Strategic Alliance Magazine by ASAP

It’s a Complex World. Let The Rhythm of Business Help You Navigate It. Increasingly, alliance managers are being asked to do more with less. Larger alliance portfolios. More complex collaborations. Fewer organizational resources. Don’t Go It Alone. When the challenges of complexity and scale threaten the success of alliance portfolios, alliance leaders turn to The Rhythm of Business for clarity, deep insights, and step-by-step help. At The Rhythm of Business, we serve as thinking partners and guides, providing cost-effective strategies, frameworks, and tools that: + Increase alliance performance and effectiveness + Drive financial results and other measurable value + Reduce complexity (and risk) in your alliance portfolio Tap into Our Broad Experience and Deep Industry Expertise. Whether they’re starting from scratch or rethinking their alliance programs, alliance leaders call on The Rhythm of Business for our wealth of ideas and for our years of expertise in alliance-savvy industries such as biopharmaceuticals, financial services, information technology, and consumer packaged goods. Take Your Collaborative Capabilities to the Next Level. The Rhythm of Business is your “center of alliance excellence,” and a resource for comprehensive support, such as: + Partnering program design + Alliance organization, staffing, and process design + Guidebooks, toolkits, and alliance metrics + Help with alliance start-ups, strategic planning, ongoing assessments, and interventions + Customized, targeted education for alliance managers, teams, and executives + Alliance portfolio analysis, mapping, and planning + Internal marketing and communications programs Partner with the Collaborative Business Specialists. Our consulting, education, and research services focus on driving innovation and growth through alliances and other collaborative relationships. We’re passionate about advancing the discipline and profession of alliance management across sectors, throughout industries, and around the world. Your Guide to the Future of Alliance Management Contact The Rhythm of Business today at +1 617 965 4777 or info@rhythmofbusiness.com to begin, or continue, your journey down the path toward successful alliance management.

www.rhythmofbusiness.com

We didn’t like the news, so we went out and made our own. Now You, Too, Can Support the Media That Support Your Profession! For too long, we’ve done the most important job nobody knows about. Despite playing an increasingly critical role in industry after industry, alliance professionals have remained off the radar screens of most business media. So the story of ASAP and strategic alliances has rarely been heard by general business audiences – or even within our own profession. Now that’s changing, thanks to the launch of ASAP Media and its flagship, Strategic Alliance Magazine. Self-publishing helps other professional associations – such as the American Marketing Association and the Project Management Institute – to share best practices, educate external audiences, and create pride in their profession. Now Strategic Alliance Magazine and ASAP Media will do the same for ASAP and the alliance profession as a whole. But we still need your help – as an ASAP Benefactor. Please consider supporting Strategic Alliance Magazine, at one of the following levels: n Silver Benefactor: $50 n Gold Benefactor: $100 n Platinum Benefactor: $150 n Titanium Benefactor: $500 All individual benefactors will be named – along with their company and ASAP chapter if desired – on a special page of the magazine. As a benefactor of Strategic Alliance Magazine, you support the media that support you. Don’t miss this one-time chance to help launch your profession’s new media. Visit www.strategic-alliances.org today!

960 Turnpike St, Canton MA 02021 USA Tel: +1 781-562-1630 strategic-alliances.org info@strategic-alliances.org

up front

Is Alliance Capability a Competitive Advantage?

“Of Course!”—But That Advantage Accrues Only When It’s Widely Understood Outside Our Ranks By Art Canter

I RECENTLY HAD THE HONOR OF MODERATING a panel discussion among alliance experts—all of them key leaders within ASAP—at the Conference Board’s 2011 Strategic Alliances Conference. (See Collaborative Buzz, Page 11.) My last question to the panelists was, “Is trust—and trustworthiness—a competitive advantage?” Of course, both panelists and the audience agreed it was—but Eli Lilly’s Steve Twait, CSAP, added a provocative afterthought: “Distrust is more tangible, unfortunately.” That comment stuck with me, and as I’ve mulled it over since then, it’s led me to think about an even larger question: “Is alliance capability a competitive advantage?” Again, we’d all say of course. But if we are honest with ourselves, we must acknowledge that even in an era when disruptive new approaches, technologies, and business models are commonplace, the alliance (and the discipline of alliance management) is often viewed outside our ranks as a less tangible and therefore less essential driver of competitive advantage. Therefore, a key goal of Strategic Alliance Magazine is to make the alliance and its managers more tangible and more easily understood—and hence, we hope, more fully supported—by all those who are not alliance leaders or managers. With our third issue, we continue to present a variety of content touching on all facets of alliance management in ways that provide lessons not just for alliance leaders and practitioners, but also for those outside the profession whose engagement and buy-in are critical to our success. In the last issue, our special section on Quarter 4, 2011

metrics provided expert perspectives on what is now a core element in tracking ongoing alliance performance and illustrating the invaluable contributions alliance management makes to the rest of the organization. In this edition, we close out 2011 by providing a detailed look at another critical component of professional alliance management—governance. Five alliance management veterans representing three industries discuss the definition and broad purpose of governance, the governance structures used for different types of alliances, how to get the “right” executives to serve in governance roles, and how to make governance committees effective without being cumbersome. In addition, an article contributed by Jan Twombly, CSAP, and Jeff Shuman, CSAP, delves deeper into governance committee member selection and guides you in how to onboard new delegates and keep them heavily involved in the alliance’s affairs once they are fully up to speed. A special focus on manufacturing and retail supply chain delivers a go-to-market–focused feature on the challenges faced by the Star Alliance, one of the leading consortiums of major airlines, in this ongoing sluggish economic period since its vice president of business development Horst Findeisen spoke at the 2009 ASAP Global Alliance

Summit. It also includes an insightful perspective on the successful RenaultNissan partnership that illuminates how to bridge two seemingly disparate cultures to accomplish daunting tasks. Rounding out the section is a profile of manufacturing relationships in the biopharmaceutical industry that examines the due diligence needed to select partners and provides tips for making pharmaceutical company–CMO partnerships more collaborative. The end result is another issue that we hope gives members and readers new ways to think about the challenges they face in their alliance management posts and individual consulting practices. And, we believe, you’ll want to pass this along to others across your organization who need tangible proof of what we already know: strategic alliances and their sibling forms of business collaboration represent the most significant lever of competitive advantage in the new millennium. Art Canter, president and CEO of ASAP, is executive publisher of Strategic Alliance Magazine. 5

Quarter 4, 2011

The magazine of the Association of Strategic Alliance Professionals

in this issue 18 n ALLIANCE governance

AN ASAP MEDIA PUBLICATION www.ASAPmedia.org www.strategic-alliances.org EDITORIAL TEAM Art Canter, Executive Publisher 781-562-1630 ext. 201 acanter@strategic-alliances.org John W. DeWitt, Publisher 646-232-6620 jdewitt@ASAPmedia.org Jon Lavietes, Editorial Director 415-572-4408 jlavietes@ASAPmedia.org Michael Burke, Editor-in-Chief 413-345-1624 mburke@ASAPmedia.org Greg Caulton, Creative Director 413-461-7096 gcaulton@ASAPmedia.org Matthew Wimmer, Design and Online Media Manager 774-316-0916 mwimmer@ASAPmedia.org ASAP STAFF Art Canter, President and CEO 781-562-1630 ext. 201 acanter@strategic-alliances.org Pam Goodell, Director of Operations 781-562-1630 ext. 202 pgoodell@strategic-alliances.org Lori Gold, Manager of Member Services 781-562-1630 ext. 203 lgold@strategic-alliances.org Michele Shannon, Program Event Coordinator 781-562-1630 ext. 204 mshannon@strategic-alliances.org Brendan Ward, Administrative Support 781-562-1630 ext. 200 bward@strategic-alliances.org Diane Lemkin, Accounting Manager 781-562-1630 ext. 206 dianel@strategic-alliances.org

Congratulations! You’ve Been Appointed to a Governance Committee. Now What?

Selection and Ramp-Up of Governance Committee Members Is Critical to Alliance Success | By Jan Twombly, CSAP, and Jeff Shuman, PhD, CSAP

Selecting the right personnel to serve on an alliance governance committee is a tough task, and one that requires careful due diligence. Failure to properly pick committee members can set an alliance on a rocky foundation. Here is how to choose the right people, get them up to speed, and keep them fully engaged throughout the alliance’s life cycle.

n COVER STORY

Paving the Way: Good Governance Helps Partners Make the Journey Together

No Matter the Industry, an Alliance Will Go Nowhere Without a Well-Defined Structure in Which All Parties Feel Like They’re in the Driver’s Seat | By Jon Lavietes

Experts from biopharma, technology, and transportation and distribution discuss the intricacies of alliance governance, including the models, people, rules, and processes that make for a smoothly operating partnership.

n ALLIANCE careers

The Alliance Management Career Path

How Do Alliance Managers Get Ahead in Their Careers If Nobody Knows What They Do? | By Michael Burke

Alliance management is seen as everything from a steppingstone to “the profession nobody knows.” But the diversity of skills that experienced alliance managers wield may qualify them for a variety of other roles—and ensure the future health of the profession. Strategic Alliance Magazine

n ALLIANCE IN PRACTICE

Star Alliance Continues to Soar

Top Alliance Executive Says Global Recession Fails to Ground Growing Airline Partner Ecosystem By Jon Lavietes

Although the Star Alliance Network was founded in an economic boom, its infrastructure, value proposition, and operational standards have helped it maintain a smooth course as the global economy continues to stagnate.

n SPECIAL EDITORIAL SUPPLEMENT

High Risk to High Reward

Using the Skills and Tools of Servant Leadership to Manage Risk By David Thompson, CA-AM, and Steven Twait, CSAP

Instilling the right competencies and mindset in alliance managers is critical to making a risk mitigationâ&#x20AC;&#x201C;focused alliance management function operate smoothly. However, alliance management practices also need to place greater emphasis on drafting contingency plans and documenting the particulars of key decisions to make this approach to alliance management work. Sponsored by Eli Lilly & Co.

n SPECIAL FOCUS: RETAIL, MANUFACTURINg, AND SUPPLY ChAIN

Pharmaceutical Companies, CMOs Still Refining Collaborations

Success Depends on Whether Trust, Transparency Can Be Manufactured By Jon Lavietes and John W. DeWitt

The cost savings of contracting out elements of pharmaceutical companiesâ&#x20AC;&#x2122; manufacturing operations are significant. However, so is the risk. Thus, the industry needs alliances rather than vendor outsourcing relationships to accomplish manufacturing goals. Yet, after years of utilizing manufacturing partnerships, people in the industry still think these relationships can be more deeply collaborative.

Regular Features: 5 n UP FRONT | By Art Canter The advantages provided by alliance capabilities only accrue when they are widely understood outside our ranks. 12 n FEEDBACK Comments, kudos, corrections, and other brief thoughts from ASAP members and other readers of Strategic Alliance Magazine. Quarter 4, 2011

13 n COLLABORATIVE BUZZ Alliance News Briefs | People in the News | ASAP & ASAP Partner Calendar of Events | ASAP Chapter Updates 43 n SOLUTIONS MARKETPLACE Products and services for and from strategic alliance professionals. 7

Quarter 3, 2011

The magazine of the Association of Strategic Alliance Professionals

ASAP BOARD & MARKETING COMMITTEE CHAIRS Russ Buchanan, CA-AM ASAP Chairman of the Board Vice President, Worldwide Alliances Xerox Corp. Jan Twombly, CSAP Chairman, ASAP Marketing Committee Member, ASAP Executive Committee President, The Rhythm of Business, Inc.

in this issue 41

n SPECIAL FOCUS: Retail, Manufacturing, and Supply Chain

Culture Clash: Does It Have to Stall an Alliance? Renault-Nissan Shows That Enlightened Management Can Keep the Engines Running By Fabien Blanchot, PhD

All alliances are complicated. An alliance that attempts to bridge two cultures with the goal of saving two struggling companies is extra-complicated. But both research and the success of the Renault-Nissan partnership show that, far from being detrimental, the “clash” of cultures, properly managed, can actually keep an alliance moving forward.

n Alliance events

Don’t Gamble with Your Professional Development!

Plan Now to Attend the Annual Showcase Event for the Alliance Management Profession

Strategic Alliance Magazine is published quarterly. Publisher is The Association of Strategic Alliance Professionals, 960 Turnpike Street, Canton, MA 02021, 781-562-1630. Subscriptions are $99 for one year, $189 for two years. Canadian subscriptions are $149 per year. All other international subscriptions are $199 (using air mail). Subscription inquiries: +1 781-562-1630. Periodicals postage is paid in Chicopee, MA, and additional mailing offices. Postmaster: Send address changes to STRATEGIC ALLIANCE MAGAZINE, 960 Turnpike Street, Canton, MA 02021. Copyright 2011, The Association of Strategic Alliance Professionals. No part of this publication may be reproduced, stored in any retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. For reprints, please contact The Association of Strategic Alliance Professionals, +1 781-562-1630.

The ASAP Global Alliance Summit is the one time each year when strategic alliance professionals from many industries come together in one place to hone and expand their skills, inspire their teams, network with colleagues, share experiences, and glean insights into improving organizational competitiveness and enhancing the bottom line through partnering.

n THE CLOSE

Now That We’ve Got the CEO’s Attention...What Next? The Alliance Management Discussion Needs to Be Made Relevant to the Rest of the Organization | By John W. DeWitt and Jon Lavietes

Although it is important to share our triumphs and discuss our challenges with the alliance management community, it is always critical to make the conversation relevant to the rest of the organization. Fortunately, CEOs are becoming more interested in the discussion; thus, everyone else will want to join in, too.

Strategic Alliance Magazine

Make Your Alliances Work

Let Vantage Partners Help Your Company Negotiate and Manage Critical Relationships Conventional advice about alliances has not reduced their dismal failure rate. By working with Vantage, companies maximize the performance of individual alliances, put under-performing alliances back on track, and ensure coordination and optimization of their entire alliance portfolio. Success requires shifting your focus to a complementary set of principles. To help companies address and find solutions to their specific alliance challenges, Vantage Partners offers a broad range of services: Develop Your Alliance Strategy ▶ Define (or refine) an alliance strategy that meets overall corporate strategy and business unit objectives Benchmark Your Alliance Management Capability ▶ Benchmark your alliance management capabilities relative to competitors Design and Implement Your Alliance Management Program ▶ Create an alliance program blueprint and implement a framework for improved alliance success rates and better business results Launch Your New Alliances ▶ We facilitate a carefully designed set of activities between partners Remediate and Relaunch Relationships ▶ We conduct comprehensive assessments of alliance performance and help revitalize faltering partnerships

Alliance Management Training Solutions ▶ Designing and Implementing Comprehensive Alliance Training Curriculum ▶ Designing and Implementing Alliance-Specific Team Training ▶ Training Alliance Management Groups

About Vantage Partners Vantage Partners, a spin-off of the Harvard Negotiation Project, is a management consulting firm that specializes in helping companies achieve breakthrough business results by transforming the way they negotiate, and manage relationships with, key business partners. To learn more about Vantage Partners, visit www.vantagepartners.com, call +1 617 354 6090, or e-mail info@vantagepartners.com.

Helping Companies Negotiate and Manage Critical Relationships

Check Out Our New Alliance Compendium Receive “Making Alliances Work,” our new collection of complimentary Vantage Partners Alliance Management publications—including some of Vantage’s most requested HBR articles, white papers and research findings on the topics of alliances, negotiation, relationship management, and change management. To request your copy of “Making Alliances Work,” visit www.vantagepartners.com/ASAPAllianceCompendium.aspx

Quarter 4, 2011

Discover a World of Fun

(and Networking, PLUS Professional Development) When You Join Your Local ASAP Chapter

Every day, you tirelessly champion the value of alliances and alliance management – but sometimes you just want to go where everybody knows your name … and doesn’t need you to explain what an alliance manager does for a living. That friendly, welcoming place is your local ASAP Chapter. ASAP’s worldwide network of chapters – spanning 19 regions and four continents – provides face-to-face networking and close-to-home professional development for alliance managers and collaborative business professionals. Whatever your industry, you’ll find common ground with fellow alliance professionals in your local ASAP chapter. ASAP members convene locally for mixers, cocktail hours, seminars, training sessions, panels, speakers, and other events. Local chapter members share everything from best practices to job opportunities, discuss pressing issues and common challenges, and further develop individual and team skills. Find your local ASAP chapter – and learn about upcoming chapter events – at www.strategic-alliances.org/content/chapters. We promise you’ll have a good time – in your new professional home away from home. For more information about ASAP Chapters, contact Lori Gold, Manager of Member Services: lgold@strategic-alliances.org or call 781-562-1630 ext. 203.

