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

Sorry, no secrets...

...this time, what happens inVegas gets spread ’round the world. Register Now – You Will Not Want to Miss the

2012 ASAP Global Alliance Summit Mastering the Art and Science of Alliance March 5-8, 2012 – Caesars Palace, Las Vegas, Nevada, USA

✓ Attend informative seminars and expert panels ✓ Get group and one-on-one training and coaching ✓ Take the CSAP Certification Exams ✓ Hear keynotes by alliance management’s leading experts and practitioners ✓ Network with colleagues – renew longstanding relationships and make

new connections, in your industry, across industries and sectors, with peers from every corner of the globe Recognize and honor the profession’s greatest achievements at the Alliance ✓ Excellence Awards Banquet ✓ And yes, it’s Las Vegas, so having fun is not optional – even if your idea of fun is debating alliance governance strategies over a cup of double espresso. Don’t gamble with your professional development. Mark your calendar today for the ASAP Global Summit, March 5-8, 2012, in Las Vegas, Nevada.

Confident.Credible.Capable.

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

up front

Building a Bridge To Emerging Markets The Work Performed to Establish Fruitful Relationships in Rising Asian Countries May Serve as a Gateway to the C-Suite for Alliance Management By Art Canter

EMERGING MARKETS IN ASIA HAVE BEEN ALL THE RAGE for quite some time now. It’s generally accepted that the market opportunities in the region represent some of the corporate world’s biggest opportunities in the short and long term. In a discussion we had in putting together our staff-written piece on alliances in the region, one of our interviewees relayed a conversation in which a multinational company’s C-level executive said he should teach his kids Mandarin so they are prepared for the China-dominated business world that figures to be their adult reality. That anecdote did not make our story, but it illustrates the bigger truth acknowledged by many: we all need to learn how to work with China and its continental neighbors. Who within a typical corporation figures to be better at building this bridge to emerging Asian markets than the alliance executive? Alliance managers are not just at the forefront of establishing relationships; they are constantly learning all of the rules—written and tacit— and the general lay of the business cultural landscape so that marketing, sales, R&D, and other parts of the organization have a clear blueprint and path to achieve company goals with minimal setbacks. More important, the alliance manager has the patience and empathy to execute a successful initial foray into these countries. Quarter 1, 2012

Where C-level executives and other company departments might be tempted to put short-term profits and the company’s immediate needs ahead of what is best for the relationship down the road, alliance managers are used to taking as long as two years or more to derive value from partnerships. Add the complexities that come with learning the ropes of a new culture, and Alfred Griffioen, CSAP, of Alliance experts says in our feature, this patience is especially virtuous. “In all partnerships, it’s about mutual understanding, especially if you’re talking about cross-cultural partnerships,” said Griffioen. “The basis of mutual understanding to start with is smaller. You have to work harder on that specific aspect.” Of course, convincing the C-suite to have this patience returns us to a point we have touched on from many angles since the debut of Strategic Alliance Magazine: you need to have their ear first! Although the work performed in future geographies of power will build another bridge to the C-suite, alliance executives will need more avenues for dialogue with C-level executives to in-

fluence strategy and further align their practices with company vision. Along those lines, our new CEO Forum column sponsored by Quintiles debuts in this issue with the company’s chief executive Dennis Gillings sharing his thoughts on alliance management. In future issues, CEOs of other companies will lend their perspectives on what they expect from their alliance management practices, the value they are bringing, and the areas in which they can improve. In the meantime, with our special section on building an alliance culture, we hope this issue continues ASAP Media’s quest to serve less as a bridge and more as a ladder for your professional development. Art Canter, president and CEO of ASAP, is executive publisher of Strategic Alliance Magazine. 5

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The magazine of the Association of Strategic Alliance Professionals

in this issue 18

n COVER STORY: ALLIANCE Culture

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, CA-AM 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 Jennifer Silver, Certification Coordinator 781-562-1630 ext. 205 jsilver@strategic-alliances.org © Copyright 2012 Association of Strategic Alliance Professionals. All Rights Reserved.

Growing Alliance Culture: Has Your Company Started Yet?

If So, Keep Up the Good Work (Because You Already Know There’s More Work to Do). If Not, Here’s How | By Michael Burke

With alliances becoming increasingly important to more companies and industries, organizations find that they need to rapidly remake themselves so they incorporate an “alliance culture” that enables partnerships to thrive. Companies can nurture and grow new processes and ways of thinking that will help them to become more alliance-enabled.

n alliance culture

Non-Alliance Personnel Training Increases Organizational Partnership Strength

If You Want Your Organization to Consistently Practice Effective Collaborative Business Principles, Training Non-Alliance Workers Involved in Partnerships Is Essential | By Jon Lavietes

In most organizations with an alliance management practice, there are many non-alliance employees who delve partially into partnership activities or function as de facto alliance managers—they are often several times more in number than there are actual alliance management personnel. If a company is to consistently practice a high level of alliance management execution, it must identify these employees and educate them in the tenets of sound business collaboration.

n ALLIANCE MANAGEMENT IN THE SPOTLIGHT

The 2012 ASAP Global Alliance Summit Preview

Las Vegas Is the Place to Be in March, as ASAP’s Global Alliance Summit Presents the Latest in Collaborative Thinking, Strategy, and Techniques | By Michael Burke

They say that what happens in Vegas, stays in Vegas—or maybe on YouTube—but it’s a good bet that much of what takes place at this year’s ASAP Global Alliance Summit will end up spilling out of the conference rooms like coins from a slot machine jackpot, and ultimately will be spread around the worldwide alliance community. Strategic Alliance Magazine

n ALLIANCE AWARDS

Recognition Dinner Highlights Global Alliance Summit

Annual Event Celebrates 2011’s Most Innovative and Successful Initiatives, Companies, and Individuals in Alliance Management | By Jon Lavietes

As is the case each year, the 2012 Global Alliance Summit will pause to honor the profession’s best and brightest. On the evening of March 7, 2012, attendees of the Summit at Caesars Palace in Las Vegas will gather for a banquet at which the 2012 Alliance Excellence Award winners will be announced and celebrated. Here are this year’s nominees who have cemented their places as leaders in the alliance management community.

2012

ASAP

n NEW EDITORIAL FEATURE: CEO FORUM

Q&A with Dr. Dennis Gillings, CBE, Chairman and CEO, Quintiles

In our inaugural CEO Forum feature, Quintiles CEO Dr. Dennis Gillings touches on alliance structures, shifting to a smaller R&D structure, mitigating risk, the increasingly collaborative nature of outsourcing relationships, alliance culture, and the general success factors for alliances. Sponsored by Quintiles. n SPECIAL Editorial Supplement

Managing Alliance Conflict

Conflict Is Inevitable. How You Deal with It Can Be the Difference Between Success and Failure By David Thompson, CA-AM, John R. Hayes, MD, and Steven E. Twait, CSAP

Every alliance reaches a crossroads when the parties encounter a conflict. This apparent difference of opinion or philosophy represents an inflection point of the partnership. How the parties handle the disagreement can have major implications for the ultimate results of the alliance. Sponsored by Eli Lilly & Co.

Regular Features: 5 n UP FRONT | By Art Canter The work performed to establish fruitful relationships in rising Asian countries might simultaneously serve as a gateway to the C-Suite for alliance management.

16 n OUR THANKS Our opportunity to say Thank You to our Charter Benefactors and ASAP Media Sponsors whose support helps make Strategic Alliance Magazine possible.

11 n COLLABORATIVE BUZZ Alliance News Briefs | People in the News ASAP & ASAP Partner Calendar of Events ASAP Chapter Updates

36 n SOLUTIONS MARKETPLACE Products and services for and from strategic alliance professionals.

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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 42

n SPECIAL FOCUS: EMERGING MARKETS

Translating Success in Asia

As the Business World Tilts Further Toward the Eastern Hemisphere, Companies Need Local Partners to Help Navigate These Emerging Markets—and Quickly! | By Jon Lavietes

To thrive in Asia, you need a local partner who knows the particulars of the culture, politics, and physical landscape itself. Even if you don’t think you do, sometimes it’s simply the law. Here’s how to select your local ally and how that organization can help you succeed in the region while the market opportunities are still ripe.

n SPECIAL FOCUS: EMERGING MARKETS

Partnering to Maximize Rewards in Pharmerging Markets

Alliances Allow a “Think Globally, Act Locally” Approach to Opportunities in Developing Markets | By Jack W. Pearson, CSAP, MBA

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 2012, 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. 8

Opportunities abound for biopharmaceutical companies in growing nations—“pharmerging” markets. Yet the actual results of their engagements in these countries have been mixed. Adopting a strategy informed by local insights and experience is crucial, but to increase the chances of success, pharmaceutical companies need to keep a few principles in mind. Allying with a partner with local expertise and proven alliance management capabilities has been shown to be a superior approach to quickly establishing a presence and gaining expertise while limiting resource commitments and risks, particularly when the local partner has an understanding and appreciation of cultural differences and Western standard business practices. n THE CLOSE

Making the Alliance Investment

Companies May Be Parsimonious with Their Cash—But There’s Good Reason to Increase Investment in Alliances and Alliance Management | By John W. DeWitt and Jon Lavietes

The climate of uncertainty continues to impact our global economy and the investments companies are willing to make. Even though market forces seem to lend themselves to increased investment, on the surface, companies are still reluctant to spend money on capabilities that will position them for growth as the economy continues to recover, including alliance management. Fortunately, in a time when investing in alliance management is essential, any level of dollars committed to alliance management still provides tremendous value. 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 1, 2012

THE ASAP ALLIANCE MANAGEMENT CERTIFICATION PROGRAM OFFERS individuals the opportunity to demonstrate a mastery of skills in alliance management as well as in managing collaborative business relationships. The certification is based on the alliance competencies needed to successfully manage an alliance. There are two levels of certification—Certiﬁcation of Achievement–Alliance Management, the basic level of certification, and Certiﬁed Strategic Alliance Professional, the advanced level of certification. Individuals who are CSAP certified have demonstrated a command of the full life cycle of alliance management from inception to termination. CONtEXt SKiLLS Business skills required in alliance management, not unique to the role. n Communications Skills n Conflict Resolution n Negotiation Skills n Financial Management n Change Management n Project Management n Team Management n Leadership Through Influence n Problem Solving and Decision Making

CORE SKiLLS Critical comCOMPANY SKiLLS Knowledge petencies specific to the role of elements unique to company alliance management. and competitive environments. n Creating Strategic Alignment n Company Strategic n Value Proposition Imperatives n Industry and Development n Governance Technical Drivers n Alliance Metrics Setting n Organizational and n Operating Principles Functional Structure n Joint Business Planning n Company Governance n Alliance Negotiations n Company Partnering n Organizational Alignment Culture n Relationship Management n Transition n Cultural Considerations

What’s in your future? Join ASAP today to validate your specialized career skills that have become increasingly critical to the business world through our certification programs. Also get valuable networking, professional ALLIANCE development, research, and other MANAGEMENT resources that will help advance your CERTIFICATION career in alliance management. For more information contact: 960 Turnpike Street Jennifer Silver Canton, MA 02021 Certiﬁcation Coordinator Tel: +1-781-562-1630 jsilver@strategic-alliances.org Fax: +1-781-562-0354 or call 781-562-1630 ext. 205 www.strategic-alliances.org

Strategic Alliance Magazine

Collaborative Buzz ASAP Welcomes New Global Member: AstraZeneca By Michael Burke

ASAP is very pleased to report the recent news that the global pharmaceutical company AstraZeneca has made the leap from ASAP Corporate Member to join the ranks of ASAP Global Members. The London-based company, which has a U.S. headquarters in Wilmington, Del., now joins such high-profile firms as Dell, Microsoft, Xerox, IBM, and Cisco Systems, as well as leading biopharma companies Eli Lilly, Quintiles, Abbott, Novartis, and Sanofi, in the pantheon of ASAP Global Members.

AstraZeneca’s business focuses on the discovery, development, and commercialization of prescription medicines, primarily in six areas: gastrointestinal, cardiovascular, neuroscience, respiratory and inflammation, oncology, and infectious disease. Its key top-selling medicines include the cholesterol drug Crestor ($5.7 billion in sales in 2010), the schizophrenia/bipolar/depression meds Seroquel IR and Seroquel XR ($4.1 billion and $1.2 billion in 2010 sales, respectively), and the asthma treatment Symbicort ($2.7 billion in 2010 sales). The company employs more than 61,000 people in over 100 countries worldwide, including more than 14,000 in North America and more than 8,000 in the United Kingdom (and nearly 20,000 in Sweden and the rest of Europe). Louis Schweitzer is the chairman of AstraZeneca’s board, and the company is headed by CEO David Brennan. Alliances and other forms of collaboration are very important to AstraZeneca’s business and continued growth, as evidenced by Silico Research’s ranking it second overall in its 2010 BioPartnering survey and first for trust and alliance management. The company has a number of initiatives ongoing that also express its commitment to partnering (see related story below). “At AstraZeneca, we’ve been partnering for more than 30 years, working not only Quarter 1, 2012

with a whole range of other businesses, but with academia, governments, NGOs, patient groups, and venture capitalists,” said Shaun Grady, vice president of strategic partnering and business development. “Every year we enter into hundreds of collaborations and partnerships. In the last three years alone, we’ve sealed more than 80 significant deals, individually designed in our own core therapy areas and beyond.” AstraZeneca also shows its commitment to collaboration in its in-house Alliance Management Center of Excellence, led by Nick Dunscombe, head of alliance management at the company. According to company informational materials aimed at partners, the Center of Excellence “[utilizes] our strengths and learning from previous collaborations and [applies] input from yourselves. We constantly aim to improve our processes and capabilities and apply this learning to all alliances so that we effectively respond to the requirements of every individual alliance in a rapidly changing environment.”

