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COVID-19 and the Digital Transformation of Alliance Management

February 17, 2021

COVID-19 has drastically changed the way we do business. As companies continue to shift to a remote model, it’s important to understand the impact and digital transformation strategic alliances have gone through. Dinners and face-to-face meetings have been replaced with Zoom happy hours, sales conferences are now virtual, and work from home is the new normal.  According to the Global Economic Forums 20th Global Competitiveness report, collaboration between companies is down 2.6% compared to the three-year average. 

What does that mean for our most important partnerships? We have to work harder to not only maintain but grow our partner ecosystems. We have to pivot from our traditional practices, embrace our new ‘virtual reality,’ and the technologies that enable us to continue to build out our most important ecosystems. 

According to McKinsey and Company, most large companies have around 30 alliances, and many have more than 100. Of those, 30 to 60% are underperforming[1]. These failures will only be exacerbated by an increasingly volatile and remote work environment.

Don’t be a statistic of failure. If you, like 76% of companies, use your partner ecosystem to deliver on your revenue goals, taking steps to ensure their success will be critical this year.

There are Three Keys to Ensuring the Success of your Alliances:

  1. Trust & Data Transparency
  2. Accountability
  3. Agility Through C-Suite Engagement

TRUST & DATA TRANSPARENCY

As businesses continue to operate remotely, it’s becoming increasingly critical that companies are as transparent as possible with their Partners. Trust is built by prioritizing communication and clarity as well as outlining clear expectations and goals. Digital tools and platforms that enable data sharing, communication, and collaboration are critical to keeping partnerships transparent.

More than ⅔ of respondents in one McKinsey Survey, indicated that the level of honesty and trust between parent companies has a significant impact on the partnership’s overall success.[2]

Levels of trust in Alliance Partnerships
[2]

Trust is a prerequisite to data sharing. You must have open and honest communication if you expect your partner to share crucial account information.

We have seen many partnerships limit the amount of customer data they share with a new partner. The reason for this? They don’t fully trust their partner. They often feel that if they give away vital information, their ‘partner’ will eventually use that data for their own benefit. Working together without sharing your customer data is a recipe for a stagnant partnership. It is through data sharing that you can begin to project revenue with your partner, begin co-sell motions and target prospective buyers in your ecosystem.

Trust and data sharing are interlinked, and absolute necessities to any successful partnership.

ACCOUNTABILITY

A company and its partners must be held accountable in order to keep Alliances on track. Accountability comes in many forms including data transparency (mentioned above) as well as the measurement of key contributions to the partnership. Contributions can be measured in the form of KPI’s, which should be set at the outset of the partnership.

Knowing where your company is falling short and flagging shortcomings is critical to financial fitness. Sales Revenues, cash flow, net income and ROI are key examples of measurable KPI’s that should be tracked with your Partners.

Quarterly calls to review performance against these goals, will assure both companies remain accountable for their contributions to the partnership. This ensures the risks and rewards for each partner remain consistent with the original objectives of the deal and the Partnership remains successful.

If you see that the partnership isn’t hitting the agreed upon KPIs, it is time to pivot. Either work together to iron out the kinks or walk away.

AGILITY THROUGH C-SUITE ENGAGEMENT

Remaining agile and flexible in times of uncertainty assures that a company can adjust to a more digitized world. 

Nimble, strategic business decisions are only possible when key processes are clearly defined, and senior leadership is actively engaged in Alliance activities. When senior leadership has insight into the inner workings of the partnership, swift decision-making is more practical. It’s always difficult to turn an aircraft carrier, but if the radar is signaling a warning, it is easier to begin to change directions.

One way to remain flexible and agile is to use a technology-enabled platform that gives senior executives up-to-date, reliable reports and dashboards. That way they can easily visualize risks, issues, and opportunities. This “any time” pulse check on alliance performance allows for Senior Executives to make decisions as needed vs. waiting for quarterly reporting.



The reality is, successful partnerships don’t just happen. They are complex relationships that require time, effort, and attention. Successful ecosystems must be built on a foundation of trust and transparency. Because the truth is, your ecosystem will only be able to scale if it can adapt to the inevitable changes from COVID-19 and the digital transformation of alliance management.


[1] Banford, Jim. “Measuring Alliance Performance.” Mckinsey On Finance.  No. 5 (Autumn 2002).

[2] Rinaudo, Eileen. “Negotiating a Better Joint Venture.” McKinsey on Finance. No. 58 (Spring 2016).

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