960 Turnpike St, Canton MA 02021 USA Tel: +1 781-562-1630 strategic-alliances.org info@strategic-alliances.org

Strategic Alliance Magazine

Collaborative Buzz

Building a Bridge over Troubled Water: Conference Board Panel Explores the Key Factors That Foster Trust in Collaborative Relationships By John W. DeWitt

Alliance leaders consider trust an essential element in collaborative relationships—“the glue and the grease of alliance success,” said ASAP president and CEO Art Canter as he kicked off an expert panel discussion on the topic at the Conference Board’s 2011 Strategic Alliances Conference Oct. 20–21 in New York City. But what are the key underpinnings of trust in collaborative relationships? Can trust be developed in “co-opetition” partnerships? How do you distinguish organizational trust versus trust on the individual level—and how are they connected? What are the top ways to build trust—and what rules of engagement foster it? With robust participation from an audience of more than 50 senior alliance executives and practitioners, Canter led the exploration of these and other questions with three prominent ASAP members serving as panelists: Alistair Pim, CSAP, vice president of global strategic alliances at Schneider Electric; Jack Pearson, CSAP, ASAP board vice chairman and global vice president of alliance management at Quintiles; and Steve Twait, CSAP, Eli Lilly and Company’s director of alliance management and M&A integration. Trust’s key underpinnings are “credibility, reliability, and intimacy,” offered Twait as the late-afternoon discussion got under way. “Consistent behavior—doing what you say” is also crucial, Pim added. However, Pearson emphasized, “It takes time to build trust—you have to strike the right balance of trust and verification. [This ties into] reputation—the reputation you have starting out, as well as the one you build” as the relationship unfolds Quarter 4, 2011

over time and (hopefully) successes begin to accrue. Not surprisingly, the role of communication in building (or damaging) trust frequently recurred as a theme throughout the hour-long discussion. “Transparency—clear motivations up front and on the table,” as Pearson put it—can be created in a safe, culturally respectful environment, particularly when alliance partners embrace reciprocity and advocate for the best interests of the partnership. However, alliance managers should be wary of overreliance on conference calls and e-mail communications—it’s crucial to “get players in the same room” and encourage both formal and informal “face-to-face interactions at all levels,” Twait said. More surprising, perhaps, Twait suggested that crisis can play a potentially positive role in developing trust. “When you work through crisis together,” he explained, “trust builds a bridge over troubled water.” Pearson agreed: nothing fosters trust more than “consistently standing side-by-side in tough situations.” See our in-depth recap of this event in the November–December issue of ASAP eNews, which arrived in ASAP members’ e-mail inboxes Dec. 2 and is available on ASAP’s newly revamped Web site at www.strategic-alliances.org.

ASAP News

ASAP’s Regional Chapters: Event Central

One of the many benefits of ASAP membership is that when you join the global association, you also automatically become a member of your local ASAP chapter and have access to all of that chapter’s events, usually free or at a reduced fee. What’s more, as an ASAP member you can register to attend any ASAP chapter event, anywhere in the world, at the member rate. And this is truly a benefit, because many of the chapters are putting on events that provide valuable education in current alliance management issues, trends, and best practices as well as terrific networking opportunities (and good food, too). The very active RTP/Carolina, Silicon Valley and Midwest chapters are just two examples of regional chapters providing value to their members by sponsoring presentations by experienced, thought-provoking authors and alliance management experts—and making it fun and social at the same time. If you haven’t been to an ASAP chapter event yet, you should definitely check it out (nonmembers are welcome—but you won’t be there long before we think you’ll want to be a member, too!). Visit the chapters page on ASAP’s Web site, www.strategic-alliances.org, or talk 11

Collaborative Buzz to fellow local members to find out what’s going on, to register, or to get involved by volunteering to help with events. Great things are happening at ASAP’s chapters.

Silicon Valley Chapter Presents “Game Changer”: Series Helps Alliance Executives Harness Digital Platform to Create New Business Paradigms

ASAP’s Silicon Valley Chapter recently broke ground on its new “Game Changer” thought leadership series of discussions, which examines how the role of alliances and alliance executives is changing in the digital world. These events feature leading authors and business executives who will discuss a chosen topic related to how executives involved in business collaboration can create value as legacy models are transformed by emerging digital platforms.

“If we use the right tools, but our people don’t believe in the values and virtues of partnering, it won’t matter.” The inaugural Game Changer series roundtable, titled “Changing the Game: The Age of the Platform and the 24-Hour Customer,” took place Nov. 2 and examined the new business model created by Google, Facebook, Apple, and Amazon digital platform ecosystems; consumers’ newfound power generated by the plethora of choices produced by these ecosystems; and the role alliances are playing in the context of digitally based collaboration. The panel featured: – Phil Simon, business consultant and author of The Age of the Platform – Adrian Ott, founder and CEO of Exponential Edge Consulting and author of The 24-Hour Customer – Sherrick Murdoff, vice president of global alliances and investments at Salesforce.com 12

The next two Game Changer series initiatives will take place in the first quarter of 2012. The first, scheduled for Feb. 7, is titled “Beyond Alliances: Aligning Partner Ecosystems with Corporate Strategy” and will feature Steve Steinhilber, vice president of emerging solutions ecosystems at Cisco. On March 13 the Silicon Valley Chapter will team with the American Marketing Association’s Silicon Valley chapter to produce the third panel, which will focus on collaborative marketing in the digital environment.

Chicago Trifecta: Midwest Chapter Dives into Alliance Rescues, Culture, and Organizational Change

Over the course of two days in October, ASAP’s Midwest Chapter hosted three different events for alliance professionals in three separate venues in downtown Chicago (all within walking distance of one another, in a great walking city). The first event was an afternoon workshop led by alliance veteran Mike Ransom, CA-AM, formerly of Eli Lilly and now heading his own company, Michael O. Ransom Enterprises, LLC, based in Carmel, Ind. “Rescuing Troubled Alliances,” the last in the Midwest Chapter’s Skills Mastery Series for 2011, was an interactive workshop that benefited from Ransom’s years of experience in biopharmaceutical alliances, as well as drawing on a case study involving a troubled alliance between U.S. and Japanese automotive companies, which participants were asked to help fix and “rescue.” (Along with Andy Eibling, CA-AM, vice president of alliance management at Covance, Ransom will be presenting on this topic at ASAP’s Global Alliance Summit, March 5–8 in Las Vegas.) Ransom’s definition of an alliance is “a complex interaction of business structure and processes, and team and interpersonal activities, whose purpose is to achieve mutually beneficial goals…creating increased value for the partners!” Signs of a troubled alliance that Ransom and participants highlighted include:

– Frustrated relationships, parties ready to walk away – Timing off—in decision making, information sharing, etc. – Misaligned goals or expectations – Noncompliance with the contract—legal issues – Alliance not profitable— expected value was not created – Lack of trust – Poor communication or lack thereof In the evening came the regular chapter meeting, ably moderated by Midwest Chapter president Ann Trampas, CSAP, professional development practice lead at Phoenix Consulting Group and adjunct professor at Benedictine University and the Keller Graduate School of Management. After hors d’oeuvres and networking time, announcements, welcomes to new members, and even a contest, the presentation that followed featured Dave Luvison, CSAP, and Jack Pearson, CSAP, speaking on the topic “Alliance Culture: What Is It? Why Is It Important? And What Should I Do About It?” Luvison, president of Misty Creek Enterprises and professor at the Keller School, has (along with Ard-Pieter de Man, CSAP, ) been hard at work on ASAP’s 4th State of Alliance Management study, and presented some of its preliminary findings. Pearson, global vice president of market development and alliance management at Quintiles and vice chairman of ASAP’s board of directors, added to Luvison’s research into organizational culture some of his own observations gleaned from Quintiles’ experience in creating its alliance management group and its pioneering effort to make the value of alliance management more visible within the organization. Pearson noted that in addition to organizations’ developing “a partnership mentality” as part of their culture, alliance managers need to sell themselves internally, documenting wins and early successes. “Don’t be shy,” he urged. “You’ve got to be out there and visible until they’re sick of you.” Finally, the following morning saw a Strategic Alliance Magazine

small invitation-only group gathered for an Executive Roundtable Breakfast, moderated by Luvison, in which participants discussed the topic “Leading Alliance Culture Change.” Luvison led off by noting that the goal of the roundtable was to get the assembled executives thinking about their roles and responsibilities as alliance leaders to change the climate of their organizations. “If we know more about organizational culture, our interventions can be more precise,” Luvison explained. “If we use the right tools, but our people don’t believe in the values and virtues of partnering, it won’t matter.” And after asking the participants to huddle together at their tables and answer a series of questions about transforming “organizational culture” into “alliance culture,” Luvison remarked that alliance managers have a choice: they can “be the fireman, or the fire marshal.” They can go in and fight fires day to day—or create conditions where fewer fires break out. He ended with an appropriate quote from Peter Drucker: “Culture eats strategy for breakfast.”

ASAP’s New Membership Survey

ASAP will be conducting a survey of ASAP members and nonmember alliance professionals in January. ASAP staff are now in the process of developing a questionnaire about what members and others in the alliance profession regard as the most important things that the association needs to learn from its current and potential future membership base.

New Corporate Members

ASAP’s membership at all levels seems to be growing by the day. There are new individual and corporate members joining all the time, and one current corporate member, Motorola Solutions, Inc., has nearly tripled the number of its alliance professionals who are now included in ASAP’s membership. Meanwhile several leading companies have recently joined the fold as ASAP corporate members. They include: – Bazaarvoice, Inc. Quarter 4, 2011

– Biogen Idec, Inc. – Ciena Corporation – Communications Media, Inc. – Gilead Sciences, Inc. – Thomson Reuters Corporation Is your company a corporate member or global sponsor yet? Have you joined ASAP as an individual member? For more information on membership at any level, contact Lori Gold, ASAP’s manager of member services, lgold@ strategic-alliances.org, +1 781-562-1630 ext. 203.

People on the Move

Donna Peek, CSAP, of SAS Institute has been promoted from a staff role supporting the division to a line position managing a team with a portfolio of global and regional consulting partners. Her official title is now global alliance director. Peek’s boss at SAS, Scott VanValkenburgh, senior director of global alliances and channels, asked her to take the lead in assisting the other members of his management team in getting CSAP certified, and Peek is developing a recommended game plan for them to achieve their certification service points. Peek serves on the board of directors for ASAP, as well as the board of the RTP Chapter (where she is marketing director), and on the ASAP Membership Committee. Meanwhile Kimberly Brue, CSAP, has left Sanofi-Aventis and landed a new job at Biogen Idec, where she is senior director of alliance management. Brue is responsible for implementing a course of action for how the organization manages alliances—and one of the first things she did was bring Biogen Idec on as a corporate member of ASAP. “I joined Biogen Idec to be responsible for managing the alliance with Elan for the Tysabri MS product,” Brue says on her LinkedIn page. “[My] other responsibilities include working with Biogen Idec to implement a harmonized approach in how we manage alliances—creating a discipline of the role of alliance manager, and creating a flexible process and toolbox based on internal needs and alliance portfolio.”

ASAP Chapters

John Parker, CSAP, a UK practice leader for the Phoenix Consulting Group, has been named president of ASAP’s UK Chapter. John Soper, managing director and senior consultant at New Paradigms Marketing Group, is the new president of the Silicon Valley Chapter. Phil Hogg, vice president of North American strategic partners for Moneris Solutions, was recently named acting president of ASAP’s Toronto Chapter. Congratulations to all!

ASAP’s membership at all levels seems to be growing by the day. There are new individual and corporate members joining all the time. In Memoriam: Paul Lawrence

This fall the alliance profession mourned the passing of Paul Lawrence, who died Nov. 1 in Bedford, Mass., at the age of 89. One of the world’s most influential and prolific scholars in the field of organizational behavior at the time of his death, Lawrence was the Wallace Brett Donham Professor of Organizational Behavior Emeritus at Harvard Business School. His research was published in 26 books and many articles and, according to an obituary published in the Harvard Gazette, “dealt with the human aspects of management, including organizational change, organization design, and the relationship between the structural characteristics of complex organizations and the technical, market, and other conditions of their immediate environment.” The Gazette referred to Lawrence as a “giant in the history of organizational behavior.” ASAP chairman emeritus Robert Porter Lynch also remembered Lawrence fondly, writing to other ASAP members and staff: “Many of you may not realize Paul’s monumental contribution to the management of alliances in his development of ‘Differentiation & Integration’ across 13

Collaborative Buzz organizational boundaries. I used Paul’s work as a primary foundation for alliance management best practices when first writing about alliances in 1986 and again in 1992. Without Paul’s insights about how to lead in cross-boundary situations, it would have been infinitely more difficult for our profession to have a management and leadership framework for operations. For his contribution, we have often referred to Paul as the ‘Grandfather of Strategic Alliances.’ “[Paul wrote] a groundbreaking article for the Harvard Business Review in 1967 (yes, 44 years ago!) about the role of ‘integrators’ (we now call them alliance managers). When I read it five years after it was written, I knew I needed to meet this man and study under him. He became my mentor, colleague, friend, and coauthor.

The Lilly NCD Partnership, combines the company’s resources with the expertise of leading global health organizations. “We were collaborating on the ‘Architecture of Trust’ at the time of his death, having just cracked the neurochemical code to trust (to be presented at the Alliance Summit). I will be continuing this work with a forthcoming book entitled Trusted to Lead.” A chair was endowed in Lawrence’s name at Harvard Business School in 1999. It is now held by HBS professor Michael Tushman, who called Lawrence “a role model to those of us fortunate enough to be his students. He was also a role model to the field of organizational behavior. ... He is the standard to which we all should aspire.” A memorial service was held on Nov. 8 in the Story Chapel at Mount Auburn Cemetery in Cambridge, Mass. Those who wish to share their remembrances 14

of Lawrence’s life are invited to do so on his blog, www.prlawrence.com.

ASAP and ASAP Partner Events It’s in the DNA...Right?

ASAP Netcast Webinar (virtual Web seminar) January 10, 2012, 11:00 a.m. ET Presented by Jack Pearson, CSAP; ArdPieter de Man, CSAP; and Dave Luvison, CSAP (free of charge and available to ASAP members only; to register visit www.strategic-alliances.org)

BioBusiness 2012

High-level biopharma strategy and bio-partnering conference January 31–February 2, 2012 Radisson Blu Hotel, London, England, UK (to register visit wbresearch.com/ biobusiness/home.aspx)

2012 ASAP Global Alliance Summit

Mastering the Art and Science of Alliance March 5–8, 2012 Caesars Palace, Las Vegas, Nev., USA (to register visit strategic-alliances.org)

Alliance News

Lilly Invests in Partnership to Address Noncommunicable Chronic Diseases in Developing Countries

Eli Lilly and Company announced a $30 million commitment over five years to fight the rising burden of noncommunicable diseases in developing nations. Lilly is launching The Lilly NCD Partnership, which combines the company’s resources with the expertise of leading global health organizations to identify new models of patient care that increase treatment access and improve outcomes for underserved people. The partnership will initially focus on diabetes, a core business area in which Lilly has deep expertise. Noncommunicable diseases (NCDs), also known as chronic diseases, include

cardiovascular diseases, diabetes, cancer, and chronic respiratory diseases. The first phase of The Lilly NCD Partnership will focus on improving diabetes care in targeted communities in Brazil, India, Mexico, and South Africa. Lilly and its partners continue to develop country-specific programs that will launch in early 2012, and will develop country-specific milestones that, if achieved, will trigger future investments. Partners include: – Brazil: Hospital Israelita Albert Einstein—Diagnostic & Preventive Medicine and Research Institute – India: The Public Health Foundation of India, Project HOPE, Population Services International – Mexico: The Carlos Slim Health Institute—Casalud – South Africa: The Donald Woods Foundation, Project HOPE The new program, based on the concept of “shared value,” is designed to identify comprehensive, sustainable approaches to patient care, which, depending on local needs, may include everything from patient education and provider training to increased access to treatment. The concept of “shared value,” developed by Michael Porter and Mark Kramer and originally published in the Harvard Business Review, occurs when a business identifies a select societal need and applies its business model in collaboration with others to find new solutions.

More Big Pharma Companies Restructuring to Strategically Outsource Trials to CROs According to a recent survey from William Blair, about 80 percent of big pharmaceutical companies either are in the process of restructuring or have already completed plans to strategically outsource more of their trials to contract research organizations (CROs). That’s a substantial amount, but not shocking in today’s business climate, said analyst Strategic Alliance Magazine

John Kreger, author of the report, which asked 174 pharmaceutical and biotech companies about their use of and thoughts about CROs in an effort to identify trends and changes. Of 167 companies that responded to the survey, said Kreger, “What is shocking is that 21 percent of respondents said they had no plans to outsource.” Among the remaining 79 percent, just 12 percent said they’ve completed their restructuring. More companies may be poised to announce deals similar to those of summer 2011 between Pfizer, Icon, and Parexel, or Eli Lilly and Company’s huge 2008 strategic alliance with Covance. Either way, the survey suggested that several more large strategic-partnership deals between big pharmaceutical companies and CROs could be on the horizon. Kreger said many eyes are watching Merck, which, having bought Schering-Plough in 2009, seems ripe for a strategic outsourcing deal. The survey, which William Blair has undertaken annually for the last seven years but more recently increased to every six months, also asked pharmaceutical and biotech companies which CROs were best positioned to win future work. The top responses for early-phase work: Covance and Charles River Laboratories. For later-phase work, Quintiles was among the top, along with Covance. The survey was undertaken in conjunction with the Life Science Strategy Group and will be conducted again in spring 2012.

Adobe Partners with OptiMine in Improved SearchCenter+

Adobe Systems, Inc., has announced a partnership with OptiMine Software, Inc., adding keyword performance predictive analytics to the Adobe SearchCenter+ search marketing management system. This follows the July release of Adobe SearchCenter+ 4.0, which focused largely on updating the five-year-old user interface carried over from Omniture. OptiMine predictive keyword analytics Quarter 4, 2011

uses SearchCenter+ keyword performance data from paid search campaigns in its algorithm to more accurately predict keyword performance. The system is capable of automatically generating optimal keyword bids. According to Adobe, search marketers can expect higher return on ad spend, increased leads, higher conversion rates, and greater profit per keyword. SearchCenter+ also gives users the ability to pause and restart keywords based on inventory availability. Both parties expressed their optimism that the partnership will bring added value to Adobe clients. Adobe customers can add the new OptiMine to their contracts immediately.