Both ASAP and AstraZeneca look forward to working together and to AstraZeneca’s joining the ranks of the growing number of companies that truly “get it” when it comes to the value of alliance management and the importance of creating and nurturing alliances organization-wide as an enterprise capability.

ASAP News

ASAP Announces New Certification Coordinator

ASAP welcomes a new staff member to its hardworking team: Jennifer Silver has stepped into the new position of certification coordinator. Jennifer now manages all administrative aspects of the association’s certification program, including responding to requests for information and processing certification applications.

AstraZeneca joins the growing number of companies that truly “get” alliance management. Prior to joining ASAP, Jennifer had been in the meeting planning industry, working both on the vendor side and on the corporate level. While on the vendor side of the industry, her client base represented a variety of industries and organizations, for whom she was responsible for onsite coordination of meetings and events. Jennifer has also previously worked for a large insurance company in its meeting planning department, where she handled site selection, planning, and executing of sales meetings and roundtables. Welcome, Jennifer! 11

Collaborative Buzz

ASAP and ASAP Partner Events RTP Chapter Event

Nights of the “Alliances” Roundtable February 13, 2012, 5:30 – 7:30 p.m. EST Mez Restaurant, 5410 Page Road, Research Triangle Park, N.C., USA (to register visit www.strategic-alliances.org)

ASAP Netcast Webinar

Aligning Your Organization with Your Collaborations February 15, 2012, 11:00 a.m. – 12:00 p.m. EST (to register visit www.strategicalliances.org)

Chicago/Midwest Chapter Event

Developing Alliances in China: Due Diligence, Negotiation, and Sustaining February 21, 2012, 6:00 – 8:00 p.m. CST PF Chang’s, 530 North Wabash Avenue, Chicago, Ill., USA Speakers: Doug Oshana, Director Global Solutions & Services, Neusoft; and Bill Liu, Vice President, NaviAsia (to register visit strategic-alliances.org)

2012 ASAP Global 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 Disney and GM Renew Alliance—But They’re Closing the Epcot Test Track?!

The Walt Disney Company and General Motors have announced that they have renewed their long-term business relationship with a new multiyear corporate alliance. As just one part of the agreement, GM will be actively involved with Walt Disney Imagineering in the development of a reimagined, redesigned Epcot Test Track ride. First the bad news, for fans of Test 12

Track—the popular Epcot ride that simulates driving a car through a variety of conditions, including 50-degree banked curves, uphill and downhill, through hot and cold zones, over bumpy surfaces, and so on—alas, plans call for closing the current GM Test Track in April 2012. But not to worry—the unveiling of the new “Test Track Presented by Chevrolet” is scheduled for fall 2012, and from all accounts the well-loved Epcot attraction is getting a serious upgrade. The redesigned and refurbished Test Track will be presented by one of GM’s iconic brands, Chevrolet. As Chevy marks its 100th anniversary, the new alliance agreement enables General Motors to tell its story in new ways to millions of Disney guests from around the world and to continue as the official vehicle sponsor of Walt Disney World Resort. “We are excited to renew our longterm alliance with General Motors,” said George Aguel, senior vice president of corporate alliances for the Walt Disney Company. “This unique agreement extends collaboration between two of the most recognized brands in the world, a relationship that spans over 30 years. The reimagined Test Track Presented by Chevrolet will continue our shared goal of providing unique and innovative experiences that engage Disney guests in exciting and interactive ways.” “As a global brand, Chevrolet is looking forward to welcoming guests from around the world to the reimagined Test Track,” said Joel Ewanick, global chief marketing officer for General Motors. “The best of Disney and the best of Chevrolet will come together to bring guests an immersive experience in the design process of the vehicles they see on the road today and will see in the future.” As part of the redo, the Future World attraction will feature a sleek new “Chevrolet Design Center at Epcot,” bringing Epcot guests into a

simulation of the world of automotive design. Amid upbeat music, engaging media, dramatic lighting, and an array of Chevy concept cars and model vehicles, guests themselves can become automotive designers—and gaze into the future of personal transportation. At interactive workstations, visitors will be able to create their own custom concept vehicles before strapping into their six-person “SimCar” vehicle to put their design through its paces on the exhilarating hills, switchbacks, and straightaways of the Test Track circuit. With performance testing complete, drivers will move into a post-show area filled with special effects and be scored on how well their vehicle did. Finally, guests will be able to see the very latest Chevrolet vehicles in an allnew state-of-the-art showroom.

AstraZeneca Crowdsources Experimental Drugs to Researchers, Forms New Office to Pursue Collaborations

The UK-Swedish pharmaceutical group AstraZeneca will give outside scientists full access, free of charge, to more than 20 experimental drugs on which it has ceased research in an effort to boost medical discovery, according to the Financial Times. The company will offer academics the chance to study its compounds—most of them still under patent protection— and to analyze the results of safety and efficacy tests it has conducted on these drugs in animals and humans. By “crowdsourcing” the compounds to leading scientists, the company hopes to spur the development of new treatments, offering AstraZeneca the prospect of commercial gain while reducing the investment it will make. If the initiative is successful, it could be a model for future collaboration that other biopharma companies might imitate. The crowdsourcing agreement with the UK Medical Research Council, which Strategic Alliance Magazine

will offer £10 million ($15 million) in initial funding to researchers wanting to study the drugs, is broader in scope than previous similar industry deals, most of which have focused on “neglected” diseases such as malaria. The drugs involved include some that have been studied for treatment of cancerous tumors, as well as Alzheimer’s disease and cardiovascular conditions. Some of these compounds were shelved by AstraZeneca either because it believed the commercial market to be too limited or because the treatments fell outside the strategic areas on which it focused. This initiative reflects a growing trend in the pharmaceutical industry to be more open and work more cooperatively with outside researchers in order to more efficiently identify potential treatments. In another development, AstraZeneca has established a new Science and Technology Integration Office, which will develop collaborations with business, universities, governments, and charities, according to the UK’s The Telegraph newspaper. The new office will be led by Anders Ekblom, formerly executive vice president of global medicines development. He will be succeeded by Briggs Morrison, formerly of U.S.-based Pfizer, where he was head of medical excellence. AstraZeneca is an ASAP Global Member.

Martha Stewart Goes to Penney’s

J. C. Penney Company, Inc., and Martha Stewart Living Omnimedia, Inc. (MSLO), have entered into a strategic alliance and will join forces to create a unique and comprehensive retail experience featuring Martha Stewart products, know-how, and advice. Beginning in February 2013, customers will be able to visit distinct Martha Stewart retail stores inside the majority of J. C. Penney department stores. These Martha Stewart shops are intended to be destinations where consumers can buy a variety of affordable, high-quality home and lifestyle merchandise designed and curated by Martha Stewart and her team. Staffed by trained associates, Quarter 1, 2012

the Martha Stewart stores will also give consumers direct access to products and educational tips. J. C. Penney will market and source the products. Under the terms of this 10-year commercial agreement, the two companies will also jointly develop an e-commerce site, expected to launch in 2013. The site will offer Martha Stewart expertise and enable consumers to purchase a wide range of home and lifestyle products, including those sold in the Martha Stewart stores inside J. C. Penney, and other merchandise designed or selected by Martha Stewart. MSLO is expected to receive in excess of $200 million from J. C. Penney over the initial 10-year contract period. The MSLO alliance is one of a number of initiatives spearheaded by new J. C. Penney CEO Ron Johnson, formerly of Target and Apple, with the goal of reinvigorating the 110-year-old company and repositioning it in the challenging world of retail department stores.

Berry Good: Ocean Spray and Pepsi Join Forces in Latin America

Ocean Spray Cranberries, Inc., and PepsiCo, Inc., have announced the formation of a strategic alliance in Latin America that will give PepsiCo exclusive rights to manufacture and distribute a portfolio of cranberry- and blueberrybased beverages through its Latin America Beverages division, according to the Boston Globe. Financial terms of the transaction were not disclosed. Ocean Spray, a growers’ cooperative with headquarters in Lakeville and Middleborough, Mass., has had a business relationship with PepsiCo in the United States since 2006, when Ocean Spray’s single-serve juices and juice drinks entered the PepsiCo bottling system. “We are eager to continue building on our successful partnership with PepsiCo, as it will help us expand consumer access to Ocean Spray products in important international markets like Latin America,” Ocean Spray chief operating officer of global partner

operations Stewart Gallagher said in a company-released statement.

Dell Moves into the Healthcare Cloud

With the acquisition of InSite One just over a year ago, new strategic alliances, and plans for global deployment, Dell has been partnering with healthcare providers to efficiently store, manage, and share medical imaging data through a large cloud-based medical archive platform. Dell currently manages more than 65 million clinical studies and more than 4.5 billion diagnostic imaging objects and supports more than 800 clinical sites in the cloud—a nearly 25 percent increase in managed objects compared with a year ago. The addition of InSite One’s secure, cloud-based, image management software and storage services—now known as the Dell Cloud Clinical Archive—to Dell’s Unified Clinical Archive (UCA) provides a single-source end-to-end solution designed to simplify data retention, facilitate disaster recovery, and allow medical professionals to access and share images across a variety of applications and platforms. Dell has teamed with imaging leaders such as Merge Healthcare, Calgary Scientific, and Novarad to further enhance its UCA solution and bring more users into the medical imaging archiving cloud. Dell also announced a $1 billion investment in cloud and solutions infrastructure, including the deployment of several new data centers worldwide. In early 2012, Dell will offer cloud-based managed enterprise archival services as part of its UCA solution in the United Kingdom, supported by the new data center located in Slough, UK. Cloudbased medical archiving will be available to healthcare providers in other regions later in the year. And through a new initiative just announced, Dell is donating the secure cloud-based IT infrastructure to support the world’s first personalized medicine clinical trial for pediatric cancer 13

Collaborative Buzz conducted by the Neuroblastoma and Medulloblastoma Translational Research Consortium (NMTRC) and supported by the Translational Genomics Research Institute. Dell is an ASAP Global Member.

Toyota Keeps Rolling with BMW, Tesla Alliances Toyota Motor Corp. may have relinquished its position as the world’s number-one carmaker to General Motors, but the Japanese company is doing anything but standing still under CEO Akio Toyoda. Toyota’s chief agreed in December to equip some Toyota vehicles with BMW diesel engines, building on an earlier deal with Tesla Motors, Inc., to use Tesla battery packs in future electric cars, according to Bloomberg Businessweek. The alliances mark a shift from Toyota’s historic tendency to go it alone, and a recognition of continuing competitive pressure from automakers such as GM and Hyundai.

The Pac-12 and Big Ten conferences jointly announced a greatly expanded collaboration that will increase athletic competition in a variety of sports for all 24 conferencemember schools. According to the Businessweek story, under the December agreement, Toyota will equip some of its European models with BMW engines starting in 2014 to gain market share in the region, where many cars run on diesel. According to the European Automobile Manufacturers’ Association, Toyota’s share of European auto sales was 3.8 percent through October 2011, whereas the company’s U.S. share was 12.7 percent through November, according to Autodata Corp. In May 2010, Toyota agreed to use 14

Tesla’s lithium-ion battery pack and motor on its RAV4 sport-utility vehicle beginning in early 2012. In previous deals, Toyota has tended to either provide or codevelop technologies with other companies such as Ford, GM, Aston Martin, and Fuji Heavy Industries (Subaru). Meanwhile, Toyota has so far not gotten caught up in the spate of other automotive alliances such as Renault-Nissan, Daimler-Chrysler, Daimler-Mitsubishi, and GM-Daewoo.

To the Rose Bowl and Beyond: Pac-12 and Big Ten Deepen Their Alliance

The holiday bowl games and the American football season may be over, but there is still alliance news from the gridiron. In the field of college athletics, the Pacific 12 and Big Ten conferences, whose football teams have played each other in the Rose Bowl nearly every January since 1947, have announced plans to deepen their existing business relationship, according to a story in the Los Angeles Times. Just after Christmas, the two conferences jointly announced a greatly expanded collaboration that will increase athletic competition in a variety of sports for all 24 conference-member schools. Plans include a preseason game at the Rose Bowl in Pasadena, Calif., perhaps as soon as 2013 or 2014, involving schools from each conference. One goal of the renewed agreement is for each Pac-12 school to play a Big Ten school as part of its nonconference football schedule by 2017. Big Ten commissioner Jim Delany was also quoted in the Times as saying he would be interested in a neutralsite game in the Midwest—such as at Soldier Field or Wrigley Field in Chicago—or even at New York’s Yankee Stadium. Delany also hatched a non-sports-related idea for the two conferences: an academic “Brain Bowl” between students from rival schools. In a college athletic landscape where conference realignment has dis-

rupted the traditional sports scene and displaced historic rivalries, the strengthened Pac-12–Big Ten alliance represents a notable exception. Both conferences will soon have their own TV networks; the Big Ten Network, launched in 2007, has already been a great success, while the Pac-12’s new network will begin broadcasting this August. Combined, the two conferences have more than 17,000 athletes competing on 550 teams, according to the Times.

