Article 1: The unique purposes behind strategic alliances
At ASAP’s Global Summit 2023, the audience was asked for a show of hands as to how many people were new to the role of alliance management. Nearly ½ the audience raised their hands.
The many new people to the field are an enthusiastic indication of growth and recognition of the important impact strategic alliances make on organization and revenue growth. Yet we often see how low experience levels can lead to unintentional problems when managing the alliance portfolio.
With that in mind, we thought we’d go back to basics with this short series of articles to create a beginner’s guide to strategic alliances.
Strategic alliance management involves overseeing and coordinating the overall relationship between partnering organizations in a broader portfolio while keeping internal stakeholders and partners to their commitments.
It focuses on the goals set out at the onset of the partnership with the objective of leveraging each other's strengths and capabilities to meet and exceed these goals.
Here are 5 unique purposes that you might find for a strategic alliance:
- Faster innovation: A strategic alliance can fuel faster innovation by combining the strengths and resources of multiple organizations. Through collaboration, sharing of knowledge, and leveraging complementary expertise, partners can accelerate the development of new products, technologies, and solutions. This synergy allows for more efficient problem-solving, increased agility, and a competitive edge in the market.
- Reducing costs: A strategic alliance can support a reduction in costs by enabling partners to pool their resources, share expenses, and leverage economies of scale. By collaborating on procurement, production, distribution, or research and development, organizations can achieve cost efficiencies, optimize operations, and eliminate duplicate efforts. This cost-sharing approach can lead to significant savings and improved financial performance.
- Growing revenue: A strategic alliance can support revenue growth by expanding market reach, accessing new customer segments, and capitalizing on complementary strengths. By combining products, services, or distribution channels, partners can unlock new business opportunities, increase sales volumes, and enhance revenue streams. Leveraging each other's expertise and resources can drive mutual growth and maximize revenue potential.
- Entering markets: A strategic alliance can support an organization to enter new markets by leveraging the partner's existing market presence, local knowledge, and distribution channels. Through collaboration, organizations can access valuable insights, navigate regulatory complexities, and establish a foothold in unfamiliar territories. Sharing resources, networks, and expertise can accelerate market entry and increase chances of success in new markets.
- Doing good: A partnership is another way for an organization to address social or environmental challenges. Collaborating with like-minded partners allows for greater impact and effectiveness in initiatives related to sustainability, corporate social responsibility, philanthropy, or community development. Together, organizations can create positive change and make a meaningful difference in the world.
Regardless of the purpose(s) of an alliance, emphasizing the importance of setting clear goals, leveraging strengths, and ensuring commitment from internal stakeholders and partners will ultimately guide the partnership toward success.