Start Your Engines: GSK Allies with McLaren

GlaxoSmithKline has forged an alliance with motor sport company McLaren, concentrating initially on manufacturing, R&D, and consumer health. GSK becomes the first drug maker to tap into McLaren’s expertise in “engineering, technology, analytics, and strategy modeling” developed over decades of Formula 1 racing. The five-year agreement involves creation of a £20 million research unit near McLaren’s headquarters in Woking, UK, that will open in 2013 and allow scientists and engineers from both companies to work together on projects. The focus of the manufacturing project is on improving the performance of GSK’s production lines, reducing the number of breakdowns, and improving cost and customer service, according to the drug maker. McLaren will apply and adapt modeling systems it uses to keep engines in good working order across the F1 racing season. In R&D, McLaren will help GSK speed up clinical trial design by allowing it to monitor patients and adjust treatments in real time, using technology currently employed to monitor a car’s performance during a race with wireless technology. This enables the team to make regular

minor adjustments every few minutes to avoid having to make significant timeconsuming interventions. Finally, in the consumer healthcare business, the two companies will work on a market monitoring and intelligence center, which will be used to gauge competitor activity and customer needs and “inform decision making around inventory management, pricing, and retailer stocking,” according to GSK. This type of cross-industry alliance is becoming more prevalent, creating new opportunities for alliance managers.

GSK becomes the first drug maker to tap into McLaren’s expertise, developed over decades of Formula 1 racing. Bristol-Myers Squibb and Gilead Sciences Sign Licensing Agreement

Bristol-Myers Squibb and Gilead Sciences have announced a licensing agreement for Bristol-Myers Squibb to develop and commercialize a fixed-dose combination containing Bristol-Myers Squibb’s protease inhibitor Reyataz (atazanavir sulfate) and Gilead’s cobicistat, a pharmacoenhancing or “boosting” agent that increases blood levels of certain HIV medicines to potentially allow for one pill once daily dosing. Gilead is currently studying atazanavir and cobicistat in Phase 2 and 3 studies in HIV-1 treatment-naïve patients. Bristol-Myers Squibb will be responsible for the formulation, manufacturing, development, registration, distribution, and commercialization of the combination worldwide. Under the terms of the agreement, Bristol-Myers Squibb will pay Gilead an undisclosed royalty based on annual net sales of the product. Gilead retains sole rights for the manufacture, development, and commercialization of cobicistat as a standalone product and for use in combination with other agents. 15

your feedback The piece on collaborative selling (“Collaborative Selling: Getting Sales Reps to Leverage the Power of an Alliance,” Strategic Alliance Magazine Q3 2011) covered the most important points related to this topic—getting influential sales leaders on board, earning those first wins selling with your partner, implementing effective governance and rules of engagement, etc. Collaborative selling is the “last mile” in alliance management. If we as an industry fail in this part of the alliance management life cycle, all of the work completed before it is for naught.

Ultimately, successful collaborative selling results from a customer-driven sales orientation. Companies need to first figure out what will create value for the end customer. From there, they will need to work backwards and align: 1) internal resources and assets, 2) the aforementioned identified needs of their customers (as well as their customers’ customers), and 3) partner ecosystems. As the article notes, once collaborative selling becomes part of the sales force’s DNA, it generates momentum

that can sustain itself. When sales people are working from the customer back, they will automatically consider the partnerships that could be valuable in creating that solution or service that will meet the customer’s evolving needs, along with all of the other internal resources that could help land the deal. Lorin Coles Managing Director and Cofounder Alliancesphere, LLC Atlanta

our thanks

Follow these leaders! Learn how you can be a benefactor —and your company a sponsor—at strategic-alliances.org or call ASAP at +1 781-562-1630. Your support makes all the diﬀerence.

ChARTER ASAP MEDIA SPONSORS Eli Lilly and Company – www.lilly.com Phoenix Consulting Group – www.phoenixcg.com Quintiles – www.quintiles.com The Rhythm of Business – www.rhythmofbusiness.com Vantage Partners – www.vantagepartners.com Xerox – www.xerox.com

CHARTER BENEFACTORS Thanks to you, the vision of ASAP Media has become a reality. ASAP Media productions—including Strategic Alliance Magazine, ASAP eNews monthly newsletters, our “Challenges in Alliance Management”webinar series, ASAP TV, and the Collaborative Buzz blog—are only possible because of the growing financial support of our sponsors and benefactors. Sponsors are our equivalent of advertisers in a for-profit magazine; benefactors are ASAP Members who agree to pay for a subscription to Strategic Alliance Magazine (even though you get it for free if you’re an ASAP Member). So thanks to the companies and individuals below for being among the first to step up! We look forward to many others following your lead.

PLATINUM Benefactors (US $150): From F. Hoffmann–La Roche: Esfandiar Ardalan, Yuko Baltisberger, Gad Bitton, Robin Breckenridge, Satbir Kaur, Joerg Kazenwadel, Mark Noguchi, Petra Sansom, Christoph Sarry, Urs Schleuniger, Annette Weissbach. Thanks also to Krys Corbett, Hong Hong, Henrik Jochens, Philip Sack. gOLD Benefactors (US $100): Lorraine Bassett, Shelley Hansen, ImmunoGen, Dennis McCullough, Susan Sullivan SILVER Benefactors (US $50): Ed Sullivan Subscribers: Craig Battleman, Matthew Hammer, Pansy Lee, Philippe Regnault, James Soudriette, Vincent Turula

Strategic Alliance Magazine

Collaborative Buzz Cisco and Damovo Begin Partnership in Brazil

Cisco Systems, Inc., and Damovo Group have begun working together to sell a corporate communications and collaboration service in Brazil, according to The Business Journal. The service is being run out of two data centers in Brazil. Cisco provides the distributed computing technology used in the package, while Damovo provides the software. The two companies said selling the package—communications between land lines and mobile phones, instant messaging, and conference technology— as a service will let customer companies in Brazil avoid having to pay for their own infrastructure and gives them more flexibility, since they can choose the applications they want, and will save on electricity.

Accenture Named 2011 HP AllianceONE Systems Integrator Partner of the Year

Accenture has been recognized with a 2011 HP AllianceONE Partner of the Year Award in the category of Global Alliances—Systems Integrator. This year marks the first time Accenture has won the award. The HP AllianceONE Partner of the Year Awards are presented to an exclusive set of HP alliance members in recognition of their outstanding accomplishments in the development and delivery of innovative solutions that achieve standardsetting levels for business excellence and client satisfaction. “The award validates our joint activities, particularly in the all important area of systems integration,” said Arthur Morley, senior executive and global lead of Accenture’s HP alliance. “But the biggest prize is helping our clients achieve tangible results. That’s been our goal since Accenture and HP began working together nearly two decades ago.” “To manage the changing demands Quarter 4, 2011

of their customers, organizations have to accelerate time to market and time to business value,” said Duncan Campbell, vice president of converged infrastructure at HP. “HP, with partners like Accenture, helps break down rigid IT silos with infrastructure specifically engineered to drive out cost and provide the foundation for agile service delivery.”

Polycom and Motorola Team on Enterprise HD Video Software Solution for Motorola XOOM

Polycom, Inc., a provider of standardsbased unified communications (UC), and Motorola Mobility Holdings, Inc., today announced the general availability of Polycom RealPresence Mobile for Motorola XOOM. With Polycom’s HD video technology on a Motorola tablet, users can connect simultaneously to other standards-based video systems, including immersive video rooms, group/desktop systems, and laptops. The new software application extends Polycom’s HD video collaboration technology to deliver to tablets the same high-quality, secure, reliable video experience customers are accustomed to inside the office. It is available via a free download from Android Market, and Motorola becomes the first company to offer the RealPresence Mobile application preloaded on its tablet devices, starting in Q4 2011. Polycom and Motorola, building on their long-standing relationship, have successfully seeded Motorola XOOM tablets loaded with the RealPresence Mobile to leading Fortune 500 companies across the United States for beta testing. Built on the RealPresence Platform and featuring an intuitive interface, RealPresence Mobile allows users to simultaneously view content in HD (such as presentations) during the video session. The solution delivers video and audio for a higher-quality experience over wireless networks and supports firewall traversal and virtual private network (VPN) clients

so users can easily join a conference from any WiFi, 3G, or 4G network. The RealPresence Mobile software application was announced at the CTIA Enterprise & Applications 2011 conference in San Diego, where Polycom president and CEO Andy Miller demonstrated the new mobile solution during his keynote address on Oct. 12.

To manage the changing demands of their customers, organizations have to accelerate time to market and time to business value. Quintiles and Intarcia Embark on Global Collaboration to Treat Type 2 Diabetes

Intarcia Therapeutics, Inc., has announced the signing of a letter of intent with Quintiles to collaborate on the global Phase 3 program for Intarcia’s ITCA 650 (DUROS subcutaneous continuous delivery of exenatide). The program aims to demonstrate multiple advancements in GLP-1 therapy to better address the unmet needs of the almost 350 million people worldwide suffering from Type 2 diabetes. ITCA 650 utilizes a matchstick-size, subcutaneous mini-pump that allows smooth, continuous delivery of exenatide from a once-yearly placement. This novel delivery of GLP-1 therapy has been shown to improve HbA1c, weight loss, and tolerability and also virtually ensures patient compliance and adherence. By improving the clinical profile and removing the self-injection barrier to use, ITCA 650 would also hold promising potential for use in earlier lines of therapy. Upon execution of the definitive agreement, Quintiles will initiate a global Phase 3 program including the six Continued on page 56 17

Strategic Alliance Magazine

Congratulations! You’ve Been Appointed to a Governance Committee. Now What? Selection and Ramp-Up of Governance Committee Members Is Critical to Alliance Success By Jan Twombly, CSAP, and Jeff Shuman, PhD, CSAP

It is often said that many alliance managers stumble into the role. They don’t have the title, it isn’t included in performance objectives, and they don’t have any training in it. Practically, the same can be said for executives asked to serve on governance committees. Sure, they’ve been part of many committees, boards, and task forces before, but how many of them were responsible for an alliance, where accountability is to both the alliance and the individual’s employer? That dual accountability fundamentally impacts the role. The simple fact is that most people who assume a governance committee post for the first time are not really sure what is expected of them. Yes, they are smart folks and sooner or later they’ll figure it out. But before they do, they are in a position to inadvertently cause damage by making commitments that shouldn’t have been made, saying something that shouldn’t have been said, or doing something that undermines trust. Many alliance managers reading this are likely saying to themselves, “I can name plenty of people who have taken part in several governance committees and still don’t get it!” Imagine the potential pitfalls for first-timers. The governance committee role is a challenging one, and it is the alliance manager’s responsibility to ensure that recruits are up to the task. For most governance committee members, it is a small Quarter 4, 2011

part of their workload and not always a priority. For those members who also participate in alliance working teams, it can be hard to separate the project work from the governance work. Effective governance is one of the core responsibilities of an alliance manager. So what can you do to ensure that governance committee members are trained and able?

Get the Right People at the Right Time Too often, assigning people to governance committee roles is haphazard, an ad hoc process in which anyone available gets tapped, or the same people are always tasked with the responsibility. Neither is an appropriate approach. Introducing a selection process can be as easy as answering a simple set of questions when governance committees are being formed. 19

The questions you’ll want to address in assessing potential governance committee members include: – Does he/she represent the most critical functions at this stage in the product life cycle? – Does he/she have the appropriate level of decision-making authority? – How many other governance committee responsibilities does he/she have?

Take stock of governance committee members. Are they the right people for the current stage of the alliance? It is also important to consider the individual’s role on the project team, if he or she has one. The governance committee and core team member roles are vastly different, but they can be hard to keep separate. Think of the governance committee—or steering committee, if there is a multitiered structure—as the board of directors of the alliance. Its role is to make the policy and strategic decisions that the project team then carries out. Also, keep an overall map of governance committee membership so that it is easy to see who is involved on each of the active committees. It is entirely likely this covers hundreds of people. With it, you will know that Mary cannot possibly be assigned to a fifth joint steering committee and you will have the facts at hand

EXHIBIT 1: ALLIANCE BRIEFING BOOK TABLE OF CONTENTS Collaboration overview and contract summary Governance structure and calendar Roles and responsibilities of each governance committee Committee rosters Committee/team operating principles Communication plan and protocols to make that case. During the life cycle of an alliance, team members and even committees themselves come and go. As part of an annual evaluation and planning process—you have one, right?—take stock of governance committee members. Are they the right people for the current stage of product or solution development? Are the committees still appropriate at this time? The alliance management team should make recommendations for governance committee assignments and reaffirm these committee members on an annual basis, or whenever there are significant transitions in the work of the alliance.

Start Them Off Properly When a new alliance begins, alliance managers follow a start-up process that includes a work stream for staffing and launching governance. As part of the process, the initial governance committee members learn about the alliance and the roles and responsibilities of each of the partners and governance committees. Savvy alliance managers will capture all of the documentation generated during the start-up process and create an Alliance Briefing Book. Keep the briefing book up-to-date and use it to onboard all new governance committee members. Do so as soon as possible after they are named. In periods of high numbers of newly appointed people, schedule some standard onboarding meetings and let people participate as they can. Just make it a requirement that they attend within 90 days of their appointment.

“Great, thanks... I’ll just run these by the Governance Committee.” 20

For the members of the most senior governance body and the heads or chairs of the functional committees, meet with them personally. Alliance managers need to build a strong working relationship with these members, so start it off right. At the first meeting present the briefing book. Then meet regularly until committee members are fully up to speed on the alliance and integrated into the governance process. These can be 15-minute sessions once a week. The Strategic Alliance Magazine

EXHIBIT 2: PRE-GOVERNANCE MEETING PLANNING Required Participants: Governance committee members Key supporting personnel Alliance manager Agenda Topics: Review open issues, new issues, impending deadlines and proposed governance committee meeting agenda Reach consensus on what decisions the governance committee must make and your company’s perspective Discuss the partner’s likely perspective Plan the negotiation, if one is expected to be needed to reach agreement Review any presentations your company plans to make purpose is to help the new committee member become fully knowledgeable about the alliance and the issues currently facing it—and to ensure that it becomes part of her regular work, not something that is only thought about when a formal committee meeting is occurring.

Prepare for Governance Committee Meetings Governance committees are resource intensive. They consume a lot of time and money, but they are essential, so a lot of attention must be paid to making them effective. A pre–governance committee internal prep meeting is an excellent tool to ensure that people are prepared and aligned. Without it, people do not have direction to guide discussion and decision-making during the governance meeting, which may suppress transparent conversation and new ideas. Alliance managers must make the pre– governance committee meeting as important an obligation as the governance committee itself! It doesn’t have to be a long or complicated meeting, as long as it covers the topics in Exhibit 2, above. If the discussion is expected to be particularly challenging—because it is either highly technical or likely to be contentious—script it out. Create a dialogue map that charts how and by whom issues and possible solutions will be presented. Of course, the partner’s response can vary widely, so a number of possibilities and “what if ” scenarios must be brainstormed. You will still generate options together with the partner— but only after carefully considering the implications Quarter 4, 2011

of some possible options beforehand so that you can engage in much more constructive discussion.

Encourage Positive Behavior

More often than not, first-time appointment to an alliance governance committee is a sign of recognition. For some more senior executives, alliance governance is rapidly becoming part of the job. Alliance managers have to support and provide developmental assistance to both rookies and veterans. They also need to ensure that governance committee members know what constitutes good behavior, including: – Building relationships with direct counterparts and other key personnel from all alliance member organizations – Honoring communication protocols – Knowing the boundaries of the agreement – Putting the best interests of the alliance ahead of all other interests—while understanding how the alliance and company interests intersect – Listening to and considering others’ views and ideas Governance is the management of an alliance. Just as companies fail because of ineffective management, alliances do not achieve their potential without qualified and proactively engaged governance committee members who are appropriate for the current point in the alliance life cycle. One of the alliance manager’s greatest contributions to alliance success is to get the governance right. That starts with getting the right people on the committee, preparing them well, and supporting them in carrying out their challenging assignment. n

Jan Twombly, CSAP, and Jeff Shuman, PhD, CSAP, are the principals of The Rhythm of Business, a consulting, education, and research firm that partners with global companies to advance their alliance and collaboration management capability. Additionally, Twombly serves on ASAP’s board of directors and its executive committee, and Shuman is a professor of management at Bentley University. Visit their Web site at www. rhythmofbusiness.com to access an extensive library of publications, presentations, tools, and other resources. 21

Strategic Alliance Magazine

Paving the Way: Good Governance Helps Partners Make the Journey Together No Matter the Industry, an Alliance Will Go Nowhere Without a Well-Defined Structure in Which All Parties Feel Like They’re in the Driver’s Seat By Jon Lavietes

Quarter 4, 2011

One of the most important elements of a successful alliance is a robust governance structure: a configuration of committees, rules of engagement, escalation processes, and other predetermined ways of order that help organizations with different cultures and processes define how they are going to work together. Recently, ASAP Media convened a virtual panel of alliance professionals from a variety of industries to talk about the finer points of alliance governance. Roundtable participants included: Pamela Duchars, senior manager of alliance management and business development at Emergent BioSolutions; Leona Helverson, CSAP, global alliance executive at Verizon; Dean Pope, CSAP, general manager of strategic alliances at Canada Post Corporation; Shelley Hansen, CSAP, head of global alliance marketing for Atos; and Mike Ransom, CA-AM, principal of Michael O. Ransom Enterprises, LLC.