Ingraham Named to Lead Brocade Alliances Brocade Communications Systems, Inc., has announced the appointment of industry veteran Doug Ingraham to the position of vice president of alliances. Within this role, Ingraham will oversee the Brocade Strategic Technology and OEM Alliances business units, as well as the Strategic Program Council. Ingraham will report directly to Brocade CMO John McHugh. “Alliances [are] an extremely dynamic area within Brocade, and Doug’s impressive track record of business portfolio management—combined with his deep networking technology expertise— makes him the ideal person to lead this charter,” said McHugh. “In addition, his extensive background in strategic partner management will enable us to uncover fresh new business opportunities that leverage the power of partnerships to further innovation.” In this new role, Ingraham will oversee several key areas relating to Brocade Alliances initiatives, with a specific focus on forging new alliances and deepening existing relationships with strategic technology alliance and OEM partners. Ingraham will also oversee the establishment of a program framework for the development of cloud ecosystem alliance partners to educate and extol the benefits of solutions built upon Brocade Virtual Compute Block technology and the Brocade CloudPlex architecture. Strategic Alliance Magazine

Quintiles and Prodia Partner on Lab Testing in Indonesia

The biopharmaceutical services company Quintiles has announced an expanded partnership with Jakartabased Prodia Clinical Laboratory, through its sister company Prodia the CRO, to facilitate rapid testing of samples from patients in clinical trials in Indonesia. This will allow Quintiles’ customers to conduct clinical research in Indonesia and help establish the potential benefits of new medicines in the Indonesian population while contributing to global programs. Under the agreement, Prodia will provide Quintiles with exclusive access to Prodia’s harmonized central laboratory for a two-year period. “This agreement demonstrates Quintiles’ commitment to improving human health by increasing participation in global clinical research,” said Kerry Strydom, general manager of Quintiles Australia, New Zealand, Indonesia, and Philippines. “Major health issues in Indonesia’s ethnically diverse population of 240 million include infectious and noncommunicable diseases, with tobacco-related illnesses also on the rise. As new and improved medicines are developed for these conditions, it’s important that they are studied in populations for whom they are intended, including Indonesian patients.” Gunawan Prawiro Suharto, president of Prodia the CRO, said, “As the local market leader in laboratory services, Prodia is delighted to partner with Quintiles to help establish Indonesia as a true center of excellence for delivery of clinical trials. We look forward to working with Quintiles and its global biopharma customers to develop novel therapies.”

Moving in Stereo: Onkyo and TEAC Form New Alliance

As part of its corporate goal to enhance shareholder value and meet the Quarter 1, 2012

demands of a changing marketplace, Onkyo Corporation, a worldwide leader in consumer audio, has announced a strategic alliance with TEAC Corporation, a global electronics manufacturer. Through this strategic alliance Onkyo and TEAC will acquire shares of each other’s stock. The companies are exploring ways to share manufacturing facilities, logistic centers and research and development resources. Onkyo president Munenori Otsuki stated that the alliance with TEAC offers unique opportunities to both companies to leverage each other’s considerable strengths to provide innovative lifechanging products to their customers. TEAC president Yuji Hanabusa stated that the strategic alliance will make both companies more competitive in an everchanging market.

BMC Software and Cisco Ally to Deliver the Cloud

BMC Software announced plans in December to support Cisco Network Services Manager across its cloud management product line, including BMC Network Automation and BMC Cloud Lifecycle Management. BMC and Cisco Systems have a broader strategic alliance with more than 25 successful joint cloud customers, including Telstra, QTS, and Harris Corp. Cisco Network Services Manager, which was announced by Cisco at the same time, will be aggressively supported by BMC across its cloud management product lines. This integration with Cisco’s network management solution is intended to provide simplicity and faster time to value for BMC and Cisco’s joint customers as well as extend support for heterogeneity in cloud environments. “The introduction of the Cisco Network Services Manager to the market will not only simplify network provisioning, but will also strengthen the ability of partners such as BMC to utilize and deploy the latest Cisco cloud innovations more quickly to our global customer base,” said Nick Adamo, senior vice president of

global service provider sales for Cisco. “Cisco’s strategic alliance with BMC brings our customers powerful validated and pretested cloud solutions.”

GSK and Pfizer Set Up Manufacturing Joint Venture in Russia

Biopharma companies GlaxoSmithKline and Pfizer have set up a joint venture that will start manufacturing in Russia via a partnership with local drug maker JSC Binnopharm, according to the industry website InPharm.com. The partnership—called ViiV—was begun in 2009 with rights to the existing HIV treatment portfolios of GSK and Pfizer, and rights of first refusal on any new compounds coming through development. A new manufacturing agreement with JSC Binnopharm will commence with the local secondary manufacturing of ViiV’s antiretroviral products, initially focusing on secondary packaging operations which will get under way early this year, according to a Binnopharm press release. Once up and running, the manufacturing alliance would make it possible for up to 70 percent of HIV-positive patients in Russia to be treated with domestically produced medicines. The agreement is one of a number of ongoing efforts by multinational drug makers to build up manufacturing capacity in Russia in the face of government plans to give preference to locally made medicines in the national reimbursement system and reduce the country’s reliance on imports.

Clouds of Azure: Microsoft Partners with Geminare

Geminare, a leader in the Recovery as a Service (RaaS) industry, has announced a strategic alliance with Microsoft Corp., whereby Geminare will deliver its RaaS Solution Suite through Microsoft’s Windows Azure cloud. Geminare enables the transition of premises-based software to cloudenabled solutions through its patented 15

our thanks Follow these leaders! Learn how you can be a benefactor—and your company a sponsor—at strategicalliances.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.

The Rhythm of Business is pleased to sponsor the 2012 ASAP Global Alliance Summit March 5–8, 2012, Caesars Palace, Las Vegas, Nevada, USA Don’t miss our Summit presentation:

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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, Casey Robb Cohen, Matthew Hanmer, Pansy Lee, Philippe Regnault, James Soudriette, Vincent Turula

Alliancesphere is pleased to sponsor

The 2012 ASAP Global Alliance Summit March 5–8, 2012, Caesars Palace, Las Vegas, Nevada, USA

Be sure to check out our Summit presentation:

Integrating Partnering into the Core Tuesday, March 6, 2:15 – 3:00 p.m. Presented by

Ron Long, Global Partner Manager, Global System Integrators, NetApp and Lorin Coles, CEO and Managing Director, Alliancesphere When collaboration is central to your company’s strategy, how do you integrate your partners into the way work is done? Lorin and Ron will lay out the strategy, process, and framework Alliancesphere and NetApp developed to build a solution value chain ecosystem that encourages value creation throughout the network, including building a shared vision, getting executive engagement and support, and the do’s and don’ts of truly integrating partnering into the core of a business strategy.

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Collaborative Buzz Cloud CORE Platform, a proven, mature, multitiered service delivery vehicle that is the foundation of Geminare’s RaaS data protection suite. Beginning with a scheduled 2012 release of its Cloud Storage Assurance (CSA) e-mail and file archiving service, Geminare will provide access to its RaaS data protection suite within the Windows Azure Marketplace, rendering it widely available through the extensive Microsoft Partner Network community.

More from the Azure Cloud: OpenText and Microsoft Expand Global Alliance

In other news on Windows Azure, OpenText announced the expansion of its global alliance agreement with Microsoft Corp. to include wider support for Microsoft cloud computing initiatives. As part of the agreement, OpenText’s newly formed Business Process Solutions (BPS) Group will be delivering a set of process management and case management solutions on the Windows Azure cloud computing platform. OpenText, based in Waterloo, Ontario, Canada, was among the first enterprise software vendors to add support for Windows Azure with records management and archiving solutions over three years ago. More recently, the OpenText M3 modeling suite achieved Windows Azure competency last year. Now, the tighter alignment between the two companies will give customers more flexibility in the way OpenText applications are deployed: fully in the cloud, on-premise, or a hybrid of cloud and on-premise. To bring the cloud to life, OpenText and Microsoft will work together to develop industry-specific applications tailored to business and user requirements in industries such as financial services, oil and gas, utilities, and the public sector. Beyond simply moving existing applications to the cloud, the two companies plan to collaborate on new scenarios that take advantage of the elasticity, availability, and Quarter 1, 2012

connectedness of cloud-based computing. Microsoft is an ASAP Global Member.

Dow AgroSciences and Fraunhofer Institute Partner to Improve Crops

Dow AgroSciences has signed a research agreement with the Fraunhofer Institute for Molecular Ecology (IME), a major European research firm headquartered in Munich, according to a report in Farm Industry News. The multiyear pact allows Dow AgroSciences and Fraunhofer to collaborate on innovative biotech approaches to improving crops. “This significant agreement with Fraunhofer IME allows Dow AgroSciences’ researchers to work with some of the best teams of scientists in the world to improve plant biotechnology and deliver improved products to our customers,” said Daniel R. Kittle, vice president and global leader of Research & Development at Dow AgroSciences. Fraunhofer IME is the largest applied research group in Europe, with 18,000 employees. The research will be carried out at Dow AgroSciences in Indianapolis, and at Fraunhofer IME in Aachen and Giessen, Germany.

Dako and Amgen Sign Agreement to Target Rare Cancer

The Danish company Dako, a leading independent cancer diagnostic supplier with 45 years of experience in pathology, announced in January that it has entered into a development and collaboration agreement with U.S.-based Amgen, Inc., to develop a diagnostic test for an Amgen cancer drug candidate targeted for a rare and deadly cancer. “I am proud to announce that Dako and Amgen have succeeded in putting together a business model that supports the concurrent development of drug and diagnostics for a low-incidence cancer—something that has been difficult to achieve in the industry until now,”

said Lars Holmkvist, Dako’s chief executive officer. “This new collaboration brings hope to cancer patients suffering from this rare form of cancer.” The announcement marks the continuation of Dako’s commitment to advance companion diagnostics by collaborating with strong partners in the pharmaceutical sector. Over the past 24 months, other Dako agreements—with AstraZeneca, Bristol-Myers Squibb, and Genentech—have also been announced.

Mucho Dinero: Big Blue Inks Deal with Spanish Bank IBM and Spanish savings bank “la Caixa” announced in January the establishment of a 10-year strategic services relationship. As part of the agreement, IBM and Serveis Informatics la Caixa, S.A. (Silk), will manage the infrastructure technology budget of “la Caixa” of more than 2 billion euros over 10 years.

Through Silk, IBM will provide technology, operations, applications, and infrastructure services to “la Caixa” and will manage its data processing centers, located in Cerdanyola del Vallès and Sant Cugat (Barcelona). The IBM-provided scope represents about half of this budget, while the remainder is directed to additional third-party service providers. The new strategic alliance is expected to save 400 million euros for “la Caixa” over the term of the agreement. The contract will provide the bank with access to new technologies and innovations to enhance its business development both in Spain and global markets and to position it as one of the leaders in utilizing new technologies in the financial sector such as mobility, social media, and cloud computing.

Eli Lilly and Immunogen in Drug Development Deal Cancer treatment developer Immunogen, Inc., said in December that it will receive $20 million from Eli Lilly and Company under a new collaboration agreement and could earn additional

Continued on page 50 17

Growing Alliance Culture: Has Your Company Started Yet? If So, Keep Up the Good Work (Because You Already Know There’s More Work to Do). If Not, Here’s How By Michael Burke

Strategic Alliance Magazine

Just as every restaurant has a particular ambiance, every family its own stories and inside jokes, and every part of every country has its own regional flavor, every organization has its own peculiar culture. The character of that culture most often manifests itself in behavior: as Dave Luvison, CSAP, professor at the Keller Graduate School of Management and head of Misty Creek Enterprises, put it, it’s “often phrased as ‘the way we do things here.’” At any given company, this may mean “We’re never late to meetings,” “We don’t wear Hawaiian shirts on Casual Fridays,” or “We always put the new cover sheet on our TPS reports,” but whatever forms it may take, every organization has a culture that is expressed in its employees’ actions, behaviors, and attitudes. But is there such a thing as an “alliance culture”? If so, what distinguishes it from other types of organizational philosophy? Does it grow organically within an organization, or is it typically introduced from outside? Or does it simply evolve? Many organizations and industries find that alliances are increasingly important to their continued success and growth, and for them it’s anything but an academic question. And just as a number of companies are attempting to move from the phenomenon of the “accidental alliance manager” to the integration of professional, certified alliance management roles, many are simultaneously working to transform themselves into “alliance enabled” or “alliancecentric” organizations—in short, to create an alliance culture.

It’s Complicated So what is an alliance culture? “An organization that has an alliance culture is one that is first and foremost aware that alliances are integral to their business, and they’re embracing the complexities that come along with working through alliances,” said Brad Crawford, executive director of R&D Alliance Management at Amgen. “That was the big ‘ah-ha’ after being on the business development side of Amgen for nine years prior to switching over to alliance management, where I am now responsible for the long-term management of these relationships. Looking at the transactions from the other side of the fence, I understand how these alliances are much more complicated than would appear. How you make decisions, do budgeting, team interactions—it’s a complicated business undertaking with a partner.” With alliances becoming increasingly important to the business, said Crawford, Amgen had to develop structures and processes that could accommodate the new complexities of working with partners. This involved, first of all, a fair amount of internal education—or what Crawford called “our road show to raise awareness, a call to arms.” Quarter 1, 2012

“Our business model and processes weren’t designed to work through alliances,” he acknowledged, “but now 80 percent of our clinical stage to marketed pipeline has a partner associated with it. These partnerships present great opportunities to expand our business but they bring with them unique challenges and inefficiencies that need to be managed. I don’t think people were looking at the business in that manner. There was friction across every function in the organization, which was the result of our business processes and procedures not taking into account how we need to operate within partnerships.” These business processes needed to be addressed very intentionally in order to create a more efficient, alliance-enabled enterprise, said Crawford, including joint planning and decision making, development of standard operating procedures, manufacturing and supply issues, alignment around commercial strategies, and even corporate communications. “Early on, the underlying problem was enormous,” Crawford admitted. “Every function had complexity which was greater than my small alliance team’s capacity or functional expertise could address. What helped shape our thinking was [the idea of] driving alliance capability across the organization—leveraging the alliance management function to enable the broader organization to address the challenges and build an organization-wide alliance capability. “Embracing these ideas, the approach we took was to raise awareness across the organization, obtain executive support, and assemble a cross-functional team to address these needed changes. We raised awareness by visiting each function and discussed how our business model had evolved to one that was reliant on our effectiveness at integrating and operationalizing partnerships and moving away from addressing partnerships as one-offs. Executive support was key in harnessing the necessary organizational resources and support for this proposed change initiative. Obtaining executive support was easier than we originally thought, because they were aware of the 19

challenges that we highlighted and understood the value of addressing them. And lastly, our biggest success was assembling a cross-functional business process team with representatives from each function. The functions had to own this because they know how to drive change within their organization. “It has been a big task, but the Business Process Team completed a detailed analysis of what they do to support alliances, along with a gap assessment which identified needed process changes across the alliance portfolio. The team developed work plans to address these gaps and implement best practices across the alliance portfolio. We’ve now spent two and a half years evolving many of the company’s processes and capabilities to improve our ability to more efficiently work with our alliance partners. One size doesn’t fit all, but 70 percent applies to most collaborations; the rest you need to tweak a bit to account for the uniqueness of the relationship. “The other ‘ah-ha’ we had is we originally thought this team would be up and running for a year or two and when their work was complete, we’d disband it. But they have developed into a great resource that we are now leveraging during integration of complex alliances and acquisitions. Their expertise helps us get new alliances, and the necessary business processes, up and running quickly, which is valuable. The sooner you can get these alliances running as efficiently as possible, the better the chances of success and our ability to pursue their strategic objectives.”

