Building Alliances That Stick

Larraine Segil, cofounder of The Lared Group, which specializes in strategic alliances, says there are many different kinds of partner relationships, including licensing, distribution, comarketing and outsourcing. She cites Starbucks as a company that seems to have a bottomless cup of alliance expertise. Its Frappacino coffee drink, which grocery stores sell, blends Pepsi’s expertise in bottling with Starbucks’ coffee know-how; it also joined forces with Dreyer’s Grand Ice Cream.

But it’s not difficult to find any number of partnerships that fall flat on their faces. One obstacle is that you don’t control the behavior of your partner. Another is lack of metrics. According to research at the California Institute of Technology, where Segil teaches an executive education alliance program, 60 percent of companies fail in their partnerships, and of those, half have no idea how to measure the value of their partnerships.

Segil offers the following five tips to building effective partnerships.

1. Define a set of metrics that you and your partner can agree on.

2. Manage the compatability challenge.

3. Get commitment to the alliance from senior leadership.

4. Ensure a level of flexibility.

5. Prioritize projects.