What is governance? Pamela Duchars: Governance provides a framework of how two different organizations are going to work together, including but not limited to defining expectations, roles and responsibilities, communication, and conflict resolution. A governance structure can help guide how two companies interact with each other and establishes a common set of rules on how they should engage with each other. The structure is a mechanism to try to align two organizations that don’t naturally work together, and try to ensure consistency as those two organizations change. Shelley Hansen: Governance to me is the stakeholders at the executive level that, at the end of the day, have that vested interest in the results, the outcomes, or whatever the performance measurements are in any type of initiative, campaign, or activity. To me, governance implies that there will be an involvement from high-level officials in setting strategy, executive decisions, and unfortunately from time to time in the escalation of issues.

You can look at alliance management in general and everything that goes into it and call it governance. It is a process to define a model, policies for business risk, decision rights, controls, and measures. It is a checkpoint for integration into business planning, budget development, goal setting, and alliance performance. Governance includes a communication plan for measurement and control systems that assess, direct, and correct execution. Leona Helverson: I run into some people who define [governance] in a much broader sense—not limited to the different roles that get informed, the escalation process, regular reporting, and decision making. 24

Mike Ransom, CA-AM, principal of Shelley Hansen, CSAP, head of global Michael O. Ransom Enterprises, LLC. alliance marketing for Atos.

A team that I’ve been working with from a very different perspective was looking at a services model, which actually doesn’t have to do with alliances. They said they were going to put together a governance model. I said, “Okay, that’s interesting.” Then, what they put forth was a very different way of looking at governance. You can look at alliance management in general and everything that goes into it and call it governance.

What types of governance structures do organizations utilize and in which situations do these models work best? Mike Ransom: [Governance structures] vary by the type of deal. If it is an in-license, you might not have much of a governance structure at all. You might just have some obligation to report back to the company you’ve in-licensed the product from—development progress or milestones, or something similar. What is probably most common in a typical strategic alliance is a governance structure that involves a steering committee of seniorlevel individuals. It could be company senior-level or line-of-business senior-level executives based on the depth and breadth of the collaboration—its strategic importance, complexity, and the value involved. Then there will be an operations committee, and you might have specific subcommittees underneath based on the functions that are involved. So in drug development, for example, you could have a medical working group, a financial working group, a commercial working group, a manufacturing working group, and an R&D working group based on the status of the asset in development. Helverson: The more strategic and the more broad the relationship is, the more complex the governance structure becomes and Strategic Alliance Magazine

the more we pay attention to setting up the formal processes. For some of the smaller alliances where there are not as many initiatives and stakeholders, it could be something that’s more informal in terms of key stakeholders that are informed and involved in decisions and so forth.

delivering an initiative or campaign down to the field level. In essence, it is a cross-functional team that abides by a common set of operating principles.

Duchars: I would echo the exact same things. Governance structures are modeled for each specific alliance, the nature of the partnership, and how broad the scope is. Many alliance structures provide for an executive committee with key decision-making responsibilities that align with the organization with whom they’re working. The structure supporting each alliance and how issues are elevated depend on the terms of each alliance. What’s generally uniform is an executive committee.

Duchars: Getting the right individuals into governance roles can sometimes be an internal advocacy campaign. You look at the qualified individuals in your organization and consider if they match the individuals being put forth in the other organization. Sometimes multiple people come forward and it’s almost difficult to choose, say, the three people that you want to have on the committee. Then other times it is a challenge to get someone to join. It also depends on the engagement level of management for that particular alliance. In most cases, though, individuals are chosen based on their expertise and the requirements of the terms of the collaboration.

Dean Pope: For large strategic alliances, we typically use what we call a “summit committee,” which is another way to describe an executive committee. We then use alliance management committees to actually run the day-to-day business. The summit committee is focused on strategic direction, new initiatives, and overall results. But we make sure that the operating committees, the alliance management committees, are fully empowered by contract to run their business and make decisions.

Who are the “right” people for governance committees? Pope: I won’t enter into an alliance unless we get line-of-business owners who control budgets and investment dollars, and who have the human resources to make it happen. If we can’t get those people on the governance bodies, then it’s a full stop—a complete waste of time. Ransom: Selection of members to the governance committees is almost as important as the execution of the governance itself. You must have people that have responsibility and authority in their own organization or function, and the ability to make decisions on behalf of the company. One of the other things I’ve had experience with is defining characteristics of a good alliance leader and a good alliance team member. We need people that are open-minded, good communicators, see different perspectives, and that are flexible and not locked into their own way of thinking. It helps to have individuals with a good reputation in the company, [who are] respected in their area of expertise.

How do you ensure you get those individuals into governance roles?

Selection of members to the governance committees is almost as important as the execution of the governance itself. You must have people that have responsibility and authority in their own organization or function, and the ability to make decisions on behalf of the company. Helverson: I think the governance [selection process] is a good way to increase your chances of engagement because what you’re doing is defining what that person’s role is, what you’re expecting them to do, and why you need them to be a part of this governance body. The chance of their engagement goes up compared to going to executives or any stakeholders on an ad hoc basis. They are officially part of your structure and part of the governance, and they know they play a key role in the alliance. That increases the chances that they will be supportive.

How do you ensure that governance provides the structure necessary for the alliance to function without bogging it Hansen: The folks that are appropriate for [an executive steering down in too much red tape? committee] when two alliance parties develop a solution to take to market would be a stakeholder from the governance team that represents that vertical market, an executive that owns that horizontal solution area if you are going at it from a horizontal perspective, and someone from the sales organization, because without sales’ involvement it’s very difficult to be successful in Quarter 4, 2011

Ransom: If you do this right, you actually do create a fair amount of process, but with a purpose. That often drives smaller companies completely crazy. But at the end of the day, if you don’t have some process then you actually end up getting twisted around the axle. Governance becomes very inefficient, which is probably even Continued on page 53 25

The Alliance Management Career Path

How Do Alliance Managers Get Ahead in Their Careers If Nobody Knows What They Do? By Michael Burke

Strategic Alliance Magazine

Recently I was in a meeting where a senior leader described another executive’s baffled confession to his alliance manager: “I know if I put you into the deal, it works, and if I take you out, it doesn’t. I just don’t know why.” This rather startling admission points to the confusion that still exists about the role of the alliance manager, and illuminates some of the questions still swirling around the profession: Is alliance management an end in itself, or a stepping-stone to other positions? Is it a recognized discipline that is evolving, or is it suffering from an “identity crisis”? Is the role truly strategic, or merely administrative? If alliance management is the “secret sauce” that makes complex collaborations run smoothly toward the fulfillment of their objectives, is it still the business world’s best-kept secret—the terrific profession that nobody knows about? And perhaps the biggest question: If so few in the corporate realm—even in areas where alliances are common—understand the role of the alliance manager, how are alliance professionals supposed to advance in their careers, gain credibility and exposure, and move upward and outward into other leadership positions?

The “Special Ingredient” To some extent, alliance experts say it’s a “both and” proposition: the old mentality, with its lack of understanding of the crucial role alliance managers play, coexists alongside a growing awareness of the indispensable skills alliance professionals bring to the table and their positive impact on the bottom line. “That executive [mentioned above] is acknowledging, ‘I don’t know enough about alliance management because I’ve never been trained in that discipline.’ As alliance management is a relatively new practice, it wasn’t a function in many organizations so many senior executives never had exposure to it,” said Jack Pearson, CSAP, global vice president of alliance management and market development at the North Carolina–based pharmaceutical company Quintiles. “Now they recognize that as some partnerships work extremely well, others, which don’t have specific alliance management involvement, are not working out at all. He’s saying, ‘I don’t know the difference, except there’s usually this special ingredient called alliance management involved.’” Pearson heads Quintiles’ pioneering Global Alliance Management Group, serves as vice chairman of ASAP’s board of directors, and admits he is “passionate” about Quarter 4, 2011

the contributions of alliance management. But, he warned, “There’s not ever going to be a complete adoption of the alliance management skill set by many organizations. Many, to accommodate market demands, will give it lip service, or grudgingly allow ‘accidental’ alliance managers to contribute within a partnership. But it takes time to get an organization to look beyond ‘operational excellence’ and ‘contracted metrics’ and truly recognize the long-term benefits a well-managed and -reported partnership can yield.”

Is alliance management still the business world’s best-kept secret— the terrific profession nobody knows about? While alliance management may be considered “just another level of bureaucracy” at some companies, Pearson pointed out that a potential partner with alliance management experience may challenge a skeptical organization to enhance its collaboration skills. “[That partner will say,] ‘We need to go a cut deeper, know exactly how you are intending to populate the governance of this partnership, and will you have a representative at your organization who is solely focused on the success of this partnership. Not just a senior leader or operational head, but a dedicated individual or process that ensures I have access to best practice and senior leadership if necessary.’” Pearson said that Quintiles now explicitly requests that its partners provide some reciprocal alliance management practice in their collaborations with the company. “We now have built contract language into our agreements to require alliance management involvement from our partners,” he said. “So we can communicate and have basically a mirror image of what we built at Quintiles—the same type of sophistication.”

Selling Yourself in Your Organization—and in the Hiring Process So in this fluid and often precarious environment, how do alliance managers advance in their careers? How do they showcase their skills and become more visible— internally or externally—so they can succeed? 27

“To me, what’s interesting is how the alliance management discipline is still evolving,” said Greg Flanagan, principal and founder of Emerging Healthcare Partners, LLC, a Danbury, Conn.–based boutique executive search firm specializing in the biotech, pharmaceutical, and medical Eric Rosenson, vice president device industries. “In some Jack Pearson, CSAP, global vice pres- Greg Flanagan, principal and ident of alliance management and founder of Emerging Healthcare of talent acquisitions at organizations it’s more stramarket development at Quintiles. Partners, LLC. Ruderfer & Associates, Inc. tegic than others. In some it’s essentially administrative. Some companies don’t reAlliance Managers: They’ve Got Skills alize the impact it can have on the business. So it’s imOne thing the alliance management job seeker has portant for alliance managers to help their organization going for him or her is that the skill set is so diverse as realize the revenue responsibility and impact it can have. to be applicable to a variety of roles. “Alliance manI always bring it back to the bottom line. You have to agement gives you a lot of skills to do different things. demonstrate the value to the business.” That’s the beauty of it,” said Rosenson. Flanagan also emphasized that alliance managers who are looking to move upward or outward in their careers need to sell themselves with specifics about their bottomline impact. “In an interview, they need to talk about their experiences in alliance management, but also about how it impacted the business. They [often] don’t finish the thought about the relationship—how the function impacts the business. Some folks have to do that internally if they’re not getting the recognition for the projects they’re spearheading. I tell them, ‘You’ve got to demonstrate, I’ve done this and this, created this amount of profitability, we were able to grow the business X percent based on my relationship with the partner.’” Eric Rosenson agreed that specifics tied to creation of value for the business are vital for alliance managers seeking to move into new positions—especially in organizations that may not yet have a well-developed alliance management capability or awareness. “It’s always beneficial to flesh it out on a résumé,” said Rosenson, vice president of talent acquisitions at Ruderfer & Associates, Inc., an executive recruiting company in the biopharmaceutical sector based in Verona, N.J. “Different companies have different definitions of alliance management—not everybody does recognize it. Companies hiring alliance managers for the alliance management role tend to have a sophisticated understanding. But it’s good management of your career to be as granular as possible. It may not be a bottom-line impact that you can measure, but you definitely want to articulate it. As recruiters, we always tell people to revise the résumé as necessary.” 28

The abilities alliance managers develop can have a profound effect on other parts of an organization. Among them are the practice of thinking strategically about the company and the partner’s respective businesses, project management skills honed from executing the day-to-day tasks that fulfill the contractual obligations of an alliance, and managing all the interdisciplinary groups—the ability to work with anybody in the company. In addition, alliance managers typically have strong contract negotiation and analytical skills. This varied skill set can lay the groundwork for a move to business development or the commercial side of the pharmaceutical industry and open the door to a broad range of possibilities in other sectors such as procurement or sourcing—“wherever a relationship with a business partner is essential,” according to Rosenson. “That just makes alliance management people more skilled. Sometimes HR people don’t understand that, and some hiring people may not understand that. We address that by giving them specifics, not just a title, but ‘here are some of my accomplishments,’ to make the hiring people understand what the skills are,” he added. Pearson also sees the particular skill set of the alliance manager as key, both to the success of the role and to mobility into other positions. And he views it as his “primary responsibility” to cultivate those skills and further the professional development of the alliance managers working under him. An alliance manager, he said, “needs to be an indiStrategic Alliance Magazine

vidual with a degree of maturity in the industry; we have to have individuals with the experience, knowledge, and background to stand in front of our alliance partners and describe to them what alliance management at Quintiles is all about, with the gravitas or authority to speak about all that alliance management includes: product knowledge, knowledge of our own organization, and the need to be fairly well read about what’s going on in the market that would affect the alliance. [They must give our partners] the confidence that Quintiles has the ability to drive the value proposition that was shown in the beginning of the alliance to a higher level.”

Moving Onward and Upward But does the breadth of alliance managers’ skills make them more employable? Are they transferable to other management positions and beyond—even, ultimately, to the C-suite? “We’re finding more and more [that this question is] being answered not by words but by physical examples of alliance managers taking on new roles and responsibilities,” said Pearson, who noted that at least two senior executives in his own organization came up through the alliance management ranks elsewhere. “Clearly an alliance manager is very much recognized for the skills of a general manager’s trade: to strategically contribute, to lead in the direction that allows for flexibility and accommodation, but driving aggressively toward goals. Leadership, communication, the ability to overcome obstacles—those are the skill sets that an alliance management professional is attaining. As time goes by and more and more alliance management skills are more recognized on the corporate bottom line, these individuals will be recognized not just for operational skills, but also for the general management skills that are critical in those higher-level positions.” And companies that are hiring are actually hungry for these skills and the individuals who have this type of wide experience. “They want people who are strategic, who can dig into the issues and be very tactical,” said Rosenson. “As companies get leaner and meaner, being able to do both things, strategic and executional, is very important. [Alliance managers] can go in any kind of direction depending on [their] own interests and skills. It’s a very good stepping-stone in terms of career development.”

ability to manage a relationship is critical,” Rosenson explained. “You have a contract that is not necessarily a fixed-in-stone type of thing—it’s evolving, as circumstances and conditions change, it’s a long-term relationship. The ability to manage those relationships, to get each partner to find compromises and new ways to work together as the environment changes, is really critical.”

The Future of Alliance Management: Certifiably Bright? But where is the profession heading? “Alliance management has been around for 10 or 15 years, but it’s still young, at least in biopharma,” said Flanagan. “Maybe not in its infancy, but its adolescence at least. That’s a challenge and a crossroads that a lot of folks in this discipline are encountering—because it’s still often perceived as a staff role, not a revenue responsibility. The biggest thing I hear is [alliance managers] can be overlooked, or not recognized for senior management roles. It should be the hottest discipline out there—it’s grown, but it hasn’t taken off like I would expect it to. Some organizations don’t know what to do with it. There are some folks out there that feel it’s an identity crisis. Executives look at alliance managers and say, ‘I don’t know what they do.’ So they’re not first in mind for an opening.” Rosenson observed that his executive search firm is placing more alliance managers and finding more companies looking for them these days. “Alliance management is something that the largest companies have,” he explained. “It’s one of those roles that in a smaller company, different people will wear that hat. What we’re seeing is that the midsize companies, as they’re growing, recognize the value of alliance management and now build it into their organization. If you look at the growth, where you’re seeing it is in the midsize companies Continued on page 57

And what some might see as the “soft” skills practiced by the alliance professional may actually be at the core of what will make them employable— and successful—in other roles. “The Quarter 4, 2011

Star Alliance Continues to Soar

Top Alliance Executive Says Global Recession Fails to Ground Growing Airline Partner Ecosystem By Jon Lavietes

When Horst Findeisen, vice president of business development at Star Alliance, addressed attendees at the 2009 ASAP Global Alliance Summit, he told a story of an alliance that had grown from five airlines to two dozen in just 12 years, providing customers a familiar corporate brand, seamless services, and routes all across the globe. He spoke of an alliance that had finished initiatives it hoped would enable it to weather a global recession that had just gotten under way in earnest and was almost unanimously predicted to be lengthy by economists. Star Alliance consolidated facilities under one roof in major airports; rolled out a robust common IT infrastructure replete with exchange network, software, and hardware for all scheduling, reservation retrieval, fare quoting, and departure control; standard30

ized its check-in processes; and agreed to common benefits for each airlineâ&#x20AC;&#x2122;s top customers. Moreover, its governance structure and processes were well developed at that point. Members conformed to 75 mandatory standards that covered processes for every element of business operations, including but not limited to marketing, sales, customer service, quality control, safety, and crisis communication. The organizationâ&#x20AC;&#x2122;s structured approach to innovation and new Strategic Alliance Magazine

Star Alliance has encountered several economic downturns since its inceptionâ&#x20AC;&#x201D; but none of these slumps disrupted its long-term growth significantly.