Changing the Mindset Simply put, “An alliance culture is an organizational culture oriented [around] alliances,” according to Fabien Blanchot, associate professor and HRM MBA director at Université Paris-Dauphine. But can this alliance culture or mindset be developed and nurtured? And how can it be inculcated in an organization that doesn’t already have it? “It is first necessary to understand why an organization doesn’t have an alliance mindset,” said Blanchot. “The history of a company, the bad experiences of its leaders with alliances, or the initial education of managers can partly explain a ‘weak’ alliance culture. It is therefore necessary to be patient and to exercise great skill in persuading managers. One way to proceed is to demonstrate by example that it is useful to consider alliances to strengthen the competitiveness and development of the company and, consequently, to develop an expertise in alliance design and management. “For instance, the pharmaceutical company Merck decided, in the mid-2000s, to raise awareness of the need 20

to cooperate with others and to kill the belief, rooted in its internal research teams, that an external project is an ‘enemy’ project. A figure has been repeated regularly: in-house research only accounts for 1 percent of global biomedical research. Training programs have also aired the idea, at all levels of management, that the survival of the group [came about] through successful alliances. But all this requires commitment from senior management, which often results in the creation of an alliance function whose virtues are threefold: 1. strengthening the links between alliance strategy and business and corporate strategies; 2. professionalization of the management of alliances; and 3. better exploitation of synergies within the portfolio of alliances and partners.” Strategic Alliance Magazine

function within the company with having a well developed companywide alliance management capability,” wrote Stuart Kliman and Renee Jansen of Vantage Partners in a white paper entitled “Falling Short of True Partnering Excellence.” Or, as Jeff Shuman, CSAP, put it in The Rhythm of Business blog, “the capability for successfully managing alliances and collaborations must be baked into how work is done. It is no longer sufficient for an organization’s alliance and partnering capability to be separated—isolated among a small number of people—and fastened or bolted onto how work is done without a partner involved.”

“What helped shape our thinking was [the idea of] driving alliance capability across the organization—leveraging the alliance management function to enable the broader organization to address the challenges and build an organization-wide alliance capability.” According to Ard-Pieter de Man, CSAP, principal at Atos Consulting and professor at VU University Amsterdam, who has worked with Dave Luvison for years doing research on alliances (see sidebar), “You cannot fake having an alliance culture. It’s not something you can only have on the outside. They go so deep into an organization that they require a deeper organizational change. Alliance managers may have an alliance mindset, but the rest of the organization does not.”

Another thought on the importance of alliance culture came from Matthew Hanmer, vice president of product strategic alliances for Europe and APMEA, MasterCard Worldwide. “It all depends on the importance of alliances to the organization,” Hanmer said. “If the alliance is important, then alliance culture has to be.”

Baking It and Faking It But even if there is recognition within an organization of the importance of alliances to the business, that doesn’t mean the company’s leaders are prepared, conceptually or structurally, to integrate alliance thinking into the company’s processes and routines, or its mindset. One of the mistakes some companies make is that they “confuse having an alliance management Quarter 1, 2012

Luvison echoed this view. “The example I’ve often heard [involves] two organizations in a high-tech alliance. The alliance managers are able to reconcile all the issues, but then you go to market and the salespeople don’t necessarily share the same kind of spirit the alliance managers have—they’re driven by a sales culture. They’re bickering for control over sales, customers, timelines, and other issues. If you can manage an alliance with just a small number of alliance managers, the organizational culture matters less. But as it gets deeper into the organization, the culture takes over.” The alliance mindset, when present, said de Man, is most often seen in three areas: 1) “alliance language and public display”—stories told about alliances, positive or negative, having the CEO talk about it, etc.; 2) “partner-focused Continued on page 57 21

Non-Alliance Personnel Training Increases Organizational Partnership Strength

Strategic Alliance Magazine

If You Want Your Organization to Consistently Practice Effective Collaborative Business Principles, Training Non-Alliance Workers Involved in Partnerships Is Essential By Jon Lavietes

FIVE YEARS AGO, NOVARTIS’S ALLIANCE MANAGEMENT GROUP convened a workshop to step back, reevaluate itself, and develop a strategy for the future. From this retreat, the team developed a three-pronged vision for its practice: 1) creating value, 2) communication, and 3) capabilities—“the three C’s,” for short. In executing the third component, Novartis hatched the idea to develop a formal training course that would teach and improve the company’s non-full-time alliance management personnel the principles of business collaboration. Although this program would be classified under the third pillar of its vision, the alliance management group had reason to suspect it could bolster the other two as well. For several years leading up to that point, the team noticed other groups were depending more on complex external relationships that required advanced collaboration skills. “As an example, our relationships with suppliers were no longer the sort of buy-sell generic transactional-type relationships. They were evolving to more of a longer-term partner-type collaboration,” said Anthony Hoerning, CSAP, head of global alliance management for General Medicines, BD&L at Novartis Pharma. “They needed some of the tools that were typically used in alliance management whether they were called supply chain manager, purchasing manager, or relationship manager.” The alliance management team worked diligently to set up its first course and invited purchasing and supply chain managers as well as governance committee participants, development project team members, people involved in licensing, and other “de facto” alliance managers who had the responsibility of managing some form of partner relationship, if not the job title of Alliance Manager, to participate in the inaugural workshop.

employees across many functions—including R&D, marketing, legal, regulatory, finance, and business development)—representing various divisions of the company (Pharmaceuticals, Sandoz, Animal Health, OTC, and Vaccines & Diagnostics).

Alliance Management Consistency Across the Enterprise Novartis’s training course tackles a critical challenge common to all alliance management practices—getting employees outside of the formal alliance management practice, those who are partially or wholly responsible for a close partnership with an external partner, to work effectively with their counterparts in other companies. Novartis’s short training programs and the development of a common set of alliance management practices seeks to help the part-time alliance managers develop the skills needed for successful collaboration.

Three and a half years later, Novartis’s Forum for Alliance Management Excellence (FAME) series is a fixture within the company. Six additional courses have been delivered, each with a new curriculum, to hundreds of Quarter 1, 2012

to start by raising awareness of how we look at topics when we are in a collaboration so that the conversations are constructive and open. It sounds terribly basic, but that’s kind of what you have to do.”

Soren Bregenholt, vice president and head of corporate alliance management at Novo Nordisk.

Peter Simoons, CA-AM, founder of Simoons & Company, agrees that teaching and illustrating this concept is not as elementary as it sounds. Simoons runs the Skills Mastery series workshop that trains alliance professionals for certification exams, but he has also been asked Erna Arnesen, CA-AM, vice Peter Simoons, CA-AM, founder of on multiple occasions to conduct courses for president of global and strategic Simoons & Company. non-alliance personnel on behalf of his clients. In these services partners at Cisco. engagements, he often observes that people outside of alWhether it is a one- to two-day class like Novartis’s liance management begin with the faulty assumption that program or informal advisory services provided by partnering with another company is similar to working alliance managers to other workers on an as-needed with other departments within your own organization. basis, the goal is the same. “They’re not used to working with outside companies. “It’s only by key personnel living the values of alliances They really need to learn the collaborative mindset. that [the alliance management group] believes in, that we They need to learn how to work with someone who can ascertain that the rest of [our company] is working is not a colleague being paid by the same company.” towards those principles,” said Soren Bregenholt, vice “It’s a different organization they’re working together with, with a different agenda, and a different value base,” added Bregenholt.

In just about any organization with an alliance practice, a main principle of the collaborative mindset is “giving to get”—the first tenet in Novo Nordisk’s alliance philosophy—and this, too, can be challenging to explain to non-alliance personnel. president and head of corporate alliance management at Novo Nordisk, a Denmark-based pharmaceutical company specializing in diabetes and hemophilia drugs, that runs workshops twice a year out of the company’s R&D Academy. “Nordisk has an R&D organization of about 4,000, and I cannot shape what everybody does. There are probably 500 to 600 people involved in alliances one way or another.”

Creating the Collaborative Mindset Regardless of region, industry, or format, almost every program begins with a basic overview of what it means to work with an external organization and the unique challenges that come with working with the different perspective of another organization. “In any relationship…there will be two perspectives: yours and theirs—it is human nature to view topics from one’s own perspective,’” noted Hoerning. “It’s very fundamental 24

This challenge extends into the world of high-tech as well. Cisco, for example, recently reorganized to integrate its alliance management practice with its channels function. A company with over 20,000 sales reps, Cisco relies heavily on its partners to earn its revenues, whether it is via “sellwith” or “sell-through” partnerships. The culture of sales, with its crazed focus on quotas and account control, often does not jibe with the basic rules of collaborative selling. “[Salespeople’s] attitude is, ‘We’re in charge.’ When we tell them [our partners] don’t do it that way, they say, ‘What do you mean?’ They see themselves as in control of their own destiny,” said Erna Arnesen, vice president of global and strategic services partners at Cisco. In just about any organization with an alliance practice, a main principle of the collaborative mindset is “giving to get”—the first tenet in Novo Nordisk’s alliance philosophy—and this, too, can be challenging to explain to non-alliance personnel. In an industry where “coopetition” is the norm, Cisco’s sales and professional services people often sell products that compete with some of the offerings of their partners. The first instinct for Cisco’s sales and professional services people is often to push Cisco’s solutions and services strongly, but that method can do long-term damage to the company’s relationships. Strategic Alliance Magazine

“[Cisco’s policy is] to play a neutral role. We don’t try to prejudice the customer one way or another. They get to select a Cisco solution, a partner solution, or a combination,” said Arnesen. “We provide enough help to our customer, but we don’t overly promote a partner, solution, pricing, strategy, or offer. It’s an interesting place to be as a vendor. The best solution for the customer must be considered based on segment, customer need, customer preference, and available solutions.” In the pharmaceutical world, this same obstacle can rear its head in the context of licensing agreements. “People actually use the word ‘bought’ or ‘purchased’ the license. The sense is we bought this piece lock, stock, and barrel, and now we get to dispose of it, which of course is not true in 100 ways,” said Hoerning. Changing this attitude is one of the first steps in the training. “The one basic, very central thing [they learn] about is for Novo Nordisk to make money, our partner has to make [their] money. It’s not a very smart thing if Novo Nordisk keeps all of the value or operates in a non-collaborative way,” said Bregenholt.

Hands-On Learning Once fundamental alliance management theory is established, trainers deploy a variety of interactive activities to instill these principles. Novo Nordisk begins its courses by playing a modified version of a game called Red and Blue used by Kofi Annan and the United Nations in the context of Middle East negotiations. The basic premise is that two groups are given the option to play “Red” or “Blue,” the latter is worth negative points, the former is positive, for six rounds. The catch, which is revealed after finishing the game: it’s the total combined score of the two groups that counts in the end, not the scores of the individual teams. Thus, the two sides are encouraged to cooperate, and create the most possible value together. The company’s full-day courses also conclude with a role-playing based on a Novo Nordisk–centered “business-school-like” case study. Bregenholt says Red and Blue and the case studies get the highest scores from attendees who fill out evaluation forms after the class. Case studies are a fixture in Novartis’s two-day training courses. Occasionally, Novartis will even bring in a partner to participate in a defined segment of the workshop. The company’s most recent sessions featured two case illustrations on each day covering differences of opinion between partners, bridging the expertise gap (particularly Quarter 1, 2012

between large and small company partners), managing compounds across multiple collaborations, and expanding beyond territorial boundaries. According to Ramzi Tubbeh, head of alliance management for the Respiratory franchise at Novartis and one of the designers of the courses, Novartis tries “to select case illustrations that typify situations where differences are pronounced and then show the way to

TABLE 1 PROGRAM AT-A-GLANCE: FORUM FOR ALLIANCE MANAGEMENT EXCELLENCE (FAME) LEVERAGING DIFFERENCES IN ALLIANCES DAY 1 13:00–13:30 13:30–13:40 13:40–14:10 14:10–15:10 15:10–16:40 16:40–17:10 17:10–18:30 18:30–19:45 20:00–22:00 DAY 2 08:00–09:00 09:00–09:40 09:40–11:10 11:10–11:40 11:40–12:40 12:40–14:00 14:00–15:00 15:00–16:30 16:30–17:00

TOPIC Registration & Coffee Welcome & Introduction Importance of Partnering to the Organization The Essentials of Alliance Management Case Illustration #1: Managing Different Interpretations of Exclusivity and Carve-Outs in Alliances Coffee Break Case Illustration #2: Bridging the Gap in Expertise and Expectations in Large/Small Company Alliances Team Building Event Networking Dinner TOPIC Breakfast Q&A with Expert Leveraging Differences in Biotech Alliances Case Illustration #3: Managing Strategic Class of Compounds Across Multiple Collaborations Coffee Break Managing Differences: A Behavioral Cut Networking Lunch Panel Session: Trust & Control in Alliances Case Illustration #4: Growing the Pie by Looking Beyond Territorial Boundaries in Alliances Key Take-Home Messages

