The Alliance Life Cycle

One useful way to approach alliance management and look at the role of the alliance manager is through the framework of the Alliance Life Cycle.

Here’s a shortened, summarized version of the Alliance Life Cycle, along with some brief thoughts on the role of the alliance manager within each phase.

Phase 1

Alliance-Specific Strategy. What is your company’s business strategy? An organization’s growth is typically achieved through internal development, acquisitions, or alliances, or a combination thereof (the build/buy/partner decision). A good alliance manager can be essential in facilitating an alliance-specific strategy with the organization’s senior management team. The alliance manager works to ensure that systems and processes are in place to support the strategy and that appropriate cultural and other measures are in place to advance that strategy.

Phase 2

Analysis and Selection. After development of a strategy, ideally the alliance manager either leads or is an integral part of a team that defines potential partners using tools and best practices to gather data that will assist in decision making regarding partner identification and due diligence requirements. Criteria include not only financial data but also measures of strategic, operational, and cultural fit.

Phase 3

Building Trust and Value-Creating Negotiations. Building trust is essential to the formation of an alliance, and trust must be cocreated by the partners as they jointly map out their future. Wherever possible, experienced alliance managers should be part of deal negotiations, review term sheets and contracts, and otherwise influence the process in favor of alliance terms and obligations that can reasonably be executed. This will increase the chances that the alliance will deliver on its intended value.

Phase 4

Operational Planning. This phase is concerned with the unearthing of any potential operational issues pertaining to the alliance and the creation of an operational business plan for it. Creation of this plan should be seen as a “pilot project” that will test the assumptions of the previous phase. The successful alliance manager must harness, analyze, or create the value proposition, as well as forecast and accurately define all planning needs for the alliance. The creation of performance metrics will also ensure that the partnership is tracked and modified as needed.

Phase 5

Alliance Structuring and Governance. This phase focuses on creating governance, organizational, and legal frameworks for the strategic alliance relationship; on finalizing the operational plans from the previous phase and putting key managers and leaders in place; and on establishing a risk-and-reward formula that motivates both parties to make the relationship succeed. An effective alliance manager will play a key role in all of these processes.

Phase 6

Launching and Managing. The agreement established previously is implemented and managed, often including a kickoff or launch meeting to confirm understandings and initiate alliance activities. As experienced alliance managers know, if you don’t start it off right, you may have to start it again—this time in the midst of conflict. Without an energized, successful kickoff and follow-up launch plan, many alliances will fail. Ongoing alliance management and governance, overseen by alliance leaders and other stakeholders, is also crucial to alliance success.

Phase 7

Transform, Innovate, or Exit Gracefully. As time goes on, an alliance will need to renew itself, adapt to changing conditions and transform, or ultimately dissolve in a way that is amicable and makes for a “graceful exit” by the partners. Alliance managers keep their eyes on the horizon and identify new opportunities that suggest possibilities for expansion of the alliance. Similarly, at some point even a successful alliance may come to an end for various reasons, and the process of alliance termination begins. The alliance manager must assess and predict the need for change and understand when it’s time to exit an alliance that has failed to reach its planned goals, utilizing the most beneficial path to assure future partnership capability.

In The ASAP Handbook of Alliance Management: A Practitioner’s Guide, the Alliance Life Cycle is discussed at greater length, using many examples, including more on the role of the alliance manager.