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product and service delivery was well defined from idea generation to launch. The Chief Executive Board, made up of the CEOs of each member airline, was in lockstep with the Alliance Management Board (AMB), which consisted of members’ most senior alliance managers. Two years later, the global economy has continued to stagnate as predicted, and there is even talk of a doubledip recession. So how has Star Alliance fared?

Flying High, Adding Members and Hubs in a Recession “What we have seen is that the Star Alliance network has remained resilient in terms of countries and destinations served, in spite of the current economic downtimes,” said Findeisen. In fact, through the addition of Continental Airlines, Brussels Airlines, Brazil’s TAM Airlines, and Aegean Airlines in Greece, the Star Alliance Network has actually grown by more than 200 new destinations.

Findeisen feels that, at least in the airline industry, multilateral alliances are much more resilient than bilateral partnerships. He also points out the positives of the Continental-United merger, including the addition of Continental’s Newark and Houston hubs to the Star Alliance network, complementing United’s hubs in Denver, Chicago, and San Francisco. Of course, it turns out that the addition of Continental added potential new challenges on top of the slumping economy. The airline merged with founding member United after joining the alliance. Acquisitions usually mean that the two airlines in question tend to temporarily focus more on their bilateral merger needs, rather than on the wider alliance picture. However, for international passengers the Star Alliance standards are critical in this process, as they guarantee consistent customer benefits before, during, and after the merger is completed. For example, United opted to keep Mileage Plus as its frequent flyer program rather than Continental’s OnePass. However, the Star Alliance benefit promises will remain regardless of what changes are made when the two programs are consolidated. 32

This is where Star Alliance’s preset standards are critical, according to Findeisen. The partnership’s “earn on all, burn on all” policy has mitigated the effects of fluctuations among individual members’ loyalty programs.

Horst Findeisen, vice president of business development at Star Alliance. “That means every

passenger enrolled on any one of the Star Alliance member programs can earn miles on any Star Alliance flight, be it his home carrier or a flight operated by any one of the member carriers on the opposite side of the world,” he said. “As with all customer promises, if you want to play in the Star Alliance club, then as an airline you are required to adhere to these standards.” Findeisen feels that, at least in the airline industry, multilateral alliances are much more resilient than bilateral partnerships. He is also quick to point out the positives of the Continental-United merger. Continental added its Newark and Houston hubs to the Star Alliance network, complementing United’s hubs in Denver, Chicago, and San Francisco. “We will be losing the Continental brand, but fortunately it’s not going elsewhere. The planes are staying in the family. The passengers are staying. It’s just a bigger United as far as we are concerned,” he said. “The new United is a stronger entity, and that serves all the other Star Alliance members well.”

The Alliance Challenge: Managing Multi-Partner Complexity Meanwhile, Star Alliance has also been fortunate in that the work of the central alliance managers does not completely overlap with the tasks of the individual airlines. In many cases, member airlines’ portfolios extend beyond bilateral airline partnerships within the Star Alliance network and into cooperation agreements with smaller regional carriers and feeder prop-plane-dominated carriers outside the alliance purview. There is some intersection between these regional partnerships and the Star Alliance. Oftentimes, long-haul flights operated by a Star Alliance member airline are completed through one of these regional partners of other individual member airlines. The alStrategic Alliance Magazine

liance managers in charge of the bilateral partnership will work all contractual arrangements with their respective counterparts. “The typical discussion that needs to be had is, ‘How do we split the revenue on multi-partner tickets? How much do you get? How much do I get?’ We call that prorating in the airline business, and that is to be negotiated by this person or by his team,” said Findeisen. Of course, the prorating process has been more or less routine among Star Alliance member airlines. Otherwise, the predefined standards pretty much mitigate most of the potential complexity that could arise in trying to mesh individual airlines’ day-to-day affairs with Star Alliance’s overall mission and execution. Thus, the Star Alliance can focus its attention on the immediate challenges that come with the recession. Most notably, when the AMB conducts its usual three or four meetings throughout the year to discuss new initiatives to pursue, they will be challenged not only to do more with less in the face of shrinking resources, but also to keep that proactive spirit burning within its members. “The appetite to invest in new products is less in a downturn,” admitted Findeisen.

A Smooth Ride Amid Economic Turbulence The current economic climate is much different from the one Star Alliance walked into when the organization was founded in 1997. “Star Alliance was founded in an upswing when everything was going fine and carriers thought, ‘What additional benefits can we give our passengers that aren’t Quarter 4, 2011

available today?’ That was at a time when the founding partners were very willing to invest,” said Findeisen. With that said, Star Alliance has encountered several economic downturns since its inception and none of these slumps disrupted its long-term growth significantly. In addition, as Findeisen pointed out, not every region is in economic turmoil simultaneously. Fortunately for Star Alliance, the carriers in thriving parts of the world are benefiting from the ecosystem and simultaneously spreading some of the wealth to the rest of the partners. “Look at Latin America, look at China, look at India. They are growing,” said Findeisen, specifically citing TAM and Air China as prosperous partners. “These growing members generate new customers and transport them long distances, maybe to North America or into Europe. Then they connect on one of the carriers that may have a downturn in their home market, [and those partners] appreciate these additional passengers that are feeding into their connecting flights.” And even as the member airlines get conservative when it comes to spending on new ventures, the Star Alliance still plays a role in reducing overhead. Plus, alliance partners can supplement the routes members can no longer afford to serve directly. “They may shrink their [own flight] network a little bit, but by virtue of working together and combining the individual networks of the members, they still have access to the destinations they used to serve themselves,” said Findeisen. “Our member airlines recognize the value the alliance is giving them toward their bottom line.” n 33

Solutions Marketplace

Selected Products and Services for and from Strategic Alliance Professionals Vantage Partners Delivers Sourcing and Supplier Consulting Services Procurement and supply chain organizations need to improve cross-functional collaboration within their own companies, develop and pursue innovative negotiation strategies, and lead efforts to build and sustain collaborative partnerships with key suppliers.

The exchange of order information between buyers and suppliers is critical, but doesn’t always run as smoothly as it should. Vantage Partners leverages expertise in negotiation, relationship management, and change management to help sourcing and supply chain executives and their teams develop and implement innovative approaches to negotiating, and collaborating, with suppliers—and internal business partners. Vantage Partners helps companies balance the need to reduce supply costs while continuing to drive innovation without damaging the long-term health of their supplier relationships. Meanwhile, the risks to consumer safety and corporate reputation posed by poorly managed supply chains are increasingly evident. This volatile and dynamic environment creates new challenges, but also new opportunities. 34

Vantage provides: – Assistance with the design, implementation, and change management associated with putting in place new or enhanced supplier relationship management (SRM) programs – Expertise around the design and implementation of a consistent, enterprise-wide methodology and toolkit for negotiating with suppliers – Benchmarking of SRM programs, negotiation skills and effectiveness, procurement organization capabilities, and overall supply chain performance – Diagnostic analysis of key supplier relationships to identify untapped sources of value and barriers to realizing optimum mutual benefit – Supplier scorecard and performance management process design and implementation – Design and delivery of customized training on topics such as negotiation, supplier management, influence, and internal client management – Development of negotiation strategies for sole and single-source suppliers and other high-stakes, complex negotiations as well as advice and hands-on coaching to implement such strategies For more information, please visit vantagepartners.com/sourcing_and_supplier_management.aspx or call +1-888547-8852.

Lawson Provides Collaboration Tools for Fashion Industry Buyers and Suppliers

Lawson M3 Supplier Portal for Fashion is an application that helps fashion companies collaborate more effectively with their suppliers. Web-based for easy deployment and easy accessibility, Supplier Portal for Fashion helps to reduce manual work, improve data accuracy, and reduce the risk of errors. Supplier Portal for Fashion provides companies and their suppliers the visibility needed to access and track order and delivery information. The application allows users to view and update orders online, eliminating the need for faxes, e-mails, and complicated spreadsheets, while helping to speed up time to benefit. The exchange of order information between buyers and suppliers is critical, but doesn’t always run as smoothly as it should. The process is often time consuming, costly, and prone to errors. Supplier Portal for Fashion is intended to deliver for sourcing companies, manufacturers, and suppliers in the fashion industry better visibility when buying goods and materials through its order processing and delivery tracking capabilities. It provides automatic confirmation of quantities, dates, and prices, as well as the creation of delivery notes. Check out www.lawson.com/solutions/ software/supply-chain-management/m3supply-chain-management/supplier-portal/supplier-portal for more information or call +1-651-767-7000. Continued on page 57 Strategic Alliance Magazine

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High Risk to High Reward: Using the Skills and Tools of Servant Leadership to Manage Risk By David Thompson, CA-AM, and Steven Twait, CSAP

Instilling the right competencies and mindset in alliance managers is critical to making a risk mitigation–focused alliance management function operate smoothly. However, alliance management practices also need to place greater emphasis on drafting contingency plans and documenting the particulars of key decisions to make this approach to alliance management work, according to Eli Lilly and Company.

This is the second of a two-part series of articles sponsored by Eli Lilly and Company and written by Lilly senior alliance executives David Thompson, CA-AM, and Steven Twait, CSAP. In this series, Thompson and Twait articulate the company’s alliance strategy and its tenets for a successful and highly valued alliance management function. The first part of this series, which ran in the Q3 edition of Strategic Alliance Magazine, defined the different roles and levels of influence alliance management normally finds itself playing in biopharmaceutical companies. It began to outline Lilly’s mindset and framework for a risk

management–based approach to alliance management, delving into the ﬁrst critical success factors as deﬁned by Lilly’s philosophy. This second installment explores the remaining components of managing risk in the context of an alliance portfolio. This includes a discourse on the requisite skills for alliance managers applying a risk management–based methodology to alliance portfolios and the value of using a “servant leadership” approach in this process. It also examines the wide variety of tools alliance managers need at their disposal to carry out this type of alliance management methodology.

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Demand Vision, Judgment, and Influence Clearly, a wide gap exists between the skills needed to implement a nominal alliance program versus one focused on risk mitigation and problem solving. Looking at past practices, we see that alliance managers often have been chosen for their social skills, or perhaps for their expertise in a certain area. In the evolution of our practice, however, we have found that the most successful professionals—those who have made the leap and established themselves as alliance risk managers—possess something more. In addition to high intelligence (traditional as well as emotional), they consistently demonstrate the ability to: — Be ever mindful of the greater vision for the alliance and communicate it clearly to the team. — Exhibit good judgment by proactively discerning between options and choosing the best course of action. — Influence the group to make sure team members are doing what’s needed to meet desired alliance endpoints. While these three seemingly disparate attributes may prove difficult to find in one person, it’s important to recognize that these qualities can evolve over time, and they can be found in combination among individuals on a highfunctioning team. And in time, the ability to clearly communicate a logical vision and the consistent exercise of good judgment almost always leads to heightened influence in group situations. Even more significant is that these behaviors—together with the problem-solving focus that enables business and legal uncertainties to be minimized—form the basis for the trust, loyalty, and commitment that are essential to reducing the probability that the alliance will be derailed by issues of interpersonal conflict.

Embrace Servant Leadership Perhaps the most important enabler of evolved alliance management is servant leadership, a framework that embodies many of the characteristics we’ve discussed to this point. While the concept of servant leadership is ancient, its modern application is particularly relevant to alliance work, especially in a risk management framework. The premise of servant leadership is that the best results are achieved when people give priority to the needs of their colleagues and their customers. When alliance managers take on challenges and address thorny problems that might 36

otherwise be ignored or neglected, they establish their willingness and ability to serve their team and move the project or process forward. Service-oriented behaviors, like recording the minutes of alliance meetings, also can provide excellent opportunities to learn early on about any business and human risk issues or legal uncertainties that may have arisen. By applying themselves where and when help is needed most, servant leaders can effect change from within, as full, valued members of the alliance team. Another attribute of servant leaders is their comfort with allowing other people to receive the credit when things go well—a readiness to take a backseat when it comes to external recognition. Such behaviors not only support others on the team; they facilitate the alliance manager’s ongoing access to important events and information that might affect the ongoing operations and eventual outcome of the alliance.

New Tools to Identify, Reduce Alliance Risk As our philosophy has evolved over the past decade, so too have the tools we use to manage alliances on a dayto-day basis. The original toolbox contains many still-useful elements (see Figure 2), including: — 3-D fit analysis—Tool used to assess the partnership compatibility across three dimensions: operational, strategic, and cultural. Provides a framework that can be used to explain differences and discuss actions that could lead to improved interactions between partners. — Governance implementation—Leading and influencing effective governance meetings, including proper meeting frequency, appropriate agenda topics with clear

Special Editorial Supplement to Strategic Alliance Magazine sponsored by Eli Lilly and Company

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FIGURE 2: ALLIANCE MANAGEMENT TOOLBOX: Risk Mitigation to Problem Solving Global External Research Acquisition

Corporate Business Development Terms Contract Negotiation Negotiation

Evaluation of Potential Collaborations

Tool or Framework 3-Dimensional Fit Analysis Governance Design Governance Implementation Strategic Futures Exercise Contingency Planning Decision Documenting/Planning Structured Listening Conflict/Dispute Resolution VOA™ Health Assessment

Triage Business Case

Alliance Management Alliance Alliance Planning and Start-Up Organization

Implementation/ Value Creation

Transaction Preparation

DUE DILIGENCE

Source: Eli Lilly and Company

objectives, internal pre-meeting alignment, participants with decision-making authority, documentation of appropriate decisions and actions. — Strategic futures exercise—Tool that provides the foundation for a successful alliance start-up by generating and aligning on long-term goals, understanding possible obstacles to achieve the goals, and aligning on guiding principles and behaviors that will help the team overcome the potential obstacles. — Voice-of-the-Alliance™ (VOA™) health assessment— Annual assessment performed on major alliances to gauge the current state of the partnership and identify issues requiring attention. But with the knowledge that our main objective is to manage the risk in every alliance and ultimately generate something of value, we have developed a series of new tools to use as each relationship and project progresses. These tools provide us with the specific means to mitigate the business risk, legal uncertainty and human risk that we encounter, at the onset of a partnership and in our ongoing interactions thereafter. While we can’t cover every available method, the following sections offer several representative examples.

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Contingency Planning, Onboarding Cut Business Risk While contingency planning is a relatively common concept, its use is not widespread in alliance management. In some cases, business partners don’t want to introduce any negativity—such as the thought that the project might not reach certain milestones or that it might fail on technical grounds. In other situations, team members might find scenario planning a distraction in an action-oriented project and give it low-priority status. For any number of reasons, the team often stays in reactive mode, thinking “we’ll cross that bridge when we come to it.” At Lilly, our customers have found great value in Integrated Alliance Management leading contingency planning efforts that address possible outcomes of major events, such as the release of results from a major trial or a Federal Drug Administration advisory board meeting. Contingency planning doesn’t have to take weeks; in fact, our teams are usually familiar with the possibilities such that we can accomplish what we need to within a day, sometimes even less depending on the nature of the upcoming event.

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These exercises are useful because very often these situations are highly emotional and significant to the business, and there is little time to react to the release of study data or FDA decisions. Having discussed the possibilities—and our public responses to any number of outcomes—ahead of time, our teams are much better prepared to work together and to make rational decisions quickly. Another common source of business risk is leadership turnover, which occurs through attrition, restructuring, or even new opportunities that arise for particular individuals. While many companies leave new team members to learn as they go through trial and error, we pay careful attention to changes in staffing. We then take the time needed to bring new leaders up to speed using the comprehensive background materials we have created over the course of the alliance. This process enables us to affirm the business goals of the partnership and avoid any barriers to project progress.

Documenting Decision-Making Addresses Legal Uncertainties In any group effort, clarity regarding who made which decisions, who agreed to them, and who will implement them is key. Because memories are never perfect and interpretations often vary, we have found it eminently useful to create and maintain detailed records of alliance decisions and the action items that result. It’s important to note that we are not simply writing down everything that is said at a given meeting. While we do assign one person to capture the content, our involvement as alliance professionals goes further. Before we adjourn our governance meetings, for example, we record all decisions, then review and approve them with everyone in the room. This provides the opportunity for clarification while the discussion points are still fresh, and team members can agree on any modifications. This process allows for both organizations to align and agree upon future actions, with the additional benefit of bringing to light basic missteps that have the potential to create problems downstream. For example, the review and agreement process might highlight a case where the true decision-maker was not in the 38

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meeting, which might become problematic as decisions are revisited and questioned later. By maintaining detailed records of joint decisions, alliance management in turn becomes the repository of project information. These records are available in case questions arise or when new team members need to be brought up to speed. Our integral involvement in such activities also ensures that we have early notice of potential risk factors, and that we can identify and address issues before they become bigger problems for the alliance.