All Head, Alliance Mgmt, Novartis Sr Manager, Novartis Stu Kliman, Vantage Partners Alliance Team #1 All Alliance Team #2 All All Stu Kliman, Vantage Partners Sr Executive, External Alliance Team #3 All Stu Kliman, Vantage Partners All Internal Panelists Alliance Team #4 FAME Sponsors

maneuver through them and come up with solutions that create value for both partners,” he said. “People get engaged and deal with the situation as if they were confronted by it. It provides active learning.” In between the overarching company alliance philosophies and active case studies are lectures on the intricacies of alliance management and the tactics and methods used Continued on page 52 25

Strategic Alliance Magazine

The 2012 ASAP Global Alliance Summit Preview Las Vegas Is the Place to Be in March, as ASAP’s Global Alliance Summit Presents the Latest in Collaborative Thinking, Strategy, and Techniques By Michael Burke

THEY SAY THAT WHAT HAPPENS IN VEGAS, STAYS IN VEGAS—or maybe on YouTube—but it’s a good bet that much of what takes place at this year’s ASAP Global Alliance Summit will end up spilling out of the conference rooms like coins from a slot machine jackpot, and ultimately will be spread around the worldwide alliance community. The annual gathering of the world’s leading alliance professionals is always a prime destination for those looking to further their professional development, take advantage of networking opportunities, and get the latest in cutting-edge collaborative thinking, but the 2012 ASAP Global Alliance Summit—to be held at Caesars Palace in Las Vegas, March 5–8—promises to outdo previous Summits with its wealth of enlightening offerings. This year’s Summit features a number of outstanding speakers, including both brand-new presenters and favorites from past Summits back by popular demand; more conference sessions than ever before, with three all-new tracks presented in a variety of interactive formats; executive coaching and intensive certification preparation; a chance to celebrate the profession’s best at the presentation of the Alliance Excellence Awards; the unveiling of the results from ASAP’s 4th State of Alliance Management Study; special networking dinners, executive roundtables, and the all-new Hospitality Suite; the new Alliance Management Resource Center showcasing products and services tailored to the alliance management professional (including ASAP Media and Strategic Alliance Magazine!)...and a full deck of other professional development opportunities. Quarter 1, 2012

Preliminary Events and the Opening Plenary: The Alliance Management Journey

Prior to the Summit proper, the brand-new Hospitality Suite will open on Sunday, March 4, and various ASAP Board and Chapter events and pre-conference workshops—including Phoenix Consulting Group’s CA-AM and CSAP certification preparatory workshops—will be given on Monday, March 5. Monday night will also see a special reception to celebrate the opening of the first-ever Alliance Management Resource Center; a CAO Reception and Dinner and other select networking dinners will also be held that evening, marking a full slate of activities taking place before the Summit begins. The Global Summit kicks off in earnest on Tuesday, March 6. This year’s Opening Plenary session is entitled “The Alliance Management Journey: The CAOs’ Perspectives,” and will feature key insights from some of the leading chief alliance officers and de facto alliance management heads in charge of alliances at their companies. The senior executives known to be participating at press time include Matt Johnson of Abbott Labs, Russ Buchanan of Xerox, Mark Noguchi of Genentech Roche, Scott Van Valkenburgh, CA-AM, of SAS, and Frank Grams of Sanofi. 27

The Opening Plenary represents a not-to-be-missed opportunity to hear directly from CAOs about the critical issues facing their organizations and the important role alliances play in successful business strategies. Every year, CAOs have gathered on the first day of the Summit to discuss the issues driving their agendas. At the 2012 Summit, for the first time, the Opening Plenary will bring that elite conversation to the entire community. Through talk-show-style interviews and discussions, the CAOs will range across topics including opportunities and trends in using alliances and collaborations to grow new business and businesses; expanding the alliance management discipline across the enterprise; integrating alliances into corporate culture; the qualities that make for a successful alliance manager; and the expectations CEOs have of CAOs, alliance managers, and alliance teams. Other sessions included in the Opening Plenary are “Global Insights: Developing the Capability to Collaborate with Emerging Market Partners”—presented by Vipula Tailor of Vertex Pharmaceuticals and Yuri Khakhanov of the Russian Corporation of Nanotechnologies, one of several sessions devoted to the increasingly global, networked nature of alliances and collaboration—and the unveiling of results from the ASAP 4th State of Alliance Management Study, presented by Dave Luvison, CSAO, of the Keller Graduate School of Management and Misty Creek Enterprises and Ard-Pieter de Man, CSAP, of Atos Consulting and VU University Amsterdam.

Breakout: Enterprises, Ecosystems, and the Art of Alliance After the rousing Opening Plenary, Tuesday’s afternoon breakout sessions will run along two alliance tracks—High Tech and Capability Building—and feature sessions on such topics as creating a simple framework for complex alliances, collaborative selling, “coopetition,” and integrating partnering into the core of an enterprise. Among the highlights will be “Launching the Alliance Management Function as an Enterprise Capability,” presented by José Ochoa of Emergent BioSolutions and Jeff Shuman, CSAP, of The Rhythm of Business, which will encourage participants to take an “enterprise view” of collaborative 28

relationships and to consciously develop a capability that is aligned across a broad portfolio of alliances; and “Creating No-Fault, No-Blame Partnering Cultures,” presented by Christopher Elliott, CSAP, of PeopleForce Pty Ltd and Richard Morwood of AECOM Australia, which will introduce attendees to some fresh ideas on collaboration from “down under” in the Australia and New Zealand public sector. Other presenters in Tuesday’s sessions will hail from companies including Infosys, NetApp, Alliancesphere, Phoenix Consulting Group, and Schneider Electric. Wednesday’s “Art of Alliance” track will be led off by Stuart Kliman of Vantage Partners, whose presentation, “Ensuring Skilled Responses to Alliance Challenges When They Are Needed Most,” will confront head-on one of the inconvenient truths about alliances—they’d be easy if it weren’t for the people! Kliman’s session will address the challenges of managing conflict, making decisions, and dealing with people in pressure-packed alliance situations where the risks—personal and organizational—are high. Also in the “Art of Alliance” track will be a session on managing and recovering an alliance amid conflicting expectations by Joan Meltzer, CA-AM, of IBM and Christine Carberry, CSAP, of Carberry Consulting, and “Global Agility: Building Bridges Across Cultures,” presented by Tarja Mottram, CEO of Action for Results. An all-new “Alliance Ecosystems” track will feature presentations on nontraditional alliances in “white space” markets, the brave new world of partnering in the IT “smart grid,” and cross-industry, multi-party alliances involving IT, academia, manufacturing, and other sectors. Presenters come from companies including IBM, Cisco Systems, Oracle, and Merck Serono.

Dazzled by Metrics, Blinded by Science Another new track, “Alliance Metrics,” will take an in-depth look at the thorny problem of measuring alliances’ value, ongoing health, and contribution to the bottom line. “Keeping Score: Maximizing Value with the Balanced Scorecard,” presented by Tara Mylenski, CA-AM, of Quintiles, will bring back a well-received preStrategic Alliance Magazine

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

sentation from last year’s ASAP BioPharma Conference to illuminate the ins and outs of a popular metric tool. Other presentations in this track, featuring panelists from

Sanofi Pasteur and Eli Lilly and Company, will focus on “Using Metrics to Keep Alliances on Track” and “Measuring Alliance Value Across the Service Spectrum.” The “Biopharma” track includes presentations on creating an “Alliance Center of Excellence” to drive the alliance capability throughout the enterprise, navi-

gating an alliance through its (sometimes lengthy) life cycle transitions, rebuilding trust after legal proceedings with a partner, and “The Emerging Landscape of Clinical Service Alliances,” presented by Michael Young of PPD. In the “Science of Alliance” track, Robert Porter Lynch, CA-AM, CEO of The Warren Company and chairman emeritus of ASAP, will share his thoughts on how to use the latest scientific findings on trust, human drives, and brain chemistry to shift organizational cultures in “Trusted to Innovate: The Neuroscience Behind Collaboration.” Other sessions in this and the final track of the day—the brand-new “Alliance Management Technologies” track—will address successful software licensing agreements, how to handle and overcome a case of “partner’s remorse,” using a “Partnership Portal” to communicate in a collaborative workspace, and managing alliances in the the new e-social world. Scheduled presenters represent such companies as Cisco Systems, IBM, Otsuka Pharmaceutical, and Covance.

Alliance Professionals: The Toast—and Talk—of the Town Wednesday night marks the gala Alliance Excellence Awards Recognition Dinner, showcasing the crème de la crème of alliance management and the collaborative world. Winners in four alliance categories—Alliance Program Excellence, Individual Alliance Excellence, Alliances for Social Responsibility, and Innovative Alliance Practices—will be named, and the dinner will provide not only the chance to cheer the best and brightest in alliance management, but yet another excellent networking opportunity for attendees to meet and greet their fellow alliance professionals. Quarter 1, 2012

For those still standing upright by Thursday morning, it’ll be time to clear away the champagne glasses, take on some hot coffee and breakfast as ballast, and launch into the Closing Plenary session, entitled “Elevating and Promoting the Profession.” The final Summit sessions include “Establishing a Culture of Alliance Excellence,” presented by Donna Peek, CSAP, and some of her colleagues from SAS; “Realizing the Value of Alliance Management During M&A Transitions,” by Shelley Hansen,

CSAP, of Atos and Satbir Kaur, CA-AM, of Roche; a Q&A session with the winners of the Alliance Excellence Awards; and last but not least, “Digging into the ASAP 4th State of Alliance Management Study,” by Dave Luvison, Ard-Pieter de Man, and their colleagues. That final session will include not only a deep dive into the data from the study, but also an interactive Q&A session where participants can find out more about the results and how the study was conducted, as well as suggest future directions for this vital ongoing research project.

See You in Vegas! So that’s the overview of the 2012 ASAP Global Alliance Summit, in an admittedly large nutshell. All except... did I mention that it’s in Las Vegas? At Caesars Palace? Yes, the premier gathering of global alliance professionals and leaders will be held this year in America’s Playground, right on the Strip, where the fun never stops. So even if your idea of “fun” has more to do with alliance metrics, joint governance committees, and alignment around go-to-market strategies than with blackjack, floor shows, and Elvis impersonators, odds are that you’ll find this year’s Global Alliance Summit a pretty good time—and what happens in Vegas may just get spread around the world. At least some of it. Don’t Gamble with Your Professional Development! If you haven’t already registered for the ASAP 2012 Global Alliance Summit, visit www.strategic-alliances. org right away—or contact Michele Shannon at +1-781-562-1630 ext. 204 or mshannon@strategicalliances.org. Don’t wait! n 29

Alliance E Awards Recog Highligh Alliance

Annual Event Celebrate and Successful Initiatives, C in Alliance M

By Jon

THE ASAP GLOBAL ALLIANCE SUMMIT IS KNOWN FOR ITS INCRED

the profession, and it is also the place where the best of the best are recognized. O

Awards Recognition Dinner, which will be held on the evening of March 7, 2012

the individual partnerships and longtime alliances that have achieved outstandi For the first time ever, ASAP is announcing finalists in the Alliance Program Excellence, Individual Alliance Excellence, Alliances for Social Responsibility, and Innovative Alliance Practices categories

prior to the dinner. Belo tenders for each catego their stories. To find ou such as IBM, SAP, HP, I

Strategic Alliance Magazine

Excellence gnition Dinner hts Global e Summit

es 2011â&#x20AC;&#x2122;s Most Innovative Companies, and Individuals Management

n Lavietes

DIBLE OPPORTUNITIES to network with leading individuals and companies in

Once again, the Summit will provide the forum for the annual Alliance Excellence

2, at Caesars Palace in Las Vegas. Each year, the Alliance Excellence Awards honor

ding results and advanced alliance management theory and practice to a new level.

ow are the remaining conory and a brief synopsis of ut who joins recent winners Ipsen, Inspiration Pharma-

Quarter 1, 2012

ceuticals, Xerox, Novartis, Cisco, and Turkcell in the pantheon of the alliance management communityâ&#x20AC;&#x2122;s elite, register for the Summit at www.cvents. com/d/8cq74r.

Alliance Program Excellence

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PTC This Needham, Mass.–based discrete manufacturing software company’s PartnerAdvantage program plays a big role in setting its corporate strategy. PartnerAdvantage provides detailed analysis on the age-old corporate challenge of deciding whether to partner, build, or buy. It suggests candidates to acquire in “buy” situations—close to half of PTC’s acquisitions start as formal partners—and provides extensive templates and onboarding processes that thoroughly address almost every aspect of beginning and maintaining a collaborative business relationship.

ISTS

SAS* This business intelligence software leader revamped its entire partner program from end to end, creating a new set of processes, tools, and systems— some of which were based on ASAP best practices. This overhaul resulted in a new scoring system to rate partners in SAS’s portfolio, the establishment of partner tiers, the specification of alliance management roles, and comprehensive training and professional development of its alliance personnel. Turkcell* Winner of ASAP’s Growth Company Alliance/Management Excellence award in 2010 for its mobile application developer community, the company’s full partner ecosystem of more than 200 registered application service providers, content providers, system integrators, OEM allies, and other business partners rounds out the nominees in this category. The company’s Partner Portal, Turkcell Lab Test Platform, and Turkcell Partner Management System (TPMS) are just some of the tools the company provides its partners to be successful.

