Channel Management Case Study: Why Alliances Fail

Channel Management Case Study: Why Alliances Fail:

Earlier this year, we were contacted by a CEO who had experienced a costly, public failure in channel management. One of their prize alliance partners was no longer willing to continue in the relationship. Competitors found out shortly thereafter and the company’s sales strategy came into question by analysts. The CEO wanted us to answer one question – Why? We reviewed every aspect of their current Channels and Alliances organization and found many best practices in place. The root cause of the failure turned out to be the very first step in the process. The value of the media attention from the alliance announcement was so compelling that both organizations rushed through the process. They overlooked a critical step in alliance management – no one bothered to document a shared strategic map. Some of the obstacles they encountered included:

• Each company communicated the value proposition differently to their customers
• The respective companies struggled to share a common story regarding a solution road map
• Each company began to claim certain customers were off limits which aggravated the sales force

Without agreement on what each sought from the alliance and their respective commitments, the alliance activity started with a bang and quickly took a back seat to day to day issues. A Shared Strategic Map contains the following elements:

• Alliance team members
• Vision, strategy & mission of the alliance
• Factors drawing the companies together
• Value proposition to the customer
• Opportunities for collaboration and potential liabilities
• Company goal alignment
• Possible joint solutions
• Target account base
• Delivery, service and support approach
• Definition of success, metrics and milestones

Once a shared strategic map has been drafted, it must be openly discussed among both company’s senior leadership. Executive sponsorship and sign off are required before moving forward. An excerpt of a shared strategic map is provided in the figure below: Sales forces view alliances with skepticism since history provides plenty of examples of failed alliances. The extra due diligence up front to ensure alignment of goals, messaging and approach can save you from forming alliances that do not produce results. For a list of top 10 alliance warning signs to watch read here. Takeaways:

• Alliance failures can cost you more than staff time; it can create a public relations nightmare
• The first step in exploring an alliance is to draft a shared strategic map
• Executives from both companies must agree and commit to the contents
• The extra due diligence will help you avoid failed alliance partnership

For more information on the benfits of an alliance management framework, read this article. Do you leverage a similar approach in your channel management process today?

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