Improving Conﬂict Awareness, Listening Skills Lessens Human Risk While the reduction of business risk and legal uncertainty plays a large part in mitigating sources of conflict between team members, human interactions always contain the potential for tension and discord. Drawing on Lilly’s expertise in neuroscience and psychiatry, we have developed tools that help participants manage their way through various situations and deal with the differences in outlook and opinion that invariably exist in group settings. One such tool is a short video that we created to demonstrate how quickly situations can degenerate under

Special Editorial Supplement to Strategic Alliance Magazine sponsored by Eli Lilly and Company

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certain circumstances, when the stakes are significant and emotions are running high. After they have viewed the video, team members are asked, “How can we prevent this from happening to us?” The ensuing discussion is always valuable, as we talk about ground rules for respectful interaction, the importance of reliability and trust, and techniques for staying objective and on-task. Another tool we have found extremely worthwhile is the use of structured listening, in which one person is chosen to speak for each team in a particular discussion. This method is effective especially when the subject matter is complicated or opinions—even among the same team—diverge widely. By funneling communication through one person, each group must achieve consensus on an issue before presenting its case. Structured listening has the effect of forcing each side to actively listen to the other and respond to the content, not the delivery, of the message. In both of these examples, it’s important to note that no training budget or major time commitment was required. In fact, we put together the video in-house at very low cost, and the structured listening techniques are readily accessible. Most significantly, we have found that applying

David S. Thompson, CA-AM, is chief alliance officer at Eli Lilly and Company and is a member of the ASAP board of directors. At Lilly, Thompson is responsible for establishing and maintaining all major development, commercial, and partnerships and oversees the integration of companies brought into Lilly via mergers and acquisitions. In the field of alliance management, Thompson is recognized for his pioneering use of decision sciences and as an expert in managing alliance conflict. He also has developed a suite of innovative training materials for executives whose role includes the management Quarter 4, 2011

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tools such as these reminds everyone on the team that minimizing risk and mitigating potential conflict will help us achieve the common goal of working together to generate a valuable product.

Establishing a Virtuous Alliance Risk Management Cycle At the start of this discussion, we asked why some alliance management groups are seen as valuable—why, instead of questioning their purpose, other corporate functions are seeking their help on sensitive, business-critical projects. We believe this is occurring because evolved alliance management groups are doing more than what is considered traditional alliance work. They are embedded as part of their working teams—solving problems, minimizing risk, and adding value to both partners. These ongoing contributions are recognized in repeat business for the alliance management office; that is, strong alliance managers are invited to expand their participation because they have proven themselves again and again. This virtuous cycle is good for individual alliance managers, entire alliance groups, and certainly the larger organizations they all serve.

Steven Twait CSAP is director of alliance management and M&A integration at Eli Lilly and Company. Twait leads teams focused on maximizing the value of partnered assets at each stage of the development cycle of development, commercial, and manufacturing alliances. A founding member of Lilly’s Office of Aland implementation of strateliance Management, Twait has gic partnerships. A graduate played an integral role in some of the University of Arizona, of the largest development and Thompson earned degrees commercial alliances in the in chemistry and Spanish company’s history, including literature as well as an MBA at worldwide partnerships with the Eller School of Business. Bristol-Myers Squibb, BoehHe can be reached at Thompringer Ingelheim, and Daiichi son_David_S@Lilly.com, Sankyo. He serves on ASAP’s +1- 317-277-8003. BioPharma Council as well as

the advisory committee for the ASAP Certification and Standards Project. Twait earned a bachelor of science degree in electrical engineering at Valparaiso University and an MBA at Indiana University’s Kelley School of Business. He can be reached at stwait@lilly. com, +1-317-276-5494. 39

In partnership, there is strength

Since 1999, Lillyâ&#x20AC;&#x2122;s Integrated Alliance Management professionals have helped companies maximize the value of partnered assets. With strong roots in governance and relationship management, we excel at problem solving and value-chain integration at all stages of discovery, development, and commercialization.

AnOffice Officeof ofEli Eli Lilly Lilly and Company Company An

As an organization and as individuals, we are committed to the success of every partnership we manage. By staying true to mutual goalsâ&#x20AC;&#x201D;and by doing everything necessary to achieve themâ&#x20AC;&#x201D;we help partners realize the value inherent in every strategic alliance.

E-mail stwait@lilly.com for more information.

STRATEGIC ALLIANCE MAGAzINE | S P E C I A L F O C U S | SUPPLY CHAIN

Culture Clash: Does It Have to Stall an Alliance? Renault-Nissan Shows That Enlightened Management Can Keep the Engines Running By Fabien Blanchot

IT IS UNDOUBTEDLY OBVIOUS THAT cultural differences can be detrimental to a global allianceâ&#x20AC;&#x2122;s success. They may contribute to misunderstandings, generate factionalism or clannishness, and threaten to destabilize managerial control. Cultural diversity may impair the performance, dynamics, and/or duration of alliances by reducing the partiesâ&#x20AC;&#x2122; ability to cooperate, adapt, and make decisions jointly as the partnership evolves. Quarter 4, 2011

strategic alliance magazine | special focus | supply chain

Dynamics of Cooperation

FIGURE 1: “EXPANDED”VIEW OF INTERCULTURAL MANAGEMENT Yet my own 2008 synthesis of empirical research measuring the impact of cultural differences on alliances shows that a negative influence is found in only 39 percent of cases. In fact, the opposite effect is found in 15 percent of alliances studied (significant positive influence on the performance or survival of the alliance), and in 46 percent the effects of cultural differences are not significant. There are strikingly successful alliances—such as the Renault-Nissan alliance—that embrace cultural differences as levers and utilize intercultural management as a key enabler of effective collaboration.

The Role of Intercultural Management One of the problems with existing studies of this issue is that they tend to neglect the role of intercultural management and its positive effects on alliances. So what is intercultural management and how can we measure its presence? Reference books do not offer a precise definition, but I have identified several criteria. Intercultural management, as a practice and a discipline, consists of encouraging managers to integrate the cultural dimension in an attempt to 1) improve the interaction between colleagues, customers, suppliers, and partners from different cultures; and 2) to strengthen the coherence between management tools and technical systems on the one hand and the cultural context on the other. It does this in several ways: – By educating stakeholders about the persistence of cultural differences (national, organizational, and professional) in a globalized world. – By helping to identify and understand cultural differences and similarities in situations of interaction. – By developing the skills to act in a multicultural world. 42

This is admittedly a narrow conception of intercultural management, which leads me to propose an expanded one. Beyond merely working to limit the potential negative effects of cultural differences, intercultural management can and should consist of a management of all centrifugal and centripetal forces exerted on a partnership (Figure 1). The aim is that the negative residual effects of cultural differences do not accumulate with other centrifugal forces that are more easily controllable and, as much as possible, are compensated by centripetal forces making cooperation more desirable. This tips the balance toward the desire to cooperate rather than the desire to leave the alliance. Looked at from this perspective, intercultural management in alliances should consist of two types of actions: those that reduce the potential for collapse of the alliance and those that act to strengthen the alliance and insulate it from negative influences. The Renault-Nissan alliance helps to illustrate this “expanded” view of intercultural management.

The Example of Renault-Nissan The Renault-Nissan alliance is a large-scale global operation that began with the acquisition by the French Renault Group of a minority stake in the Japanese keiretsu Nissan Motor Company. From the announcement of the alliance on March 27, 1999, cultural differences were a source of concern—and sometimes perceived as a fatal obstacle. Giovanni Agnelli, then leader of Fiat, said, “Renault and Nissan? They have great courage...it’s true that they are complementary...except there”—at which he pointed to his head. Similarly, Jacques Calvet, former boss of PSA Peugeot Citroën, declared: “I would never have launched into such an operation because the disadvantages, the financial risk, the juxtaposition of two product lines more competing than complementary, and, more importantly, the enormous difficulty of making culturally distant teams work together prevail, in my view, over the benefits.” Other observers were, if anything, even more blunt. Perhaps noting Renault’s small size and Nissan’s history of unprofitability, one European CEO scoffed that “two mules don’t Strategic Alliance Magazine

strategic alliance magazine | special focus | supply chain make a racehorse.” Bob Lutz, then CEO of Chrysler, compared Renault’s investment in Nissan to putting $5 billion into a steel container and sinking it in the ocean. And a Businessweek article in 1999 called the alliance “a marriage of desperation for both parties.” However, 12 years later, it appears that the alliance has survived and that its synergies have been significant. How did this happen, and what is the role of intercultural alliance management in overcoming cultural differences that some perceived as “colossal”? If we look at the manner in which the alliance was designed and is still driven, it becomes quickly apparent that it is built around an “expanded” conception of intercultural management. Indeed, it mobilizes many of the levers—involving the actors, the structure, the strategy, and the management system—that tend to reduce centrifugal forces and/or strengthen centripetal forces (Table 1). It was Louis Schweitzer, Renault’s CEO in 1999, who initiated the alliance. In his view, it was about forming a bi-national group based on respect, mutual understanding, and the preservation of the identity of the two companies (Lever 1). This avoidance of domination is the fruit of Renault’s experience, drawn from the failure of its merger with Volvo in the 1990s. Renault’s stake in Nissan (44 percent) should not be considered an indication of Renault’s dominance of the alliance. Leaders were in fact able to separate the “shareholder relationship” from the “partnership relationship.” The financial investment thus should be regarded as a credible commitment (Lever 2). Indeed, Renault invested nearly 5 billion euros whose return was far from assured, given doubts at the time about Nissan’s ability to survive.

Quarter 4, 2011

Levers to Reduce Centrifugal Forces or Strengthen Centripetal Forces Expected Effect 1 Balanced rather than dominating strategy Reduces centrifugal forces 2 Importance and credibility of commitments Strengthens centripetal forces 3 Discussion of objectives and strategy to be implemented Reduces centrifugal forces 4 Widen scope of field of cooperation – stress importance of the potential benefits Strengthens centripetal forces 5 Complementarity and uniquness of the contribution of each partner Strengthens centripetal forces 6 Creation of exit barriers to the relationship Strengthens centripetal forces 7 Awareness of cultural differences Reduces centrifugal forces 8 Management of the linguistic dimension Reduces centrifugal forces 9 Distributive justice (equity in the rewards of partners) Reduces centrifugal forces 10 Process to develop a feeling of procedural justice Reduces centrifugal forces 11 Teams of cooperation that do not accumulate differences Reduces centrifugal forces 12 Narrow interface Reduces centrifugal forces 13 Actors at the interface with a multicultural profile Reduces centrifugal forces 14 Surveys of the relational climate Reduces centrifugal forces

Table 1: MAIN LEVERS MOBILIZED IN THE RENAULT-NISSAN ALLIANCE Working the Levers The strategic vision of the partnership was discussed during the negotiation phase (Lever 3) based on an assessment, by several working groups, of the potential synergies between the two firms. The challenge was considerable for both (Lever 4). For Nissan—losing market share for more than 20 years, unprofitable for most of the 1990s, and with $20 billion in debt—it may have been the last chance for financial and commercial recovery. For Renault, it was a unique opportunity to feed its ambition. In such a situation, everyone had the will to overcome the obstacles, including the formidable cultural barriers. A wide scope of cooperation (Lever 4) was preferred, given the complementarity of the partners and their contributions (Lever 5). Essentially, Renault was strong where Nissan was weak and vice versa (in terms of geographical implementation, and in terms of skills regarding quality, design, motorization, and purchasing management)— and each made contributions to offset the weaknesses of the other. Taken one by one, these contributions do not have a unique character (other partners could provide them), but they become idiosyncratic in a global context (Lever 5): it is unlikely that Renault or Nissan could have forged an alternative alliance providing so many benefits. In any case, there was not another firm interested in Nissan in 1999, and Renault did not have Continued on page 54 43

Strategic Alliance Magazine

strategic alliance magazine | special focus | Supply chain

Pharmaceutical Companies, CMOs Still Refining Collaborations Success Depends on Whether Trust, Transparency Can Be Manufactured By Jon Lavietes and John W. DeWitt

There is no dispute that strategic alliances are critical on the manufacturing side of the biopharma industry. For several years now, pharmaceutical companies of all sizes have found it economically prudent to rely on Contract Manufacturing Organizations (CMOs) for a wide variety of production needs in all phases of the drug development cycle. Over time, CMOs have snatched up manufacturing operations divested by pharmaceutical companies that no longer want the risk of maintaining expensive facilities for drugs that eventually may fail to make it to market. They have successfully built their own business models around these already fully equipped sites and are sharing risk with these facilitiesâ&#x20AC;&#x2122; former stewards.

Quarter 4, 2011

strategic alliance magazine | special focus | supply chain And there is certainly plenty of risk to share. The overall timeline for getting a drug to market is relatively tight in the grand scheme of things, and getting a chosen supplier approved can take up to two years or longer. Once a CMO is up and running, pharmaceutical companies must be extremely vigilant Esther Alegria, vice president to keep operations moving of manufacturing for Biogen Idec. smoothly.

Given the potential losses that can result from a recall or tainted product, pharmaceutical companies need to make prospects divulge very detailed information about their operations in order to assess quality systems. “The oversight is very critical to ensure the supply chain is working, there are no hiccups in that supply chain, the flow is happening, [and] the quality levels are being maintained,” said Mary Kachinsky, senior director of strategic sourcing at Cubist Pharmaceuticals, who has also served in procurement capacities at Pfizer and Genzyme. “In other words, you can’t just say, ‘I’m going to outsource this and I’m going to stand back and just watch it happen.’ You have to be very involved.” There can be a certain level of complexity in the supply chain. Oftentimes, a pharmaceutical product will require several CMOs to produce the final product. For example, there may be one CMO for active pharmaceutical ingredients (APIs), a second for drug product, and yet another for packaging and distribution. The pharmaceutical company has to not only ensure each CMO is executing properly, but also facilitate a smooth hand-off between the organizations as the drug advances through the development process. Moreover, pharmaceutical companies have to take similar actions to integrate CMOs with activities being conducted by Clinical Research Organizations (CROs) who are depending on the manufacturing organizations to supply clinical trials. 46

Christine Carberry, president of Carberry Consulting.

Mary Kachinsky, senior director of strategic sourcing at Cubist Pharmaceuticals.

One failure or setback anywhere along the line and the pharmaceutical company may have to scrap the drug entirely. “Having a communication breakdown between a pharmaceutical company, CMO, and CRO could disrupt the supply of drugs to a clinical trial. Many of these clinical trials are conducted over multiple years and represent the critical path to bring a drug to market. Could you imagine being two years into a three-year clinical trial and having a supply issue put the whole study in jeopardy?” said Christine Carberry, president of Carberry Consulting and veteran of biopharmaceutical clinical supply issues.

Getting Off on the Right Foot With so much at stake and relatively little flexibility once a company has cast its lot with a supplier, extensive due diligence and background checks of prospective contracting companies are a must to mitigate the potential for a weak link in the chain. “When you’re selecting contract manufacturers, it should be done with a high level of rigor,” said Carberry. For example, a prospect’s financial footing must be inspected very closely before signing any agreements. “Pharmaceutical companies need to look at the overall health of their contract manufacturer’s business. You need to know that the contract manufacturer has a viable future business. They need to have the financial strength to be a reliable supplier for a long time,” said Carberry, acknowledging that this can be tricky as companies look all across the globe for new CMOs where “you may not have the type of financial information that is publicly available for U.S. companies.” Given the potential losses that can result from a recall Strategic Alliance Magazine

strategic alliance magazine | special focus | supply chain or tainted product, pharmaceutical companies need to make prospects divulge very detailed information about their operations in order to assess quality systems. “Who are their suppliers? Where do they get their materials? What are their business practices?” said Carberry to illustrate key questions to explore. Esther Alegria, vice president of manufacturing for Biogen Idec, agrees that checking financial health and quality records is as vital as evaluating technical capacities and capabilities. She adds that once a prospect demonstrates it can meet the technical aspects of the project, the company still needs to convince her that it can keep pace with the chaotic nature of the industry, particularly in the clinical phases. “Then the question you will need to answer yourself is, is this alliance going to provide me the flexibility [to handle] the multiple forecast changes? Will these people be able to react quick and fast when we need to do a process change?”

Challenges to Collaboration in the Supply Chain Of course, even when appropriate care has been taken in forming alliances, manufacturing partnerships still run into challenges. Alegria sees a big difference in the alliance capabilities committed to co-licensing agreements as compared to situations where a particular service is contracted. Companies usually staff the former with a dedicated alliance manager, something that does not always happen for relationships in the latter category. “When you’re contracting a service that’s not related to a co-licensing relationship, I don’t think we dedicate alliance management resources. Rather, we rely on operations personnel who know the fundamentals behind the service to manage the relationship from a transaction/delivery/contractual perspective. In a co-licensing relationship we focus on a more shared vision of the relationship, which may extend to areas like joint productivity imperatives, IP, etc., and usually comes with a reciprocal expectation of higher flexibility to each other’s needs,” she said.

