Coherence

Negotiate the present, not the future

Coherence — Wed, 22 Feb 2012 14:31:04 +0000

In building alliances, teams often get bogged down discussing future scenarios before talking about the first steps needed to build the business.

I’ve seen this a lot working in the mobile banking space. Mobile network operators and the banks they negotiate with know that if they can successfully create mobile-wallet products together, then in two to four years, they’ll be able to use that m-wallet platform to sell their customers micro-finance products, insurances, and other services to their target market.

What they do is funny (and completely predictable): Before they even manage to get their m-wallet platform up and running, they spend precious time talking about who will get what revenue from the insurance and micro-finance products. In other words, they focus on how they will benefit from future business operations before they even get their first product right.

This may sound trite, but I can tell you that many deals fall on their faces almost entirely because the teams get enamored with negotiating the future without first dealing with the present. There are several ways to get around this common problem:

Build the foundation of alliance cooperation: Genuinely think through the established policies, procedures and teams that will take advantage of future opportunities that are either planned for or that come up.
Plan only for the products that you’re ready to roll out right now, and during the initial term of the alliance. If for example the contract term is five years, but the product suite may not all launch right away, then negotiate what’s, say, two years out but not all five years into the future.
Work toward deeper clarity for the specific roles and responsibilities of each partner.
Establish the alliance governance/cooperation structure in terms of who will lead what, how decisions will be made, what ongoing meetings will be held, and how new products, marketing, or activities will be planned for, decided upon, organized, and launched.
Plan for problems – for how to resolve them and for building the cross-functional teams that will make those resolutions happen.
Determine the tools that will be put in place to ensure the relationship is functioning well and that culturally the two organizations understand each other.
Establish a reasonable and fair exit clause – one that I tend to use “no one can leave with the business in their pocket, at least not without paying for it.”

Many alliances executives will try to justify to themselves why their own situation is “different.” They will provide excuses for why they “have to” think into the distance, even as their projects stall out in the present. This is a dangerous line of thinking. The next time you find yourself thinking that it’s okay for your team to spend its time talking about the running before you start walking, remember that thinking about future products before you figure out the present is like buying furniture for the baby’s room before you even get married. So don’t spend your time on future concerns when there are pressing matters in the present. Do what you must do now. Take small steps. Get things done. Plan for only what is right in front of you. Do this and the future will take care of itself.

The miracle of chocolate in alliances

Coherence — Thu, 09 Feb 2012 15:32:06 +0000

I’m sure you’re thinking: “Is he serious? Is he really going to talk about chocolate as in an alliances blog?” I am. Chocolate may very well be the secret ingredient to excellent innovation sessions and partnership development meetings. Bear with me. There’s actual data behind this idea.

The task of developing partnerships requires that we let our guard down a bit, that we become less concerned and fearful that we’ll give something away or say the wrong thing leading the other party to take advantage of us. We’ve discussed thinking outside the box and leading productive innovation sessions and I’ll tell you that there’s no better way to get those ideas flowing and reduce overall stress than with some good chocolate.

There is a good deal of research on the positive effects of chocolate on the brain. Chocolate causes the release of certain neurotransmitters that help to trigger positive emotions in people. Good chocolate – defined as chocolate with more than 60% cocoa – actually increases the levels of endorphins released into the brain and causes the release of serotonin, which reduces pain and decreases stress. In addition (and perhaps most importantly), chocolate causes the release of phenylethylamine. This so-called “chocolate amphetamine” causes changes in blood pressure and blood-sugar levels, which leads to feelings of excitement and alertness – much like the feelings you get when you’re in love.

In a recent World Café session with a major retailer client of mine, we served up a round of truly amazing truffles at each of the three tables. By the end of the session, everyone was in good spirits. The London-based VP of Finance was looking at me like I was some kind of god, having facilitated such an amazing session. Little did he know that he had been drugged from the start with the tantalizing dark chocolate truffles that I picked up from my hotel that same morning. This was the day I learned the power of chocolate. It had just seemed like a good idea at the time – and well, I’ve been using my secret weapon ever since.

Innovate and create together

Coherence — Sat, 04 Feb 2012 00:14:55 +0000

When forming an alliance, there comes a time when all the talks of visions and opportunities for developing a business together come to an end and partners begin to truly build the business. They can now move from the formalities to innovating and creating together. This is where the magic happens.

We typically hold innovation sessions over two full working days involving everyone – operations, technology, finance, marketing, sales – who will help build ideas, kick the tires of what can be actually implemented and get down to concrete potential projects and products that establish the working model for the alliance.

The first half of the first innovation and co-creation session involves envisioning the potential of what could be. Here, we “set the container of possibility” for the group through presentations given by key members of each team that provide knowledge of the key strategic pieces of the business.

