that hoping for the best and relying on luck and good intentions is a bit imprudent for something so important. You need to manage your strategic alliances just as you manage other components of your strategy.

How does this work? As usual, it begins with the strategy. You must have a clear and documented strategy and strategic measures for your organization. In doing so, you must also define process measures and outcomes that relate to the purpose of your strategic alliance. This is an important way for you to track the effectiveness and results of your partnership. This is good, but I would suggest it is insufficient. You and your partner are pursuing a shared outcome which will benefit from strategic cooperation, rather than simply parallel efforts.

How to establish measures for a strategic alliance? In a joint meeting with leaders from each organization, ask "if this alliance is successful in the future, how will we know?" Then jointly brainstorm a list of measures that would indicate success. (The measures you already have on your scorecard are good candidates.) Together choose one or two--not more -- measures that both partners consider a strategic priority. If possible, agree to a target for each of those measures as well. Even if you get no further than this, you have advanced the ball!

Ideally though, you could also identify two process measures that each organization will review to monitor their own effectiveness. These measures will likely be different for each organization because each brings different capabilities to the partnership. Finally, you must establish a review cycle for the partnership. Leaders should periodically discuss progress with the partnership's goals. The measures should be the foundation for those conversations. Monthly, quarterly, more or less often depends upon the nature of your objectives. Don't forget this last step. Unless you get together regularly to discuss what's working and what's not based on the measures, you will not capture the value of having shared measures and strategically aligned efforts. Even if performance is off – have the meeting. If you don't create the forum for strategic conversations, then problems will not be identified, solutions will not be discussed and cooperation will give way to competition, blame, or shifting priorities.

Filed Under Collaboration