“There’s an element that is becoming more partnershipbased, collaboration-based, and there’s still an element that is quite transactional,” he said. “When customers are looking at a longer horizon out to a commercial marketplace, that’s typically when it becomes much more of a collaboration.” Kachinsky thinks there is still plenty of room for improvement in applying the basics of alliance management to biopharmaceutical manufacturing relationships. In particular, she feels the degree of trust showed by pharmaceutical companies and manufacturers usually is not at the level of a true collaboration. Moreover, she thinks all sides still need to better define what success looks like, develop appropriate KPIs to measure performance, and share risk. “We really need to understand what are the true indicators of success and measuring those success factors and put in place governance to enable effective conflict resolution,” she said. In her observations, companies are still afraid to share critical information necessary for a deep level of commitment to each other. “Too many times, we don’t engage in our supplier relationships in an open way. There’s still an element of, ‘I still don’t want to disclose too much,’” she said. “It’s open disclosure and transparency on both sides and really having that feeling that we’re on the same side. It’s opening the books and understanding where the costs are. If it’s a quality issue, understanding the root cause and resolving it in a collaborative way. What I mean by that is both parties come to the table and try to understand, ‘Is it an issue on our end? The supplier’s end? How do we work to mitigate that?’” One of the obstacles to this deeper level of commitment might be the reluctance to put enough skin in the game,

Michael Cicio, vice president of operations and site manager for Lonza, a Portsmouth, N.H.–based CMO, says the timeframe for the desired end results play a big role in determining how collaborative a relationship ends up becoming. If a project has a short timeframe, cooperation often becomes a casualty in the relationship. Quarter 4, 2011

strategic alliance magazine | special focus | supply chain particularly in the earlier phases of drug development. On one side, pharmaceutical companies frequently elect not to engage at all early on if they value their potential drug highly. “If a company has patents, trade secrets, and know-how related to a manufacturing process, they will be concerned about transferring that information to a contract manufacturer who’s dealing with a lot of other clients,” said Carberry. And when pharmaceutical companies are ready to contract out manufacturing processes, they often find that, from their perspective, CMOs are playing a shell game in which they are trying to diversify their business and hedge their bets. CMOs do this because clinical phases tend to be more unpredictable and difficult to forecast because the processes are still taking shape, in contrast to the relatively steady commercial stages that come later. “The contract manufacturers [in the clinical phases], they don’t necessarily want to commit their capacity to very low production volumes,” said Alegria, adding that pharmaceutical companies can get a firmer commitment if they want to risk promising a set amount of business over a longer term. Cicio says Lonza has a unique value proposition in that it can offer several services in many areas of the clinical and commercial phases where most other CMOs specialize in specific facets of the manufacturing life cycle. He says Lonza’s ability to bundle some of those programs together helps share the risk for both the organization and its clients. It is less critical if one area is less successful than another as long as the client is getting solid overall value from the relationship. “By providing those different alternatives to our customers, it de-risks it for them so they can make a commitment knowing they have different options to meet that commitment.”

Increasing Collaboration Moving Forward How can the manufacturing side of the industry improve on its relationships? Perhaps they can observe CROs and the folks on the clinical research side with whom they are working more frequently. Kachinsky, for one, is impressed with the degree of collaboration shown in clinical research relationships. “That’s an area where I’ve seen a level of maturity and trust. [CROs are] a great example of where collaborations are working very successfully, and I think it’s because the contract research manufacturers and the biopharmaceutical companies really understand where the strengths are in each organization, and they can understand where the value is, and how they identify, engage, and build those relationships. This has developed over time.” More importantly, manufacturing alliances will improve as each party shares more about their respective companies. The deeper partners know each other, the better they can assess the appropriate balance of risk and value to share. For pharmaceutical companies, this includes having an understanding of the unique challenges faced by CMOs. “[CMOs] have several different clients, and each client can have different expectations of how things should be done. It can be a real challenge for a CMO to operate under different procedures for each client,” said Carberry. Cicio says pharmaceutical companies will reap intangible rewards with this mindset.

According to Cicio, even with this wide offering, getting some pharmaceutical companies to deepen relationships is a challenge.

“The benefit that comes for the two of us is the ability for the customer to think of us as more of an intrinsic part of their organization as opposed to being something that they use when they need it.”

“I don’t know if I would call it resistance—there are some customers that haven’t thought about it, aren’t sure if this is for them, and aren’t sure where they are going and how largely they want to do a program,” he said.

Kachinsky thinks it is only a matter of time before the pharmaceutical industry hones its manufacturing alliances.

It takes two to tango, according to Kachinsky. “I don’t know why [CMOs] say we’re not stepping up. It takes two to step up. It takes both parties to have those 48

honest conversations. If we come to the table with that mindset that we’re really going to engage in this partnership and really work with you and be transparent—‘Here’s what we can do for you, and here’s what we need from you, biopharma company, to be successful in this relationship’—I think that message will be heard.”

“As we mature and we begin to work these relationships, it will be inevitable that we will see the value of what we deliver with each party sharing that risk and truly being transparent,” she said. n Strategic Alliance Magazine

Donâ&#x20AC;&#x2122;t Gamble With Your Professional Development!

Plan Now to Attend The Annual Showcase Event for the Alliance Management Profession ASAP Global Alliance Summit 2012 Mastering the Art and Science of Alliance Confident. Credible. Capable. Caesars Palace, Las Vegas, Nevada USA March 5-8, 2012

Quarter 4, 2011

Why You Should Not Miss This Event!

About the 2012 ASAP Global Alliance Summit Now in its 13th year, the ASAP Global Alliance Summit is the premier professional development and networking forum for strategic alliance professionals and all those who work directly with alliances and collaborative business relationships. The ASAP Global Alliance Summit is the one time each year when strategic alliance professionals from many industries come together in one place to hone and expand their skills, inspire their teams, network with colleagues, share experiences, and glean insights into improving organizational competitiveness and enhancing the bottom line through partnering.

As in the past, ASAP’s 2012 Global Alliance Summit will deliver significant ROI on your company’s professional development budget. Each session has been specifically designed to focus on core alliance management competencies to create a comprehensive educational experience. There are new tracks this year, all-new sessions and formats, and new speakers and presenters—in addition to those from past summits who are “back by popular demand.”

Outstanding Speakers

Networking Opportunities

Based on attendee feedback, a number of well-received speakers have been brought back by popular demand from previous Summits: – Donna Peek, CSAP, SAS Institute – Ard-Pieter de Man, CSAP, ATOS Origin – Robert Porter Lynch, CA-AM, The Warren Company – Dave Luvison, CSAP, Misty Creek Enterprises – Mike Ransom, CA-AM, YourEncore – Stuart Kliman, Vantage Partners – Jeff Shuman, CSAP, The Rhythm of Business – Norma Watenpaugh, CSAP, Phoenix Consulting Group

The ASAP 2012 Global Alliance Summit will offer unparalleled networking opportunities. Informal sharing of insights and expertise, career opportunities and partnering discussions dominate the conversation. The ASAP 2012 Global Alliance Summit features more networking than ever before!

In addition, a host of new presenters are lined up to deliver added value and make this year’s Global Summit the best ever: – Phil Sack, CA-AM, Asia-Pacific Collaborative Business Community – Chris Elliott, CSAP, PeopleForce – Alistair Pim, CSAP, Schneider Electric – Nancy Breiman, CA-AM, IBM – Jose Ochoa, Emergent BioSolutions – Jeffrey Dietz, CSAP, GlaxoSmithKline – Subhojit Roye, CA-AM, Infosys

As an alliance management professional or an individual who manages partnerships or collaborative business relationships, you know the importance of developing and maintaining the critical skills to successfully do your job. The ASAP Global Alliance Summit provides unparalleled learning, experience sharing, and networking opportunities. In fact, some attendees have reported that they learned more in four days at the ASAP Global Alliance Summit than in a year of on-the-job training.

Sunday, March 4 Hospitality Suite—New for 2012! Monday, March 5 – Alliance Management Resource Center Reception—New for 2012! – Networking Dinners Tuesday, March 6 – Breakfast, lunch and breaks – Opening Welcome Reception – CSAP Dinner Wednesday, March 7 – Breakfast, lunch and breaks – Alliance Excellence Awards Recognition Dinner Thursday, March 8 – Breakfast and break

Strategic Alliance Magazine

2012 ASAP global Alliance Summit

Caesars Palace, Las Vegas, Nevada, USA March 5-8 Conference Highlights

Monday, March 5: Pre-Conference Workshops – When the Prof Met the CEOs: (available for an extra fee) Creating Value in a Multiparty, Multisector Alliance – CA-AM Preparatory Workshop – Get Smart: Cross-Industry Alliances in the – CSAP Certification Preparatory Workshop Disruptive World of IT – Rescuing a Troubled Alliance Track: Alliance Metrics Tuesday, March 6: Keynote and Plenary Sessions – Maximizing Value with the Balanced Scorecard – Global Insights: Developing the Capability to – Keep Your Alliances On Track: Collaborate with Emerging Market Partners Beyond the Metrics, a Continuous Improvement Process – The ASAP 4th State of Alliance Management Study – Defined Contributions: Measuring Alliance Management Value Tuesday, March 6: Breakout Sessions Across the Service Spectrum Track: High Tech Track: Biopharma – A Simple Framework for NEW THIS YEAR – The Center of Excellence: Complex Alliances: Lots More Reasons You Should Be at the Summit! What It Is and How to Use It to Drive An IDEA from IT 25% MORE SESSIONS THAN LAST YEAR Alliance Capability Throughout the – Integrating Partnering n Three all-new tracks: Alliance Ecosystems, Alliance Enterprise into the Core Metrics, and Alliance Management Technologies – The Long and Winding Road: n More intensive certification preparation workshops for – Collaborative Selling Navigating the Alliance Through both CA-AM and CSAP exams at the Cutting Edge Life Cycle Transitions n New research: Results from the ASAP 4th State of – Services Alliances: – See You After Court: Rebuilding Alliance Management Study unveiled Co-opetition and Common Trust After Legal Proceedings with n Favorite speakers and executive coaches return—along Ground with new voices and perspectives Your Alliance Partner Track: Capability Building n More sessions designed to grow and sharpen your – The Emerging Landscape of Clinical – Launching the Alliance skills in managing risk, developing trust, and buildService Alliances Management Function ing alliances with new partners in new industries and Track: The Science of Alliance unfamiliar cultures as an Enterprise Capability – Trusted to Innovate: The n Variety of interactive formats: Debates, talk shows, – The Care and Feeding of an Neuroscience Behind Collaboration roundtable discussions Alliance Capability – License to Repeat: Risk-Mitigating – Creating No-Fault, No-Blame n A global, multi-industry perspective on building and Tips and Techniques for Successful managing successful alliances and other collaborative Partnering Cultures relationships Software Licensing Wednesday, March 7: n More networking opportunities than ever before— – Partner’s Remorse: Correcting for Breakout Sessions including special networking dinners, executive roundPartner Selection Factors After the Fact The Art of Alliance tables, and the all-new Hospitality Suite Track: Alliance – Ensuring Skilled Responses n The brand-new Alliance Management Resource Management Technologies Center—come visit the ASAP Media table and get to Alliance Challenges When information on ASAP and ASAP partners – Tweet, Like, or Plus?: Managing They Are Needed Most Alliances in the e-Social World – “You Thought This Alliance – The Partnership Portal: Transforming Alliance Was About What?”: How to Manage and Recover an Alliance Communication with a Collaborative Workspace Through Conflicting Expectations – Global Agility: Building Bridges Across Cultures Thursday, March 8: Closing Plenary Sessions Elevating and Promoting the Profession Track: Alliance Ecosystems – Establishing a Culture of Alliance Excellence – Coloring In the White Space: Collaborating – ASAP Business Meeting with Nontraditional Partners to Create New – Realizing the Value of Alliance Management Marketplace Value During M&A Transitions – It’s Happening in the Smart Grid: – Final Session: Digging into the ASAP The Brave New World of IT Partnering 4th State of Alliance Management Study Quarter 4, 2011

2012 ASAP global Alliance Summit

Caesars Palace, Las Vegas, Nevada, USA March 5-8 Need More Reasons to Attend?

Attending the 2012 ASAP Global Alliance Summit enables you to: – Participate in informative seminars and insight-filled panels – Hear and participate in presentations and workshops with leading alliance experts and practitioners – Network with colleagues—renew long-standing relationships and make new connections in your industry, across industries and sectors, and with peers from every corner of the globe – Bring your global team and incorporate an all-hands meeting – Get group and one-on-one training and executive coaching – Take the CSAP exam on-site – Receive 2 qualification points for attendance – Recognize and honor the profession’s greatest achievements at the updated and enhanced Alliance Excellence Recognition Dinner – ...And Did We Mention It’s in Las Vegas? Yes, the 2012 Global Alliance Summit is being held in America’s Playground, so having fun is definitely on the agenda—even if your idea of “fun” is debating alliance governance strategies over a cup of double espresso!

Accommodations and Travel

Conference Headquarters Hotel Caesars Palace 3570 Las Vegas Blvd. South Las Vegas, NV 89109 ASAP has secured a special nightly rate of $205+ for Summit participants. Making Reservations There are two ways you can book your room at the ASAP rate—telephone or online. Telephone Booking Instructions: Call Caesars Contact Center at +1 866-227-5944 and mention ASAP’s group code SCASA2. You may also mention you are booking with the Association of Strategic Alliance Professionals Global Alliance Summit. Online Booking Instructions: In order to receive ASAP’s rate you must book using this link: https://resweb.passkey.com/go/SCASA2

Registration Information Reg. Dates Global Sponsor Corp. Member Indiv. Member Non-Member Dec 15-Feb 29 $1,665 $1,760 $1,850 $2,220 March 1-8 $1,980 $2,090 $2,200 $2,640

Global Sponsors and Corporate Members registering five (5) or more attendees are eligible to receive a $100 discount on each registration. A pre-registration code is required to receive the discount during the registration process. To receive the pre-approved discount code, contact Michele Shannon at mshannon@strategic-alliances.org.

Please note that if you go to Caesars’ main website there is no option to book within the ASAP block.

Deadline to book either via telephone or online is February 17, 2012. After that time, the group rate will be offered based on hotel availability only.

To register online, scan this QR code or contact: Michele Shannon +1-781-562-1630 ext 204 or mshannon@strategic-alliances.org

See You at the Summit! 52

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Paving the Way: continued from page 25 worse for the small company. So it takes planning and a commitment to the process. How often are we going to meet? Who’s going to do the agendas, take the notes, and facilitate? And classic meetings guidance—Robert’s Rules of Order, that kind of stuff. Pope: Generally, I actually err on the side of less-is-more. We try not to box [alliance managers] in too tightly. I’ve found that flexibility is far better. Our contract always has a governance schedule in it and that schedule is one page. It just defines the process, the rules, the escalation procedures, and the roles of the committee members, but it’s a one-page document. However, we do get a little concerned in situations where we are entering into an alliance with a competitor. There’s more red tape there, and there’s good reason for it. Companies and alliance employees need to be mindful of competition laws, which are fairly restrictive and require a different approach when it comes to information sharing, discussing market opportunities, and the like.

How do you ensure that the granular meetings and processes of governance structures are more actionable and less administrative? helverson: An alliance manager really drives making sure that the right content is included [in regular meetings]. You’re dealing with stuff that can impact the alliance that’s really critical. I don’t see it as administrative. I don’t know where that’s coming from. They’re reviewing the state of the alliance in some of the meetings, reviewing objectives, taking a look at metrics, and reviewing action items or issues that were brought up the last time and making sure there’s some progress. It’s pretty critical. Duchars: The agenda content must be geared toward making progress. In order to do this, it is critical to develop a meeting environment that establishes trust, ensures that actions and decisions are captured, and enables issues to be raised. It’s all about content; a meeting can be a check-the-box administrative chore or it can be a defining moment. The alliance manager plays an important role in making sure that each meeting counts. hansen: To me, a governance committee call is a performance review in a live, interactive event. There’s going to be a project or program manager who will prepare a set of slides. One is an executive update—progress to date. Another slide would be around what’s left to be done—future state. The last one is most important—it’s hot topics. That can be, “We’re having difficulty, we need your help” or, “We have this new idea and we need your counsel.”

How do you keep information ﬂowing and prevent committees from becoming silos of information? Pope: Our alliance management team will coordinate information flow between various parties and ensure it flows. We define up front what information needs to flow based on the critical success Quarter 4, 2011

factors around a particular alliance business opportunity. In some cases, particularly when we’re working with a competitor, we define what information can’t flow or shouldn’t flow. In the large alliances, which involve multiple business opportunities, the alliance managers are mandated with integrating the individual committee information to advance it to the summit level in a consistent format. That prevents silos. hansen: It’s almost a part of human nature. We are all working very hard with a finite amount of time to expend. Our attention spans sometimes get distracted into other areas—we may miss a communication or there’s someone who doesn’t communicate just because they forgot. Then you get those with an agenda, and they want to hoard information.

It’s incumbent on the two alliance managers to orchestrate communication. If information doesn’t get to the top, it’s probably not good news. We all manage up. Nobody wants to deliver not-so-good news. When there’s good news, all that information flows up. If the project is going to hell in a handbasket and no one has the courage to tell the steering committee after several rounds of steering committee meetings, and suddenly the news is revealed that the project is in the tank, that’s not a good thing.

If you need to use the escalation paths, is your partnership in trouble? Ransom: Clearly, if something goes all the way to the C-level of an organization, then there’s something potentially broken, but escalation is not a sign of a partnership in trouble. It’s actually a good thing to have differences of opinion aired quickly and efficiently in a predefined process. Some people might say, “The issue was escalated. That’s bad!,” while in fact, I think it’s almost the other way around. If you follow a good process, you will realize when you can’t resolve an issue or reach a decision quickly. Don’t spend days and weeks discussing or ignoring an issue at one governance level when you might be able to resolve it at the next level with a 30-minute conversation. hansen: It’s incumbent on the two alliance managers to orchestrate communication, to be the glue that holds together the two parties when they need to, from time to time, mitigate conflicts before they have to get to the escalation point. That’s a role that needs to have leadership skills and qualities. Duchars: I believe it’s essential to have this structure early because otherwise you’re kind of going at it blind. Without a structure in place, one may run into roadblocks where one organization thinks this is the way things get done naturally because we do X, Y, and z here, yet the other organization disagrees. By having the conversations up front and ironing out things early on, some pitfalls that you could run into later can be avoided. n 53

strategic strategic alliance alliance magazine magazine | PROFESSIONAL | special focus PERSPECTIVES | supply chain CULTURE CLASH: continued from page 43 another opportunity for such a vast alliance. In addition, the multiplication of common achievements—rationalization of procurement, development of common platforms, establishment of a common information system— rapidly created an exit barrier (Lever 6). To make the stakeholders aware of the cultural differences (Lever 7), training programs were implemented on each side, which benefited several hundred people. In addition to a conference on French and Japanese culture, a training session on “working with Japanese/French partners” was organized focusing on three main areas: communications, project management, and the resolution of difficulties, all while maintaining a positive partnership. This training was aimed at the key players in the alliance. Another aspect of the training was “teamworking seminars,” intended for the alliance’s various governing bodies. These seminars were designed to improve the efficiency of teamwork, strengthening personal ties and mutual trust to build the identity of cross-company teams and share common goals. Since their launch in 2003, more than 20 teams have implemented teamwork seminars, involving more than 360 participants. At the same time, training in English (the working language of the alliance) was encouraged and the use of translators authorized when necessary to ensure a perfect mutual understanding (Lever 8).