Individual Alliance Excellence I F I NA L

STS

Getronics Workspace Alliance A few companies from several different regions of the world— KPN|Getronics, CompuCom Systems, APX, Getronics Middle East, NTT DATA Getronics, ServiceOne 32

Getronics, and Tecnocom—have combined their resources to provide international IT workspace services and maintenance without laying out the expenditures for offices around the globe. The alliance is serving 6.1 million workspaces across multiple continents. Oracle–Deloitte Although the two companies had been partners at the corporate level for some time, their alliance management approach in Asia Pacific was ad hoc and carried out informally without consistency in alliance management processes and governance structures. The two global organizations used a “start-up” approach utilizing best practices, tools, and methodologies from a variety of professional disciplines to achieve consistent yearover-year growth in many parts of the region. Roche–Aileron Aileron turned to Roche to help develop its “stapled peptides” technology to investigate its suitability for drug discovery across multiple therapeutic areas. The alliance has delivered a preclinical proof of concept in timely fashion, which has laid the groundwork to expand from two oncology programs to a third initiative in the inflammatory disease area.

Alliances for Social Responsibility F I NA L

ISTS

Coherence This company has played an instrumental role in the alliance between ScotiaBank and Digicel to introduce the Tcho Tcho mobile wallet to the people of Haiti after the country was hit by a massive earthquake, spurring the Bill and Melinda Gates Foundation to bestow a $2.5 million award to the alliance. Hoffmann–La Roche Hoffmann-La Roche is the creator of the myclimate Alliance, which aims to achieve reductions in carbon emissions that contribute to global warming and preserve a clean water supply in developing countries. The alliance has accomplished a 22 percent reduction of travel-related carbon emissions within a year. * SAS and Turkcell are also finalists in the Innovative Alliance Practices category. n

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ceo forum

Q&A with Dr. Dennis Gillings, CBE, Chairman and CEO, Quintiles

Strategic Alliance Magazine: You are recognized as one of the founders of the outsourced biopharmaceutical services industry, and a visionary in its growth and development over the past 30 years. What are your views regarding the future of alliances in biopharma? Dennis Gillings: Strategic alliances are becoming ever more important. Biopharma is facing unprecedented challengesâ&#x20AC;&#x201D;there are new economic, regulatory, and reimbursement realities; patients want access to effective, safe, and affordable treatments; regulators and payers want evidence of the value of new medicines. So itâ&#x20AC;&#x2122;s more important than ever for biopharma to optimize product and portfolio value by looking for partners willing and able to help navigate the risks and rewards of this landscape we call the New Health. Other industries, such as telecommunications and electronics, already have gone through similar periods of transformational change. Successful companies in those industries transformed the ways they did business, and strategic alliances proved to be one of the most effective ways to become more flexible, more nimble, and more successful. SAM: In the early and mid-1990s, Quintiles pioneered growth opportunities in emerging markets. Why are alliances important for companies looking to enter the growing markets in Asia-Pacific, Quarter 1, 2012

Eastern Europe and the Middle East, Africa and Latin America? Gillings: Quintiles has a long-standing presence in emerging markets, especially on the clinical side, and we are accelerating that expansion both in clinical and commercial services. In 2011 our Commercial Solutions group launched services in Russia and Brazil, and we are investing and growing our commercial services in Turkey, Egypt, and Mexico. In addition, we have an aggressive growth strategy in Asia as well as other regions. SAM: There is a variety of alliance structures, equity- or non-equity-based, requiring different levels of cooperation. What alliance structure works best for entering new markets? Gillings: Every emerging market has its own unique characteristics, and every company has its own strategy, goals, and challenges. Each alliance needs to be structured to align strategy with the development phase of the target market. Shorter-term contracts, or so-called exploration alliances, allow companies to test new markets and business models with the flexibility to respond to new market conditions. A strategic alliance that makes sense today may not be the best option tomorrow. Companies often use the market expertise they acquired during a successful partnership to expand the alliance or establish their own sales base.

SAM: You have mentioned that for many biopharma companies, the next big shift will be toward a smaller, more ďŹ&#x201A;exible, innovative R&D infrastructure. What role will strategic alliances and partnerships play in helping companies make this transformation successfully? Gillings: This shift is already well under way. Companies have been transitioning toward smaller, more flexible structures with increased reliance and interdependence on external alliance partners for some time now. This shift is leading companies to make changes on several fronts. First, companies are entrusting entire functions, such as data

Every emerging market has its own unique characteristics, and every company has its own strategy, goals, and challenges. management, biostatistics, and clinical monitoring, to partners. This frees up resources and management time for a biopharma company to focus on its core competencies. Second, companies are seeking innovative alliances involving human, intellectual, and financial capital to move their most promising therapies through their pipelines faster. Finally, partnering can play a role in providing access to biomarker and diagnostics technology 33

realizes the value of committed Alliance Management.

The stakes are too high to go it alone. Anticipating pitfalls while embracing transformation takes a veteran guide. From start to finish, you need expert insights to recognize viable opportunities â&#x20AC;&#x201D; supported by best-in-class resources to design flexible solutions. It takes a culture dedicated to Alliance Management and to working harder to help partnerships succeed. More at www.quintiles.com/capital/alliance-management/

clinical | commercial | consulting | capital

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and expertise to match potential therapies with patients who would benefit from those therapies; molecular medicine has tremendous potential to improve outcomes, reduce side effects, and add value to health care. SAM: How have the changes in the biopharma industry affected Quintiles? How are you using alliances to take advantage of opportunities and mitigate risk? Gillings: Quintiles has structured alliances in numerous areas, both to access the best-in-breed expertise and technology we need to provide innovative solutions to customers, as well as to build with biopharma companies to help them achieve success clinically and commercially. We are clearly seeing the evolution from traditional fee-for-service work— although that type of work will always be there and always will be important to Quintiles—to more partnerships. As examples, we have a dedicated Global Functional Resourcing group, and we work with our alliance partners to track results in delivering improved efficiencies. We are continuing to see increases in demand for these kinds of approaches. SAM:What is Quintiles’ strategy in terms of alliances, and what do you view as key factors for alliance success? Gillings: Since 2000, Quintiles has committed more than $2.4 billion to more than 80 nontraditional alliances. There is no clearer evidence than that as to the growing importance of alliances. What we have found is that although many managers believe their time and attention is most important during contract negotiations, it’s actually post-signing that is most important. It is relatively easy to agree on a contract and strategic rationales, but the execution of an alliance involves a Quarter 1, 2012

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high degree of complexity, collaboration, communication, and culture. This is where alliance management comes into play. Early on, Quintiles recognized the importance of dedicated alliance professionals, which is why we created an Alliance Management unit that works to manage each partnership for success. This unit reports directly to the executive management—independent of operating units. Such a structure expedites decision making and ensures that both parties are focused on achieving the alliance’s objectives. We are also a long-term member of the Association of Strategic Alliance Professionals (ASAP), together with industry peers and colleagues. It is a way to improve the performance of alliances across all industries and develop industry standards, policies, and best practices for governance. SAM: How are the relationships between biopharma and outsourcing companies changing, given the shift toward a greater degree of partnering, both clinical and commercial, versus traditional fee-forservice work? Gillings: Companies typically use traditional fee-for-service outsourcing to obtain extra resources at the lowest cost through a bidding process, taking the approach that all is equal in terms of quality and timelines. What’s often left out of the traditional fee-for-service is consideration of the value that an outsourcing company can add to a development or commercialization program. Adding value and sharing risks and rewards is at the core of alliances. Sharing risks, whether it is a capital investment, a resource investment, or a milestone-based investment, always changes the dynamics. It incentivizes both alliance partners to contribute their respective expertise. A clear contract is still important, but close collaboration and alliance management

become equally, if not even more, critical. To be effective, you have to change the way these relationships are managed.

No matter how good the strategy is for all parties involved, or how well the terms are detailed, corporate culture underpins a productive alliance. Open communication, laser-like focus on common goals, collaborative problem solving, peer-to-peer relationships— these are all parts of a highperformance alliance culture. SAM: When evaluating potential alliance partners, how important are criteria like partnership and willingness to dedicate alliance management resources? Gillings: No matter how good the strategy is for all parties involved, or how well the terms are detailed, corporate culture underpins a productive alliance. Open communication, laser-like focus on common goals, collaborative problem solving, peer-to-peer relationships—these are all parts of a high-performance alliance culture. Experienced alliance managers, who serve as the internal champion and voice of the alliance throughout their respective organizations, are central for success. The best alliance teams are those that not only deliver on the original intent of the alliance but also recognize additional value for expansion of opportunities beyond the initial scope. n The CEO Forum is sponsored by

Solutions Marketplace

Selected Products and Services for and from Strategic Alliance Professionals Entrepreneurial Approach Gives The Rhythm of Business Its Beat

to focus on the most complex collaborations while building the company’s ability to succeed in alliances.

It’s no longer news that alliances and other collaborations have become foundational building blocks of most corporate strategies. As companies grapple with turmoil in their industries and uncertainty in the global economy, they are increasingly turning to alliances and collaborative networks to build new businesses, reach new customers, and carry out their research and development agendas. Achieving success with this strategy requires developing a new corporate capability—an alliance and collaborative capability.

The Rhythm of Business’s entrepreneurial approach to alliance management is utilized for a variety of purposes, including but not limited to: – Shaping partnering strategy, business, and governance models – Facilitating partnering discussions, alliance start-ups, and wind-downs – Alliance portfolio analysis, mapping, and planning – Designing the alliance management organization, coverage models, and processes that are aligned with the needs of the alliance portfolio – Crafting alliance management guidebooks and toolkits – Implementing innovative metrics that measure individual alliances, the alliance portfolio, and the alliance management practice – Improving alliance results through action-oriented assessments – Intervening and relaunching troubled collaborations – Customizing a library of educational offerings and trainings for alliance managers, teams, and executives – Developing and providing content for internal marketing and communications – Assisting alliance leaders with job descriptions, objective setting, and evaluations

The Rhythm of Business partners with companies to integrate alliances and collaboration into their corporate culture and processes. When collaboration is essential to strategy, alliances can’t be seen as an afterthought; they must become part of how work is done. The Rhythm of Business draws on multi-industry and cross-sector experiences and knowledge to move beyond a collection of best practices to a complete philosophy and integrated body of alliance management principles. This overarching framework and set of processes and tools can be adapted and applied to any alliance while maintaining consistency across all collaborations, ensuring that alliance skills are widespread within the organization. This resource-friendly approach is scalable as the portfolio of relationships grows, allowing professional alliance managers Quarter 1, 2012

For more information, please visit www.rhythmofbusiness.com or call +1-617-965-4777.

Teradata Integrates Supply Chain Data One of the most pressing IT-related challenges is collaborating with partners across the entire supply chain in integrating and analyzing large amounts of data expediently so that up-to-date accurate information is at executives’ fingertips. Traditional lean and demand-driven supply chain management delivers value in highly predictable and steadier, less volatile industries and markets. However, increasing globalization, virtualization, demand for increased leverage of IP outside the firewall, and pressure to increase growth and profits are demanding new chaos-tolerant supply chain management approaches. Teradata helps reach more informed and productive decisions by better analyzing and synchronizing products and processes daily from multiple sources. The company’s Teradata Database helps make consistent, accurate data—both detailed and summary—available for analysis anywhere within the organization at any time, along with the flexibility to view the business from a variety of perspectives. Teradata can help combine data from thousands of readers and edge servers and millions of tags; allow business managers and executives to see and collaborate across the total supply chain; and proactively measure, monitor, and exceed supply chain performance objectives. For more information, please visit www. teradata.com or call +1-937-242-4030. 36

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Managing Alliance Conflict

Conflict Is Inevitable. How You Deal with It Can Be the Difference Between Success and Failure By David S. Thompson, CA-AM, John R. Hayes, MD, and Steven E. Twait, CSAP

Every day we manage conflict. Whether dealing with friends and relatives or coworkers and customers, we constantly resolve issues by applying the conflict management approaches and skills at our disposal. Those of us working in alliances certainly work our way through such situations frequently. While it might be part of our jobs, most people do not like to hear the word â&#x20AC;&#x153;conflictâ&#x20AC;? associated with their own name. Just hearing the word is sometimes enough to make your stomach churn or your muscles tense.

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Conflict, however, is one of the greatest sources of creative power, if it is managed effectively. Examples of fruitful conflict are found throughout human history in a wide range of categories: the formation of an independent United States, the songs of the Beatles or Fleetwood Mac, the Los Angeles Lakers NBA championship teams that featured Shaquille O’Neal and Kobe Bryant, and all the Apple products created through the efforts of Steve Jobs and John Sculley. We all have experience dealing with conflict, we all share a need to improve in this area, and we all stand to benefit greatly from these efforts.

