All 4 One Alliance Legal During my career, I have helped numerous companies realize their growth agenda through acquisitions. While many of these complex mergers have resulted in achieving desired outcomes, a few haven’t.
Looking back at some of those unsuccessful mergers, I realized that some of those companies could have succeeded by leveraging alliances as a tool for growth. Alliances seem to be becoming more relevant than ever in a world where companies face increasing challenges from new more agile competitors; from ever changing customer expectations; to growth in the age of COVID-19.
Between January and April 2020, more than 200 new strategic alliances formed to specifically focus on COVID pandemic response. Some of the more cutting-edge alliances are transforming once emerging technologies into everyday solutions. For example, as social distancing guidelines continue to restrict in-person interaction, companies across multiple industries are forming alliances to advance augmented reality (AR) and virtual reality (VR), a market forecasted to increase US$125B during 2020-2024.
Dell, for example, partnered with software company EON Reality to promote AR/VR solutions for academic and enterprise training. By combining EON Reality’s leading technology and Dell’s customer reach, the alliance provides timely productivity solutions as remote work and remote education become the norm.
I am asked often about the secret to starting strategic alliances quickly, yet thoughtfully, in a way that adds immediate value to customers. And beyond launch, executives want to know how they ensure sustainable, long-term success. Let’s talk that through.
1. Define your present & future
Before exploring the possibility of a strategic alliance, the first step is to look internally at your own company to define your today and tomorrow. For Dell and EON, due to COVID-19, it was clear that the tech landscape was changing forever. As people began their shift to remote work and study, the companies thought about the key technologies and capabilities they would need to swiftly position themselves as a potential leader in the AR/VR space.
As your company has been managing pandemic-related disruption, how have your vision and strategic objectives changed? It’s easy to get caught up in riding the wave of emerging tech like AR/VR, 5G, the Internet of Things (IoT), and artificial intelligence (AI), but you need to thoughtfully consider what aligns best to your vision. To gain a clearer understanding of who your company is, where you are going, and what you need to get there, we recommend answering the following questions:
Who are we?
- What does our organization look like (customers, products, services, culture)?
- How are we positioned?
- What are the trends affecting business?
Where do we want to go?
- What does our industry look like tomorrow? In 5 to 10 years?
- What do we want to be and what is our value proposition tomorrow? In 5 to 10 years?
How do we get there?
- What strategic objectives enable our vision?
- What capabilities do we need?
- What products or services do we need?
- What kind of culture and value do we need?
- How will we measure success?
2. Select the right alliance partner
The Dell / EON alliance, at face value, makes a lot of sense. Dell wants to move more aggressively into AR / VR technology, while EON wants customer reach for its digital solutions.
It is also important, though, to look beyond capabilities, and to consider other elements like culture, synergies, and upfront commitments. To help you think through these areas:
Define selection criteria
Identify, prioritize and rank capabilities, cultural traits, and any criteria that is important. Start wide and include fast-moving start-ups.
Create an alliance partner shortlist
Identify alliance partners based on ability to meet criteria, with an eye on similar capabilities. Consider emerging technologies and ability to scale.
Conduct due diligence
Perform a deep dive into your short list and evaluate cultural fit, customers, capabilities, and value. Be honest about risk or problem areas.
Select your alliance partner
Make your selection by focusing on cultural and strategic fit, and desire for success. Be sure your selection can meet your objectives and goals.
3. Launch and manage the alliance
Looking at Dell / EON, their immediate next step is to get tactical, determining target customers and geographies. But what about down the road when customer preferences change, and new needs emerge? What other industries, geographies, customers, or offerings might make sense for them to expand into?
As you can see, it’s important to launch your relationship from a platform that sets you up for immediate success but allows you to continue to improve and innovate together. These three steps will help:
1. Strategize
Develop go-to-market strategy and approach based on the objective. Make project goals and benchmarks clear to track progress. Have a vision and understand the opportunity size.
2. Plan and enable
Establish the structure, governance, and execution timeline. Include vital project members in the early stages. Have a business plan, timeline of milestones and activities, and view of objectives.
3. Launch, reassess and optimize
After the launch, reevaluate what is working and what is not. Alliance sustainability hinges on honesty and transparency between alliance partners.
No time like the present
Strategic alliances are always important, but never more so than in disruptive times. As you look to complement your company’s capabilities and drive sustainable growth, “better together” is more than a mantra. It’s a North Star for your alliance strategy.