The example of Renault and Nissan shows it is not necessarily inevitable that cultural differences will have a negative impact on the success of alliances. A charter of the alliance also was written to specify and promote common values, confidentiality, and the rules of working together on a daily basis. One of the charter’s stipulations is that “the alliance is fair and balanced” (Levers 1 and 9). In addition, behaviors and attitudes that promoted respect for cultural differences (Lever 7) and procedural (or decision-making) justice (Lever 10) were encouraged. These include development of, and respect for, common working rules, transparency in trade, sincerity and reliability of information pooled, resolution of problems in common, respect for each individual in his/ her culture and origin, and actively listening and searching for understanding before judging. Cross-company teams were established using the criteria of parity and expertise of both firms (Lever 1). Each team 54

was composed of equal numbers of Renault and Nissan employees. However, joint management was only implemented in the most strategic team. In other teams, one unique manager was the designated leader, but always with a deputy from the other side. The firm that leads each team is the one that is agreed on as the most efficient and competent in that team’s particular area; the manager chosen to lead the team is thus from this agreed-on firm. Compared with the scope of the cooperation, the interface was rather narrow (Lever 12). Since the beginning of the alliance, exchanges have only involved a few hundred people—a very small proportion of the population of two companies representing nearly 300,000 employees. The best-known manager of the alliance, after Louis Schweitzer, was Carlos Ghosn. He is the archetype of the multicultural manager (lever 13)—the product not of one but of several cultures, being of Lebanese descent, born in Brazil, and educated in France. He speaks five languages and has international experience, having worked in France, Brazil, and the United States before moving to Japan. Finally, partners proved their ability to change their initial agreement, as they advanced on their mutual learning and as the context changed. This criterion guarantees the sustainability of alliances. In particular, they set up relational climate surveys (Lever 14), which, in addition to being an element of the alliance’s “dashboard,” have also served as a tool to manage cultural differences.

Success and the “Intercultural” Alliance Manager The example of Renault and Nissan, as well as my own and others’ research, shows it is not necessarily inevitable Strategic Alliance Magazine

strategic alliance magazine | special focus | supply chain

More on the Renault-Nissan Alliance – Nissan management includes 13 different nationalities – Women make up 11 percent of Nissan’s workforce and 10 percent of its overall management – Women make up 17 percent of Renault’s workforce and 30 percent of its executive committee – Recent products of the alliance include the launch of the Nissan Leaf, billed as the first “zeroemission car,” and four electric vehicles coming out under the Renault name – Renault-Nissan embarked on further alliances in 2010, includAmong the nuggets of information ing partnerships with Daimler available from the blog and associ(Germany), Bajaj Auto (India), and AvtoVAZ (Russia) ated press materials: Since its inception in 1999, the Renault-Nissan alliance has been the subject of numerous articles in business publications, as well as academic case studies. Another excellent source of information on the alliance is the official RenaultNissan blog, which is remarkable not only for its breadth of information but also for its transparency and candor about the sources of the alliance and the obstacles and challenges to its ongoing success. The blog can be accessed at http:// blog.alliance-renault-nissan.com/. that cultural differences will have a negative impact on the success of alliances. Certainly there will always be culture clashes in global alliances, and some of them will fail, partly as a result. But this is far from being foreordained— and the cultural distance can even have a positive impact, as the Renault-Nissan experience shows. An important factor in alliance success, in fact, is what we might call “the visible hand of the manager.” The efforts undertaken in the Renault-Nissan alliance—spearheaded by Louis Schweitzer and Carlos Ghosn and welcomed and furthered by Nissan executives such as Tsumoto Sawada and Norio Matsumura—correspond to an expanded notion of intercultural management. No doubt, these efforts were made because of the acknowledged huge cultural differences and fear of their deleterious effects—as well as the strong desire of both parties to see the alliance succeed for mutual benefit. The perceived importance of cultural differences led to specific managerial actions that affected alliance performance for the better and limited the negative effects of these cultural disparities. Renault-Nissan is a paradigm of expanded intercultural management playing a moderating and mediating role that significantly contributes to alliance success. n Fabien Blanchot, Ph.D., is an associate professor in strategic management at France’s Paris-Dauphine University. His research, publications, and consulting activities focus on strategic alliances, acquisitions, and mergers. He is also vice president of ASAP France, and a Knight in the French Order of Academic Palms. He can be reached at fabien. blanchot@dauphine.fr. Quarter 4, 2011

Key Quotes from Renault-Nissan History “Mr. Schweitzer, as much as possible, asked me to send our best people to work for Nissan,” says Bernard Long, vice president for senior executive staff management for Renault, who went to Japan in 1999 to help run Nissan’s HR department. “We needed people with good listening skills, great talent for empathy with other people, open minded, straight, great level of integrity, who must speak English and preferably already had overseas experience. They had to have a clear ability to add value professionally.” “Like some of my colleagues I went to Japan in April 1999,” says Patrick Pélata (an executive vice president with Nissan from 1999 to 2005 and now Renault’s COO). “We traveled the world to look at the Nissan network, from Mexico to Thailand, from Japan to England, every time asking Nissan people what was wrong,

what do you think should be done? We wanted to really find out what Nissan people thought. ... I became a Nissan person, we all did. We didn’t work for Renault, though we knew they were a large shareholder, we worked for Nissan. Ninety-nine percent of what I did was consensual. I didn’t thump the table and tell my Nissan colleagues what to do. That never would have worked. I explained. Forming a consensus is part of Japanese management. That is exactly what we all tried to do.” On the role of Carlos Ghosn in the success of the alliance: “His greatest performance is that he was able to restructure people’s mindsets.” (Executive vice president and board member Norio Matsumura, quoted in A. Taylor, “Nissan’s U-Turn to Profits,” Fortune, Feb. 18, 2002)

Collaborative Buzz Continued from page 17 clinical studies that will form the basis of international regulatory submissions. This alliance is the first of a planned two-step partnering strategy, as Intarcia finalizes its late-stage discussions with global pharmaceutical companies in the diabetes field. This will form a unique and powerful threeway alliance dedicated to the development and commercialization of ITCA 650 around the world. “We couldn’t be more pleased to attract and partner with a world-class organization like Quintiles—a global leader in its field with great depth and breadth of expertise in Type 2 diabetes,” said Kurt Graves, executive chairman of Intarcia’s board of directors. “The Quintiles team working with us shares our enthusiasm for ITCA 650; this was the catalyst to form an innovative collaboration model about which we are both very excited.”

Partnering in “Pharmerging” Markets: New Quintiles Report Eyes Alliance Trends and Benefits While biopharmaceutical spending in emerging markets is growing at double-digit rates—much faster than in developed nations—opportunities in “pharmerging” countries must be balanced with accompanying costs and risks of entering new markets.

So says a new report from Quintiles, Partnering to Maximize Rewards in Pharmerging Markets, which details growth factors and trends for biopharma clinical research and commercialization in emerging markets, and outlines alliance strategies and best practices to share costs, risks, and rewards. Partnering allows a ‘think global, act local’ approach to opportunities in developing nations.” Diverse demographics, disease profiles, health care systems, governmental controls, and distribution systems in emerging markets require a deep understanding of the opportunities and 56

risks matched to corporate strategy, risk tolerance, and expectations on return. To learn more, or to download Partnering to Maximize Rewards in Pharmerging Markets, go to quintiles.com.

Lilly and Amylin End Collaboration, Work to Avoid Litigation

Pharmaceutical companies Eli Lilly and Company and Amylin Pharmaceuticals, Inc. reported in November that they will end their long-standing collaboration to develop diabetes drugs, according to the Associated Press. The companies also said they were resolving a lawsuit Amylin had filed over another agreement Lilly signed earlier this year with German drug maker Boehringer Ingelheim. Amylin will pay Lilly $250 million and assume full responsibility for sales of the type 2 diabetes treatments Byetta and Bydureon. It will take over U.S. sales of Byetta, also known as exenatide, and sales in all markets by the end of 2013. Amylin will look for a partner or partners to help with sales outside the United States. Amylin also will pay Lilly 15 percent of global sales for Byetta and Bydureon up to $1.2 billion plus interest. That agreement ends if Bydureon doesn’t receive U.S. approval by July 2014. Amylin will then pay Lilly 8 percent of global sales afterward. Lilly received $430.6 million from Byetta last year, a small slice of its $22.44 billion in total product sales.

AOL, Yahoo, Microsoft Combine to Sell Online Ads

Seeking to combat the online ad dominance of Google and Facebook, Yahoo, Inc., Microsoft Corporation, and AOL, Inc., announced an advertising partnership in November whereby each company will be able to sell the others’ unsold premium advertising inventory by early next year. Such online display ads appear on Web pages and attract marketers, and tend to command higher ad rates. It’s yet another case of “co-opetition”;

while the three companies have hammered out this partnership, they are still competing with one another both for advertising spending and for publishing partners. “We’re not reducing competition in any way, shape, or form,” said Rik van der Kooi, corporate vice president of the Microsoft Advertising Business Group. “As a result of transparency, the competition is only going to increase.” Van der Kooi described the partnership optimistically as a “rising tide that lifts all boats.” Executives from the three partner companies said they are not expecting objections from the Department of Justice (DoJ), even though the DoJ could potentially litigate against the combine if it viewed it as reducing competition or unduly affecting ad rates.

SAS and EMC Greenplum Release Data Warehouse, Management, and Analytics Appliance in Middle East and North Africa

SAS Institute, the provider of business analytics software and services, has announced that its strategic partnership with EMC Greenplum, a pioneer in enterprise data cloud solutions for largescale data warehousing and analytics, has resulted in the Middle East and North African region’s (MENA) new offering addressing customers’ analytics, data management, and data warehousing needs. The resulting offering, referred to as D1, allows customers to go to one locally based partner, approved by both SAS and Greenplum, to receive the best of both technologies and all relevant technical support. The newly launched offering has been designed to help reduce operational cost and break down the complexity barrier for small/medium enterprises (SMEs) by acting as an integrated offering to help address the needs of this market, providing market-leading technologies in the fields of data warehousing and analytics. Strategic Alliance Magazine

Solutions Marketplace Continued from page 34

Saba Software Helps Onboard Governance Committee Members Saba Software On-boarding Solutions help organizations implement a comprehensive process that enables new members of your governance committee to hit the ground running by taking advantage of prescribed information Career Path: continued from page 29 that never had that role before, to see that their alliances are being managed properly. They tend to reach out to a company like ours [saying,] ‘Help us develop that job description.’” Pearson, for his part, sees a bright future for the profession, but advises alliance professionals not only to get all the experience they can, but to become ASAP-certified in alliance management. In building its own alliance management capability in the preASAP-certification days, Quintiles developed a two-year, “MBA-style” curriculum and training program—which

Collaborative Buzz cont. To roll out this new product, SAS recently organized special road show events, on Oct. 19 in Dubai and Nov. 14 in Abu Dhabi. The two special events were part of the strategic initiative to target the MENA region’s mid-enterprise market, composed of companies and organizations with disparate sources of data that need to be integrated into a single data source for better decision-making purposes. “The exclusive MENA launch of the new D1 offering reflects the strategic relationship we have with EMC Greenplum, which is one of the leading data warehousing solution providers in the market today,” said Amir Sohrabi, Quarter 4, 2011

regarding goals and expectations, combined with a clear development plan that can incorporate real-time learning and blended learning programs. This solution aims to improve time to contribution and provides a focus on continuous performance improvement and ongoing development. – Align new committee members with corporate strategies and objectives from day one with cascading goals – Effectively communicate job responsi-

bilities and requirements, and measure progress with performance reviews – Create new appointee profiles with competencies, skills, experiences, and content that can be used as a foundation for all people processes – Provide access to potential subjectmatter experts through Saba Live

later helped ASAP to establish its own CA-AM and CSAP certification programs. Pearson sits on ASAP’s certification standards committee, and still fervently believes in the importance of certification for alliance professionals.

but unless you have a strong handle on the tools, the process, the concepts, you’re not going to be an alliance manager. The ‘accidental alliance managers’ are individuals who are quickly thrown into a role because a partner realizes, ‘We have to have a governance system in place to work with our partner!’ Historically many companies simply identified someone with spare capacity and designated that person an alliance manager. That’s not acceptable. As we become more and more educated on alliance management, it’s more recognized in the partnership community that it’s not just alliance management, but certified alliance management.” n

“You can’t be an accountant, a lawyer, or a physician without the credentials, certification, and training that allows you to stand up and say ‘I’m an expert, a recognized trained professional in this area,’” Pearson said. “It’s very important that our people have that training—not only for their own credibility but in actual practice, where the rubber meets the road. It’s nice to have the certification to hang on your wall, regional alliance manager for the Middle East & Africa Region (Middle East, Africa, Turkey, and Pakistan) at SAS Middle East. “Businesses in the region today draw their success from the presence of a sound data warehousing system combined with effective data management, BI, and analytics technologies. Addressing this need, the new offering combines EMC Greenplum’s data warehousing solution with the features of SAS Analytics via ‘In Database Analytics’ to produce positive results. D1 not only gives users the advantage of a fully integrated warehouse and data management solution but can also help drive down operational costs, thereby resulting in increased productivity and efficiencies among users.

To learn more, please visit www.saba.com/ employee-onboarding-process or call +1 650-581-2500. n

Signum Biosciences Signs Collaborative Agreement with GlaxoSmithKline

Signum Biosciences has entered into an agreement with GlaxoSmithKline to collaborate on Signum’s phosphatase screening technology and Phosphoprotein Phosphatase 2A (PP2A), according to Silico Research. The agreement provides Signum with research support and milestone payments. GSK meanwhile receives the exclusive rights to Signum’s proprietary phosphatase screening technology for GSK’s research and development activities in neurosciences. GSK and Signum will undertake a broad R&D collaboration to screen and identify PP2A targeted compounds. Financial terms of the agreement were not disclosed. n 57

the close Now That We’ve Got the CEO’s Attention... What Next? The Alliance Management Discussion Needs to Be Made Relevant to the Rest of the Organization By John W. DeWitt and Jon Lavietes

ALTHOUGH IT IS IMPORTANT TO SHARE our triumphs and discuss our challenges with the alliance management community, it is always critical to make the conversation relevant to the rest of the organization. Fortunately, CEOs are becoming more interested in the discussion; thus, everyone else will want to join in, too. In the first three issues of Strategic Alliance Magazine, we’ve tried to tackle a variety of issues that matter to alliance professionals and to employees from other parts of the company who have been charged with the responsibility of managing an alliance. Whether it is a discussion about governance, metrics, or industry-specific perspectives on alliance management, we have tried to make each discussion relevant to the alliance community.

How does the CEO’s involvement change the language of the alliance manager? How does the alliance manager begin to communicate the alliance’s value proposition and challenges so that both are relevant throughout the rest of the organization? With that said, alliance industry veterans have always acknowledged the importance of expanding the conversation to the rest of the organization. We have already begun this discussion in previous issues as well. Our feature on SAS’s path-to-market initiative in the magazine’s inaugural issue profiled the success achieved through partner marketing, while an article in the last edition on collaborative selling revealed how to get your sales team to engage with partners. Of course, alliance managers are increasingly find58

ing themselves sitting next to a powerful new ally in removing barriers to the rest of the organization. CEOs are paying closer attention to alliance management as organizations continue to realize they cannot accomplish their goals alone. They are asking alliance management executives to help set strategy and even serving as alliance managers themselves in some partnerships. How does the CEO’s involvement change the language of the alliance manager? How does the alliance manager begin to communicate the alliance’s value proposition and challenges so that both are relevant throughout the rest of the organization? Or put more simply: if C-level executives are working more closely with alliance management executives, how do alliance management teams parlay this recognition into greater influence within the organization? In the next issue Dr. Dennis Gillings, Quintiles’ chief executive, kicks off our new “CEO Forum” section, which will give a voice and a space to CEOs and their viewpoints on the strategic value and role of alliance management. It is all part of an evolution that is making the discussions about partnership and business collaboration as relevant to the highest level of the organization as they are to the alliance management community. When the conversation matters to the CEO, it will certainly matter to the rest of the organization as well. The next step? Making sure we, as alliance leaders and practitioners, know precisely what to say now that we’re getting everyone’s attention. We hope Strategic Alliance Magazine helps you find the right words. n Strategic Alliance Magazine

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