Caveat Pars, partners beware!
Partnering, as with any activity, has its unexpected challenges and pitfalls. Actually, this is probably more so than in traditional adversary relationships. In adversary relationships you must always watch your back. In relationships based on trust or what is perceived as trust, one can be lulled into a false sense of security. While you need to protect yourself from these dangerous situations, you do not want to create them by exhibiting the wrong attitude.
To keep your alliances healthy, conflict should be dealt with immediately. This is your best chance for moving forward in any relationship. But, improperly challenged, conflict can be the death sentence to an alliance.
Alliance conflict emanates from five core areas:
1. Values
2. Goals
3. Facts
4. Procedures
5. Misinformation
Conflict doesn't have to be a roadblock to a successful alliance if you and your partnering alliance members are willing to resolve the conflict at the core level, in a timely manner. In fact, the resolved conflict can lead to a stronger relationship through improved communication. Unfortunately, conflict that is left unresolved will lead to fatal flaws that will erode the relationship.
Some of the more common areas of conflict in alliance relationships are accessibility, culture clashes, hidden agendas, management tenure, poor communications and unrealistic expectations. Many advocates and consultants for alliances believe that the alliance mortality rate is around 50 percent.
If you wait to build partnering relationships until all the potential pitfalls are unearthed, your industry will pass you by. Others, who you might have considered as possible members for strategic alliances, might be aligned with your competition. Be realistic though, as with a spouse, partnering alliance members don't change with time. They do not become, who and what, you want them to be. But rather, evolve to whom and what they desire. If you suspect core problems, you probably are accurate in your assessment and the chances for a successful alliance is greatly diminished. Partnering, like marriage, will not change people. What it does do, is to remove the facades, and exposes the good and bad.
Trust in others and the belief that alliance Partnering starts at the top are crucial elements to your success. These two topics are frequent causes for failed Partnering agreements when they're not followed. Also, in alliance agreements, be cautious of things you can't see now but may experience later. Little things like the small print in a detailed alliance contract. Don't let your enthusiasm cloud your judgment.
Just because you're working with a company of integrity, it doesn't mean they will look out for you. Even in a Partnering relationship, you are still accountable for your own success and well-being. Make sure your bottom-line expectations take into account that servicing the partnering agreement is going to require extra resources. Be certain of everybody's alliance partnering goals. Here are examples of potential Partnering pitfalls. Be aware of them before you enter an agreement. Your chances for success will increase.
At Timex:
Timex, for example, forfeited $60 million in lost revenue and learned about the challenges of Partnering overseas. You could say it took a licking and kept on ticking. After 18 months of frustration, Timex wanted out of the partnership it created in India. It all started a decade ago when it was illegal to export watches into India. Timex wanted into the market and proceeded to select a local watchmaker as its partner. Unfortunately Timex should have spent more time on due diligence and asked around a bit more about the partner to be. Timex assumed it could dominate the relationship and have the Indian manufacturer carry out its manufacturing needs on cue.
Was Timex surprised? The head of Timex’s joint venture in India, Robert Werner was quoted in a Los Angeles Times article as stating, “Until its Indian joint venture, Timex had been accustomed to owning companies outright, and its problems in India were a learning experience for many at Timex.” He said It took Timex six months of negotiations and an undisclosed settlement before the company could rid itself of the partner.
Today, Timex is happily partnered with Indian watchmaker Titan Industries, which is a subsidiary of Tata Group, one of the largest corporations in India. The Timex-Tata joint venture went to market in late 1992 and in its first year sold 400,000 watches. Two years later annual sales leaped to 1.9 million watches.
At Donnelly Corporation:
Founded in 1905, Donnelly Corporation started as a glass mirror manufacturer and supplier for the turn-of-the-century (1900) furniture industry. Today, through joint ventures and strategic alliances, they have operations in 12 countries. With net sales in 1998 of over $763 million (13.7% increase over 1997), they are successfully Partnering around the globe.
Dwane Baumgardner, chairman & CEO at Donnelly feels strongly about what it takes for Partnering to work. When we visited at their Holland, MI headquarters he said to me, "If you have management that is not operating on the basic believe, that it has to start at the top, those beliefs have to be held and permeated throughout the organization. For example, with employees (approximately 5,500 in 1999), if you have to believe your people can be trusted, that they want to work together in a supportive and cooperative fashion. The same must be true with another company; you have to believe when you form a strategic alliance that they will operate with the same motive that you operate. If you don't have those beliefs, I think you're going to run into problems."
