For Fossil-Fuel Titans Looking to Pivot to Sustainable Models, Partnerships Will Be Key

Posted By Jon Lavietes and Michael Burke, Thursday, June 24, 2021

With the Q2 2021 Strategic Alliance Quarterly wending its way to your mailboxes and inboxes as we write this, we thought we would give you a glimpse of the discussions we had in putting together the issue’s cover story on the strategic alliances that are tackling climate change today. We spoke with some of those who are on the front and sidelines of these partnerships bringing sustainable innovations to market and seeking to extricate us from the fossil fuel–based goods and services that are so deeply embedded in our societies. Here are a few illuminating thoughts from one of those experts that didn’t make it into the larger cover story.

Dominate, Be Disrupted, or Do Things Differently? Pharma and Fintech Provide the Playbook

Ben Gomes-Casseres, CSAP, DBA, author of Remix Strategy, and professor at Brandeis University, doesn’t see incumbents changing on their own, but he thinks external forces will compel them to move, and he expects alliances to play a critical role in transforming their businesses.

“The companies that now dominate energy generation, distribution, and management are large and well established. They will have to start doing their work differently—a lot differently—if we are to respond appropriately to climate change. Even if new technologies are called ‘disruptive,’ they are not likely to wipe away the incumbents. More likely, you’ll see in climate tech what you’re seeing now in fintech, and like we have seen for decades in biopharma,” he explained.

Gomes-Casseres was referring to how biotech companies have changed traditional pharmaceutical organizations by bringing compounds and technologies to them through partnerships. Similarly, the current crop of financial technology startups are forcing old-guard financial institutions to shift how they do business, and to cater to today’s digital natives. With a few exceptions, these technology disruptors couldn’t sustain a long-term business model on their own, but their innovations helped their larger partners accelerate their transformations and meet fast-evolving market demands. These partnerships sometimes led to acquisitions that then changed the incumbents from within as well.

“Good Alliance Strategy Practices May Help Us Fight Climate Change”

As Gomes-Casseres explained, “Just doing climate tech might not be enough of a basis for a startup to thrive. This means they so often have to diversify their technology to apply to other fields, or they get acquired by a company with a larger footprint.

“So in that sense, the partnerships are critical to the climate issue. New ideas are going to have to be incorporated into existing technologies and business models—a classic case of the ‘business remix.’ This challenge is not always easy—if you’re an oil company, you’re good at drilling, exploring for oil, and all that. That doesn’t mean you’re going to be good at solar or wind,” he said, referencing his book Remix Strategy.

Gomes-Casseres recommended that incumbent companies facing disruption ask themselves, “‘What are my capabilities?’ From that, they can figure out how to ally with the new players. We do this in any alliance situation: identify the underlying resource base and capabilities that you have, and then see how you can apply it in a new space. In other words, good alliance strategy practices may help us fight climate change.” Some of these tools and practices are explained in his LinkedIn Learning course “Strategic Partnerships,” as well as in Remix Strategy.

We encourage you to check out your copy of the print edition of the Q2 2021 Strategic Alliance Quarterly—ASAP members have started to see theirs appear in mailboxes as of last week. The Q2 2021 issue also provides pointers for integrating the alliance portfolios of acquired technology companies, charting partner marketplace strategy, and guiding pharma-biotech collaborations over the long haul, as well as a primer on financial and business metric fluency. ASAP members, if you misplace your digital or print copy, head to ASAP’s Member Resource Library to retrieve it at any time.