The second session is designed to be what is called a “World Café” session. World Café is a process that has been used all over the world in many different settings that require collaboration, productive dialogue, knowledge sharing, and generating possibilities between groups. In the realm of partnerships and alliances, we use it to facilitate a process by which the teams can begin asking questions that matter.

The central purpose of the World Café is to facilitate active conversation. This stimulates innovative thinking, builds a sense of community, and allows the team to explore possibilities around real issues and questions related to the business. These guiding principles are key to the process:

All the knowledge and wisdom we need is here in the room. Include all the people who stand to influence the direction or the decisions that need to be made on the project. Don’t move forward without all the key people in the room. Doing so can lead to shortfalls in understanding, decision-making, and commitment.
Good ideas come from having conversations that matter. Good ideas are not developed through presentation and note taking. They come from engaging conversations.
Conversations that matter are ignited by good questions. The ultimate goal of the World Café is to create an environment wherein all the burning questions are asked – all those questions that require deeper inquiry and for the teams to answer collectively.
Insights are derived from a number of important places. Key insights come from understanding that individual comments are fragments of a larger idea or potential at play. Understand that everyone holds a fragment and that only when we all put our idea thoughts together can those fragments become a whole concept that evolve into an actionable idea. Key insights come from connecting ideas to other ideas.

Of course these principles are not written in stone. They can be changed and modified to fit the temperament of the teams working together. But in general, the point must be the same. The goal of the World Café is to shift the teams away from talking at one another to talking to one another – the foundations of strong alliances and successful partnerships.

Out-of-the-box thinking

Coherence — Mon, 30 Jan 2012 17:20:04 +0000

It’s amazing what companies can achieve together with a little creative thinking. I recently purchased the 111 Navy Chair from Design Within Reach. It’s an amazing and aesthetically beautiful product created from a partnership between Coca-Cola and Emeco, a company that has been making aluminum chairs since the 1940s and is famous for its Navy Chair – a chair it designed for the U.S. Navy. You may be wondering what brought together a bottling company and a chair manufacturer. That’s precisely what I love about this partnership.

According to Emeco, Coca-Cola approached it in 2006 with a proposal. The soft drink giant was looking for ways to show the value of recycled plastic so it asked Emeco to make its classic Navy Chair out of recycled soft drink bottles. Imagine that. Coke bottles turned into chairs.

On one hand we have Coca-Cola wanting to turn its bottles into something that can be used every day and encourage people in the U.S. to recycle. On the other, we have a small but successful company (an underdog) that had to make a significant investment and reengineer one of its core products to produce these chairs using recycled plastic. That didn’t deter Emeco, though. They, like Coca-Cola, embraced this creative thinking. Emeco’s Chairman and CEO said he “was excited about the impact” of using the plastic of some 3 million bottles into something durable that people would keep for years. They call it up-cycling: turning waste into something durable and of value that won’t need to be recycled for a long time. And they did it. Engineering of the 111 Navy Chair started in 2008 and the first prototype was unveiled in 2010.

In many industries, it’s not too common to have such disparate companies coming together to create something innovative but this partnership is a great example of really thinking outside the box to create a differentiation in the market. It’s something that more companies could do to really stand out and make an impact and it’s the perfect thing to do in the first phases of building your alliances strategy – think outside the box or the bottle as it were.

5 steps to finding the right alliance partner

Coherence — Thu, 19 Jan 2012 19:40:06 +0000

On this blog, I have discussed the benefits of seeking out the underdog, the partner that is going to give it all to drive your company and theirs to succeed, the partner that is willing to collaborate and innovate rather than push an agenda. But that partner must also be the right fit for your company and what you’re trying to accomplish. As in any relationship, finding the right partner plays a key role in the relationship’s success. The question is: how do you find that perfect fit?

Following are five steps that I have found helpful when assessing a potential alliances partner:

1. Build a simple matrix of partner attributes.

Your matrix should list both soft and hard attributes that you will use to measure the value of your potential partners, such as geographic footprint, brand relevance, core products and services, and cultural fit. The goal in creating this list is to identify all the key areas that will impact the outcome of your potential alliance.

2. Rate the attributes.

The list is valuable enough on its own, but you can make it even more valuable if you rate the attributes that are most important to your potential alliance. Sort the list from highest in importance to lowest. You are looking at your new priorities when looking for an alliance partner.

3. Identify key industry groupings.

The market is full of many different kinds of players. The best way to begin assessing the potential for each player to contribute to your alliance business is to determine which industry group they fall into. Some examples include retail, supermarket, airlines, transportation, online movies, etc.

4. Rate the top players in the grouping.

With your list of industry groupings in place, you can now move on to identifying the top five players per industry grouping (in less mature economies, you may only find three). The top players in this case are the ones that best fit with the priorities you determined in Step 2.

5. Ask the key questions.

Now that you have identified a short list of potential partners, start researching. Download the potential partner’s 10K reports, annual reports, and other recent postings. Determine whether they partner already, and if so, with whom? Find out whether they have a VP of partnerships. Determine how important their partnering strategy is. Figure out how they make money. Understand at a basic level their need to grow and how your vision would complement their growth strategy.