FIGURE 1: CONSTANT VALUE vs TIME

VALUE

CONSTANT VALUE CREATION

TIME

Source: Eli Lilly and Company

VALUE

FIGURE 2: VALUE CREATION AND DESTRUCTION POINTS OF INFLECTION vs TIME

VALUE DESTROYING INFLECTION POINT

VALUE CREATING INFLECTION POINT

TIME

Source: Eli Lilly and Company

The value of alliance management, if graphed, would not be a pure linear function, where value is being generated at a constant rate (Figure 1); rather, the graph has points of inflection where value is created or destroyed. These points of inflection represent points of conflict, while more linear parts of the graph represent the daily value generated from the more administrative aspects of alliance 38

management (Figure 2). At these conflict points, great value can be produced or lost depending on the outcome. For example, when a teacher takes the time to help a child who is struggling with math, that teacher is creating a potential inflection point. The student who currently loathes the subject could eventually develop a love for math as the skilled teacher helps build the necessary foundational skills in that student. That teacher’s thoughtful intervention and the child’s willingness to develop skills creates an inflection point in that child’s life, affecting that child’s career opportunities and chances of creating and keeping wealth, and perhaps affecting our lives if the child eventually creates something that contributes to the greater good. Conflict Defined An operational definition of conflict might be a situation where people hold at least two different views of how to resolve an issue. (This article will not address inner conflict, or the conflict created by a person’s unique personality traits. While these factors do influence alliance conflict significantly, they invite separate discussion and are beyond the scope of this article.) Most of the negative feelings associated with conflict are not based on two people seeing radically different problems; rather, negative feelings are more often generated in the execution phase of conflict resolution. That is to say, people often agree about the existence of a problem, but disagree vehemently about how it should be addressed. In the teaching example above, both student and teacher recognize that math is a challenge for the student. They use different words and have different perspectives and interpretations regarding how to address the issue, but they both agree on the central issue: math is a challenge for the student. The student might say, “Math stinks!” while the teacher might say, “The student lacks a fundamental grasp of the basic principles of math and fails to see how the mastery of the subject will influence the rest of his life.” Success, therefore, depends not on identification of the issue, but on the implementation of a resolution. The focus of this article is to highlight tools and techniques that are helpful in the execution of alliance conflict. Modeling Conflict and Resolution One school of thought useful in describing conflict holds that a person does not experience any event without first passing the event through a “perception filter.” This filter is the way in which we assign meaning to the things we perceive or experience. People’s filters are made up of personal and cultural elements including past experiences,

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

E D I T O R I A L

S U P P L E M E N T

FIGURE 3: A BASIC MODEL FOR EXAMINING CONFLICT

Beliefs

FACTS

Beliefs

Bias

EVENTS

Bias

Experience

ISSUES

Experience

FILTER

DECISION

FILTER Source: Eli Lilly and Company

beliefs, biases, education, and so on (Figure 3). It is not surprising, therefore, to note that two people could experience the same event and assign it very different meanings. Study of this model reveals the basic steps of managing conflict: Step #1 Fully understand the event. Step #2 Understand your own filter as well as the other party’s in order to understand the meaning both parties are ascribing to the event. Take the time to really listen to your partner. Ask openended, unbiased questions. Find out why that person believes what they believe about the events that took place. How are they interpreting the events? Really listen. Use tools like structured listening to help understand. During this listening phase, see if you can agree with your partner on the events and their timelines. Establish boundaries for separating actual events from beliefs or interpretation of events. Step #3 Use your understanding of the meaning each party has given to the event to modify the filtering on both sides, if possible. Your goal should be to move toward more shared meaning of the event, and consequently toward a mutually acceptable path to a solution. Master the Basic Business Tools for Conflict: You Cannot Really Overcommunicate Although the tools for conflict management all involve communication, it is useful to think of three main categories of business communication: verbal communication, written communication, and a special subset of verbal and written communication that is upheld by the force of law, otherwise known as litigation! In this situation, often a third party (for example, an arbitrator or ombudsman) filters and interprets Quarter 1, 2012

the facts on behalf of the disputing parties and renders a decision that carries with it the force of law. It is intuitive that one’s success in implementing the first two tools often determines whether the third ever needs to be employed. Here are some basic tips: Establish an agreement with your partner about how to communicate. This conversation would range from how to handle highly emotional topics to more mundane considerations. Generally, the more emotional the topic, the more it needs to be handled verbally and preferably face to face. The converse is also true: the more mundane the issue, the easier it is to put into writing. A wise man once said, “Among my most prized possessions are words that I have never spoken.” This is a valuable concept in managing alliance conflict. Do not attack the filter of the other party. It only leads to bad feelings and defensiveness. Remember, we all have our own filters, and understanding your own as well as your partner’s will more likely lead to agreement than if you simply reject the conclusions your partner naturally reached by interpreting an event through filters other than your own. It is, however, acceptable to point out: — New data regarding a person’s filter: In the context of our earlier example, the teacher might say, “Did you know that the more math a person knows the more money he can make?” — What’s right with a person’s filter: “Math is a diﬃcult subject.”

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.

E D I T O R I A L

— The feelings associated with a person’s filter: “I completely understand why you feel so frustrated with math right now, but it seems as if we both can see why it is an important subject for your future.” In addition, it is good to keep several other principles in mind to ensure that you are managing conflict constructively: 1. Know the difference between pointing things out and attacking, and know how to make that difference felt by the other party. 2. Have a trusted colleague read any written communication being sent to a partner. Have him or her focus on looking for “loaded” or biased wording and overall tone. This is especially true of any highly emotionally charged communications. 3. Don’t be afraid to change your own perception of the events and facts when given better and clearer information. Be the change that you want to see in others. 4. Allow enough time for your partner or your own organization to process new information. Change does not always happen quickly. 5. Become an expert in gauging how much time it takes for each organization to process new information. 6. Develop the ability to correctly determine the importance of a particular issue to your company and to your partner. Some conflicts can be quickly diffused when you realize that the issue is not really critical to your own company and perhaps is very meaningful to your partner. 7. Adapt your strategies for dealing with conflict to suit the 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 and implementation of strategic partnerships. A graduate of the University of Arizona, Thompson earned degrees in chemistry and Spanish literature as well as an MBA at the Eller School of Business. He can be reached at Thompson_ David_S@Lilly.com, +1- 317-277-8003. Quarter 1, 2012

S U P P L E M E N T

matter at hand. Some conflicts should be largely ignored, while others may need immediate attention. Know the difference and whom to call for advice when you don’t. 8. If you make a mistake, stop and take time to apologize and get the resolution process back on track. 9. Continually read and practice the art of positive conflict management. Here are a few books that have influenced our way of thinking: – Crucial Conversations: Tools for Resolving Broken Promises, Violated Expectations, and Bad Behavior by Kerry Patterson (McGraw-Hill, 2004) – The One Minute Manager by Kenneth Blanchard and Spencer Johnson (William Morrow, 1982) – Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher, William Ury, and Bruce Patton (Penguin, updated and revised edition, 2011) Effectively managing conflict is a skill that can take years to master. There are full-day, week-long, and semesterlong courses on how to manage conflict. While this article provides several commonsense techniques that should be added to your arsenal, we as alliance managers need to pursue our personal journeys toward being better conflict managers. The opportunities we have to create value for the alliance when managing through critical inflection points further solidify the value our profession can add to each company’s bottom line.

Steven E. 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 Alliance Management, Twait has played an integral role in some of the largest development and commercial alliances in the company’s history, including worldwide partnerships with Bristol-Myers Squibb, Boehringer Ingelheim, and Daiichi Sankyo. He serves on ASAP’s 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.

John R. Hayes, MD, is a psychiatrist who has been a medical school professor, a clinician, president of a large health system, and vice president of Lilly Research Laboratories, where he led several major corporate alliances. Dr. Hayes is currently the executive director of the National Network of Depression Centers, an alliance of 21 comprehensive academic depression centers committed to improving care for persons with depression and bipolar disorder through research, education, reduction of stigma, and informed public policy. John can be reached at jrhayesmd@gmail.com

Strategic Alliance Magazine

STRATEGIC ALLIANCE MAGAZINE | SPECiAL FOCUS | EMERGING MARKETS

Translating Success in Asia

As the Business World Tilts Further Toward the Eastern Hemisphere, Companies Need Local Partners to Help Navigate These Emerging Markets—and Quickly! By Jon Lavietes

BY NOW, IT’S NO SECRET THAT NATIONS IN ASIA ARE the present and future of the business world. No longer just a dumping ground for low-grade tasks, these countries oﬀer global organizations more than just manufacturing cost–cutting opportunities. They are the source of many of the world’s biggest and fastest-growing consumer markets and oﬀer a bounty of sophisticated expertise for many industries. Whether they are exploring already booming economic titans China and India, or their increasingly prosperous neighbors such as Indonesia, Vietnam, Malaysia, Thailand, and Cambodia, global companies are still scrambling to get a handle on the wide variety of legal, cultural, and logistical challenges that come with the increasingly mature business initiatives being tackled in these regions.

Quarter 1, 2012

strategic alliance magazine | special focus | EMERGING MARKETS “There isn’t such a thing as one Southeast Asia, just as there isn’t one Europe. There are big differences among the countries,” said Griffioen.

Legally Bound Even if you wanted to make a go of it on your own—and few, if any, companies ever do— in some countries it is not even an option.

Paul Conrad, director of alliance management for AMAG Pharmaceuticals.

“Foreign companies in certain countries in the region are not allowed to have assets there themselves; you can only have a minority share C. S. Nair, chief executive officer Mark Benvenuto, CA-AM, director in the business. You always need a partner for at Core Points Group. of international alliances for Cubist legal purposes to work with who has mostly 51 Pharmaceuticals. percent,” said Griffioen. With little time to spare, foreign establishments are more In some countries such as Singapore, local ownership dependent than ever on collaborative relationships to is not required, but you still have to appoint a native as operate in the region, and they are finding partners on the ground who know the terrain (in more ways than one) to help them capitalize on these business opportunities expediently. With that said, even though a local ally will help reduce the time-to-value in the region in the long run, that does not mean there is not a significant upfront investment of time and energy. While it is generally agreed in the alliance management community that it takes several months, if not years, to extract the full value of a business relationship, it is even more true of working with a local company from a different culture that is showing you the ropes of their unfamiliar land. “With a local partner, you have to be aware that there might be big differences in culture and ways of working. And with that local partner, you have to invest a lot of time to get that proper understanding,“ said Alfred Griffioen, CSAP, author of the book Creating Profit Through Alliances, and a partner at Alliance experts, a Netherlands-based alliance consultancy that has recently opened an office in Singapore and is currently pursuing its own partner relationships.

Having someone who knows the political structure and has the necessary relationships is a necessity in many countries. Once you are on the same page with partners in the region, they will help you understand an assortment of sometimes-tricky legal hurdles and cultural nuances that are essential to success. For corporations with business interests in several nations, the complexities compound greatly. 44

a director, secretary, or similar-level position of influence—on paper at least—within the foreign company. However, Griffioen noted there are ways to comply with these regulations without compromising too much control. “You have many manageable companies that can play that role—provide you with a company secretary who does nothing except for some specific legal obligations. It’s relatively simple to work around,” he said. However, even without the legal mandate, having someone who knows the political structure and has the necessary relationships with key bureaucrats is a necessity in reducing potential setbacks or delays in some countries. China is a prime example, particularly when it comes to their regulatory drug approval processes. “With the Chinese regulatory process there’s an official Strategic Alliance Magazine

strategic alliance magazine | special focus | EMERGING MARKETS interaction and timeline that occurs, but equally important is an intimate understanding of the inner workings of the SFDA [China’s State Food and Drug Administration],” said Paul Conrad, director of alliance management for AMAG Pharmaceuticals, a Lexington, Mass.–based iron deficiency anemia specialist that has partnered with 3SBio, Inc., in China. “Being in-country is critical to fully understand the SFDA’s processes and ensure an effective dialogue with the agency, and we rely on our local partner for that.” Conrad cited an example from several months ago in which the SFDA underwent an internal reorganization replete with staffing changes just as AMAG was in the middle of its drug approval process. 3SBio was able to leverage their knowledge of the SFDA’s internal workings to get ahead of the organizational changes and keep the review process moving. “Because our partner had strong relationships with their SFDA reviewers, they became aware of the changes and who the new individuals responsible for our drug approval process would be, [then] quickly worked with the new officers such that there really wasn’t any time lost. Coming from outside, without knowing internal workings of the SFDA, it would have presented at least a temporary obstacle in moving ahead with the approval process,” said Conrad, who also noted that 3SBio has “full ownership of the regulatory approval for the drug and its subsequent commercialization in China” as part of their partnership agreement. Griffioen has observed similar workings in Thailand, where not only do you need to know influential government officials, but those contacts have to be affiliated with the political party in charge. This can get tricky when there is a change in power. An already-established company’s projects are unlikely to be affected, but to begin a new initiative “it’s important who you know and whether your associates are from the party in charge,” he said.

Learning the “Unwritten Rules” While legal statutes and policies involve at least some sort of fine print, even more complicated are those unspoken norms and assumptions unique to each culture—the “unwritten rules,” so to speak. A fundamental philosophical principle in Chinese culture is guanxi, which literally means “relationships” but in practice is, in essence, the concept that each individual and organization regularly and voluntarily does favors for others with the expectation that those courtesies are returned at some other point—a “scratchmy-back-and-I’ll-scratch-yours” mentality. Quarter 1, 2012

Guanxi is “about commitment, obligation, reciprocity,” said Mark Benvenuto, CA-AM, director of international alliances for Cubist Pharmaceuticals. “In the U.S., we do business first, then the relationships follow. There, it’s the other way around; you focus on the relationships first.”

To question someone, particularly a higher-ranking executive, is to risk negatively impacting that person’s public “face,” thereby potentially creating discord. In addition to guanxi, China’s hierarchical society emphasizes “saving face.” “Face” is about how other people view you, the desire to look your best, and conversely, not to look weak or bad in the eyes of others. To question someone, particularly a higherranking executive, is to risk negatively impacting that person’s public “face,” thereby potentially creating discord. “Especially in front of other people, you would never tell someone they’re wrong or you disagree. This insult is a surefire way to make someone lose face and can jeopardize the relationship,” said Benvenuto. Examples of tips for saving face include: — Respect hierarchy. Understand who to go to and when. — Avoid asking questions of people if there is a good chance they do not know the answer, and do not force responses in uncomfortable situations. — Put Chinese executives in a position where they appear to win. These intricacies extend to some of the minutest details and affect seemingly inconsequential actions in other countries in the region as well. You can have what you think is an excellent meeting with a potential partner or client in Thailand, and then hear nothing for an extended period of time despite assurances that you fit that company’s needs like a glove. “If you try to follow up yourself, you hardly get any response. A local partner knows the other ways of how to approach [the situation],” said Griffioen. Continued on page 54 45

Strategic Alliance Magazine

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Partnering to Maximize Rewards in Pharmerging Markets Alliances Allow a “Think Globally, Act Locally” Approach to Opportunities in Developing Markets By Jack W. Pearson, MBA, CSAP

Global spending on pharmaceutical drugs will reach nearly $1.1 trillion by 2015, according to IMS Health. This reflects an annual sales growth rate of 3 to 6 percent. But hidden behind these numbers there are unprecedented dynamics at play, which are shifting the mix of spending between branded products and generics and between mature and emerging markets.

