Strategic Alliances: Not necessarily a two-way street

[Paul Terlemezian]

Just about every business owner I have met has tried to implement strategic alliances. Their evaluation of alliance success has been mixed (at best.) One of the most common mistakes I have observed is the notion that a strategic alliance is a two-way street.

I am fond of reminding people that if you look closely at a two-way street that it is really two one-way streets running in parallel and moving traffic in opposite directions. Each side must function independently of the other.

What would the impact be to your current alliances if they were designed to only work in one direction?

[Peggy G Hutcheson, PhD]

This question raises the question of intentions. And it takes me back to a tool that Paul used when we were first beginning to think about alliances as a way of building business -- the matrix of potential ways of connecting. A strategic alliance must benefit both parties, but not necessarily in the same way. For one party, it may mean reaching out with new services for clients that are not part of your company's "portfolio." For another, it may mean extending your reach through a larger organization or one that's focused on a different market segment. Strategic implies that it supplements your strategy and that of the partner -- it's more than sales referrals. If the alliance works only one way, it is difficult to see how it can be strategic for both partners. So alliances may work one-way, but if you add the word "strategic," it's a two-way street.

[Paul Terlemezian]

I agree with your expectation that the alliance should be strategic for both partners. The analogy needs to be clarified so that it implies the direction of revenue flow. It certainly can work both ways where either partner initiates prospect contact. It can however be strategic to both even if only one of the partners is responsible for initiating client contact. Publix sells Coca-Cola products but Coca-Cola does not sell Kroger products.

A software firm may resell a partner's custom training development capabilities without expecting the training company to sell the software firm's products. My firm has a relationship with SalesForce.com that allow me to resell their products but I do not expect them to resell services from iFive.

Does anyone have an example of an effective alliance in which sales move in both directions?