The steps above may seem rather straightforward, but it’s remarkable how many alliances leaders attempt to enter into an alliance without considering them. This is maybe the main reason so many alliances fail. Leaders must formulate a strategy for identifying potential partners and do their due diligence up front.

Who do you partner with?

Coherence — Tue, 18 Oct 2011 18:16:50 +0000

Big dogs want to control meetings and expect everyone to say “yes”.

Underdogs aren’t afraid to ask questions.

Big dogs hide behind NDAs.

Underdogs are open to telling you what they’re doing.

Big dogs demand that you get things done for them.

Underdogs share the work, along with their thoughts and feelings. Big dogs expect you to do all the heavy lifting.

….Underdogs dig deeper and get things done.

The public talks

Coherence — Thu, 06 Oct 2011 19:11:05 +0000

It is being said that Miramax is looking to partner with Google TV and Youtube.

There’s a lot of talk in the marketplace about potential partnerships, but sometimes it is just that; TALK. The verdict is out on whether speculations on potential partnerships actually helps them to materialize.

While Google is more certainly in the position to partner with major players across several industries and channels (mobile money, content, search, etc.), it’s hard to tell if they will actually partner with Miramax. This article is more like an invitation to the negotiating table. My advice is that it’s often better to keep such conversations behind close doors.

Don’t compete alone. Build Alliances and Go!

Coherence — Thu, 29 Sep 2011 19:39:26 +0000

We can all learn a thing or two about Facebook’s recent new business development approach. By now everyone has seen, and most even complained about, the new Facebook format. In a recent Wall Street Journal article Facebook Chief Executive Mark Zuckerberg lent a bit of insight to the strategic partnership approach shaping the future for the social media giant.

Although Facebook is the Goliath in the current market it is smart enough to realize that even giants can’t do everything alone. In order to be able to compete effectively to crush the competition Zuckerberg realizes there is strength in numbers. The recent unveiling of partnerships with media companies such as Spotify, the Washington Post, and Netflix give the Facebook battalion the power it needs to beat the competition, such a Google+ and Apple’s iTunes.

Zuckerberg and very likely the smart people that surround him, all know that if they doesn’t implement an “open graph,” system that allows outside applications, created by a variety of media companies and start-ups, to be used within the Facebook platform someone else will. Will you be a “Zuckerberg” creating alliances to be reckoned with, or will you let your ego stand in the way of success?

See WSJ article here

A Motor Marriage Divorce

Coherence — Fri, 16 Sep 2011 19:52:52 +0000

Suzuki and VW were not able to handle a partnership. Can you believe this one? Honestly, didn’t Suzuki and VW see all this coming way ahead of time? My guess is that higher level executives signed the deal, but they forgot the main ingredients: drawing out their partnerships values, principles and governance processes, specially on rights of first refusals, working with the media, etc. and most importantly, getting their implementation teams on the same boat!

When you see a partnership’s dirty laundry in front of the media, you know they didn’t prepare and go through the process of mapping out their relationship beforehand.

Like all marriages, either you get counseling or you get divorced and hope that the next marriage works out – either way, counseling is needed because for all you know the next marriage will have the same problems.

We keep seeing in the market how companies are striking alliances while forgetting to actually establish a relationship with the people who make it happen at each firm. In this case, you mean to tell me that the executives responsible for the relationships on either side didn’t see this coming a mile away? Hard to believe.

What seems to have happened here is very common. Two firms signed financial and strategic deals without actually talking about it to each other. They probably failed to see each other face-to-face to create something together. They forgot to ask the most basic and key question: Can we, as people, actually make this happen regardless of how our companies work? Do we trust each other enough to take the lipstick off the pig and call out the elephants in the room? If you can’t have this kind of straight and direct conversation, why partner in the first place?

Like a good friend of mine always said, “It’s not what I like about my wife that led me to marry her, it’s knowing that I could learn to live with the things that drove me nuts.”

Partnerships are between people, not companies

Coherence — Thu, 01 Sep 2011 14:21:52 +0000

The merger between Japan’s Sony Corp, Toshiba Corp and Hitachi Ltd. could seem like a sweet deal with the government backed INCJ who’s investing 1.2 billion. But the move seems more like a desperate measure to divest themselves of loss leaders in the business, strap the government with the bill and the risk to build a business worthy to compete globally.

Mergers of this type, while they may look good on paper, have a hard road ahead. As in all business alliances, after the dust settles and the deals are struck, all that’s left are the people that have to make it happen. In this case, the implementation is left to be seen in what I would call a pretty precarious exercise.

Thought of the day: Good strategy coupled with good people is a recipe for success – bad strategy (throw money at it – someone else’s money at that) and get people to pull it together – can lead to mediocre results if any. In alliances both have to be in play – strategy and people.