Pharmerging markets, on the other hand, have seen double-digit growth rates driven by a large population base with unmet medical needs, economic growth, increased prevalence of chronic diseases, and greater governmental involvement in health care. These dynamics will result in a significant geographical shift in drug spending. The United States’ share of global drug sales is expected to drop to 31 percent by 2015, down from 41 percent in 2005. But 17 pharmerging markets, led by China, will account for 28 percent of total spending by 2015, up from only 12 percent in 2005.

Global Spending on Medicines It is no surprise that the biopharmaceutical industry wants to tap these rising markets where the growth potential could offset stagnating sales in mature markets, ensure further growth, and cover Quarter 1, 2012

increasingly expensive R&D costs. However, efforts to achieve these aims have netted mixed results. Success depends on moving quickly and adapting global strategy through local insights

FIGURE 1: PHARMERGING MARKETS 1125 BILLIONS OF DOLLARS

Growth in mature Western markets has been slowing down, mainly due to market saturation, the economic slowdown, health care cost containment efforts, patent expiry of key blockbuster drugs, and increased use of generics.

750

375

2005 Pharmerging Markets

2010 EUS

2015 US

Source: IMS Market Prognosis, April 2011

Rest of the World 47

STRATEGIC ALLIANCE MAGAZINE | SPECiAL FOCUS | EMERGING MARKETS and experience, but no defined strategic blueprint can be applied uniformly across these extremely heterogeneous countries.

Challenges of Highly Diverse Markets Entering pharmerging markets comes with several challenges. First, market opportunities are scattered among a host of countries, and to take full advantage of growth, drug makers have to enter numerous, enormously diverse markets. The uniqueness of each countryâ&#x20AC;&#x2122;s demographics, disease profiles, health care system, governmental controls, and distribution systems requires a thorough understanding of the potentials and risks. No single entry strategy can be successfully applied to all countries.

Most pharmerging markets are characterized by high market and regulatory uncertainty, stiff competition, and complex distribution systems. A companyâ&#x20AC;&#x2122;s product portfolio must match local needs. In general, there is still a high need for treatment of acute conditions, but disease profiles are becoming more similar to those of developed countries and are shifting toward more chronic diseases. Fast-growing countries can exhibit huge quality differences between urban and rural health care services. While urban areas are a solid market for Western patent drugs and branded generics, populations in rural areas use local generics or rely on traditional medicine. It is crucial to understand these subtleties and create market entry strategies with balanced portfolios of branded, patent-protected products and lower-cost generics. Infrastructure gaps are an additional challenge, and accessing rural areas requires answering questions regarding distribution networks, safety and counterfeiting, pricing mechanisms, packaging, and consumer financing. Despite a growing middle class in many of these countries, per capita income remains significantly lower than in developed markets, and peopleâ&#x20AC;&#x2122;s ability to pay for medicines varies significantly. The majority of drug spending is out-of-pocket, margins are often low, and competition can be stifling. Negotiating or lobbying for price or reimbursements is often a necessity and constitutes a huge challenge for an outsider. Pharmerging markets also have unique, sometimes unpredictable, regulatory rules resulting from governmental efforts to curb health care 48

costs or to spur growth of the domestic biopharmaceutical industry. It is important to understand these local regulations and monitor changes to assess their impact on potential growth opportunities. And while intellectual property (IP) protection laws have been improved, they still remain inconsistent and weak in countries such as India. These concerns should not be taken lightly, and opportunities need to be weighed against risks.

Partnering to Navigate Risk and Seize Opportunities Entering emerging markets forces biopharmaceutical companies to rethink their strategies and adjust them to local conditions. No single entry strategy can be successfully applied to all countries. Developing true understanding of the markets is a process that takes time. Fundamentally, there are only three ways to enter new markets: organic internal growth (build), mergers/ acquisitions (buy), or partnerships (ally). No approach is inherently superior, and the best option depends on the specific market and company situation.

FIGURE 2: THREE WAYS TO ENTER NEW MARKETS Mode Conditions Favoring Mode Advantages

Challenges

BUILD In-house expertise Core to business

Substantial investment Extended time to market

Internal resources available BUY

ALLY

Full control Slow, but controlled growth Acquire learningby-doing expertise

High risk Foreign ownership limits

If speed of entry is important

Fast market entry

Lack of in-house expertise

Full control

Need to acquire market leadership

Expand competencies Acquire expertise

Highly differentiated business environment Lack of in-house expertise

Limited investment

Share returns

No acquisition premium Shared risks

Governance and integration challenges Lack of trust and commitment Inadequate preparation

Huge importance of speed of entry Limited internal resources

Fast market entry Learn from alliance partner Flexibility Retain IP rights and branding control (depending on structure) Customize for specific markets

Substantial investment (possible mark-up costs) Complex due diligence and negotiations Integration of different company cultures Local SOPs High risk

Most pharmerging markets are characterized by high market and regulatory uncertainty, stiff competition, and complex distribution systems. Biopharmaceutical companies that enter these markets seek speed to Strategic Alliance Magazine

STRATEGIC ALLIANCE MAGAZINE | SPECiAL FOCUS | EMERGING MARKETS profit from the remaining patent life. All these circumstances favor alliances as a business strategy for entry. Allying with a partner with established presence and regional expertise allows a company to accelerate market access and gain an understanding of local conditions while limiting resource commitments and risks. Strategic alliances can create synergy effects such as integration of complementary competencies and resources. They also offer benefits in addressing local government concerns about foreign ownership and the tendency for local firms to receive preferential treatment. They can provide on-the-ground experience of nontransparent state or country regulatory systems and of the most appropriate infrastructure to build.

best option tomorrow. Thus, shorter-term contracts or so-called “exploration alliances” allow companies to test new markets and business models with the flexibility to respond to new market conditions. Ownership of existing and jointly developed IP rights and brand control needs to be agreed on and well documented. Moreover, allying with a company that is not a current or potential competitor helps avoid competing interests.

Choosing the Right Alliance Partner Despite their apparent advantages, alliances can be challenging, particularly between companies from Western and developing markets. In addition to the well-known hurdles, these partnerships also have to deal with cultural differences, language barriers, and significant time zone differences across disparate geographies. Careful alliance partner selection is thus crucial. Given the challenges and unknowns of highly diverse markets, local expertise and cross-functional depth are obviously prerequisites. But equally important is a partner’s thorough understanding of Western culture and business practices and adherence to international standards. What a local company might consider standard business practice potentially could violate the code of business conduct of a Western company. U.S. companies, for example, need to ensure that their partners have effective policies in place to prevent any potential violations of the Foreign Corrupt Practices Act (FCPA). The pharmaceutical industry is under increased scrutiny by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) for potential violations of this act, and several large pharmaceutical companies have received severe penalties for running afoul of the FCPA. The winners will be companies that select an alliance partner with an extensive network of relationships and a demonstrated ability to overcome unique market and product challenges. An ideal partner has an established presence in multiple markets, allowing market penetration in different countries with one single partner. It should have complementary skills and be open to flexibility in partnership design. A strategic alliance that makes sense today may not be the Quarter 1, 2012

Alliance Management Is Key to Success A partner’s commitment to a dedicated alliance management approach is important for all alliances, but especially for those in pharmerging markets. Hurdles such as undeveloped infrastructure add a level of complexity not encountered in traditional markets. Dealing with these challenges in unfamiliar and rapidly changing business contexts calls for professional governance structures to alleviate the risk of failure. Alliance management benefits partnerships by introducing more rigor to the decision-making process and improving communication. As such, alliances can drive forward aggressively and effectively, accelerating commercial opportunities.

Alliances offer benefits in addressing local government concerns about foreign ownership and the tendency for local firms to receive preferential treatment. Pharmerging markets are characterized by unpredictable changes in the regulatory environment and high fluctuations in demand. Alliance governance structures in such an environment should be flexible enough to allow for quick response to new challenges and opportunities. Continued on page 56 49

Collaborative Buzz Continued from page 17 payments of about $200 million per drug under the terms of the deal, according to a report from the Associated Press. Immunogen, based in Waltham, Mass., said Lilly will receive some exclusive licenses to use its Targeted Antibody Payload (TAP) technology to develop cancer treatments. Immunogen declined to say how many licenses it granted to Lilly, which is headquartered in Indianapolis. TAP technology includes a tumor-targeting manufactured antibody with a cancer-killing agent attached. The antibody delivers the agent specifically to tumor cells, where it is released to kill the cells. Lilly is responsible for developing and selling any products from the agreement, and Immunogen could receive royalties on future sales. Ely Lilly & Co. is an ASAP Global Member.

“Medical imaging plays a critical role in advancing drug development, and this alliance strengthens our global research and development services across several large disease areas. Through our strategic alliance with VirtualScopics, we are able to provide clients with more advanced imaging data.” Oracle and Teradata Pursue Business Intelligence

Teradata, a leading analytic data solutions company, has announced its nextgeneration capabilities for companies seeking more control, functionality, and business value from Oracle Business Intelligence (BI) technologies. To accommodate escalating data volumes and end users, companies are pursuing heightened technology capabilities that cut through data complexity, 50

extend the scope of their BI, and speed delivery of new types of useful information to growing communities of business users. The Teradata-Oracle alliance seeks to meet this need through ongoing integration and optimization of Oracle Business Intelligence and Teradata platform family technologies. Newly released next-generation BI capabilities will empower IT and business professionals to effectively leverage geospatial analytics, improve system performance, and enhance management of complex BI environments.

PPD and VirtualScopics Expand Medical Services Alliance

Pharmaceutical Product Development, Inc. (PPD), and VirtualScopics, Inc., announced that they have expanded their successful one-year strategic alliance in clinical and medical imaging services across multiple therapeutic areas to now include oncology, central nervous system, cardiovascular, general medicine, and medical devices. The companies deliver integrated, customized clinical and medical imaging technologies using an innovative, patented, algorithm-based approach to image processing and biomarker measurement. The goal is for biopharmaceutical companies to be able to make faster, more confident decisions about the status of their compounds from early phase through post-approval. “Medical imaging plays a critical role in advancing drug development, and this alliance strengthens our global research and development services across several large disease areas,” said Paul Colvin, executive vice president of global clinical development for PPD. “Through our strategic alliance with VirtualScopics, we are able to provide clients with more advanced imaging data via an integrated solution so they can make important development decisions related to patient safety and eligibility protocols, drug efficacy, and study endpoints.”

Heavy Hitters Form Big Alliance: Multiplayer Collaboration on Memory Initiative

Major electronics companies Panasonic Corporation, Samsung Electronics Co., Ltd., SanDisk Corporation, Sony Corporation, and Toshiba Corporation announced just before Christmas that they have reached an agreement in principle to collaborate on a new content protection technology for flash memory cards such as SD cards and various storage devices. Under the “Next Generation Secure Memory Initiative,” the five companies will start preparing for licensing and promotion of HD-capable security for SD cards and embedded memory for use in advanced consumer applications such as tablets and smartphones. The five companies believe this technology will enable various HD content applications such as HD network download, broadcast content to go, and HD Digital Copy/Managed Copy from Blu-ray Disc 2 media. With these applications, users will be able to view HD content on a wide range of devices, including Android 3–based smartphones and tablets, TVs, and Blu-ray 4 products. The companies are also betting they each can make substantial contributions that, when combined, will enable them to start licensing the new secure memory technology early in 2012. They expect to see adoption of flash memory products and various embedded flash memory solutions using this technology in the market this year.

GE Healthcare and M+W Group Form Biopharma Alliance to Help Emerging Nations

GE Healthcare, the healthcare business of General Electric, and M+W Group, a global engineering, construction, and project management company, announced that they have formed a strategic alliance aimed at overcoming the lack of key biopharmaceuticals in emerging nations. The alliance, which will combine Strategic Alliance Magazine

GE Healthcare’s expertise in technologies for biopharmaceutical manufacture with M+W Group’s global capabilities in bioengineering and construction, will assist countries worldwide to become self-sufficient in the manufacture of vital biopharmaceuticals such as vaccines, insulin, and biosimilars. Together, the companies will offer governments and pharmaceutical companies an integrated, cost-competitive, “turnkey” approach for the construction of biopharmaceutical manufacturing plants to help meet the rapidly increasing worldwide demand for these potentially lifesaving treatments. Worldwide demand for vaccines, insulin, and other biopharmaceuticals such as antibodies to treat cancer and rheumatoid arthritis is increasing dramatically, driven by the global aging population, rising obesity levels, and the worldwide effort to reduce the incidence of vaccine-preventable diseases. Many countries have limited capabilities for the manufacture of these products, resulting in considerable unmet health needs. The introduction of local “in country, for country” flexible manufacturing capabilities could help overcome this critical health gap.

Ethiopian Airline Takes Off with Star Alliance

In a move to improve its services, the Ethiopian Airline has joined the global airline network Star Alliance, according to The Guardian. A press statement issued by the company said joining the Star Alliance would make the airline stronger, and that because of competition and an unstable business environment, the aviation industry will likely see greater numbers of such alliances formed. Through Star Alliance, the Ethiopian Airline will be able to access 21,410 daily flights in 189 countries. The thinking is that more travelers from Ethiopia and across Africa will benefit from Star Alliance’s worldwide reach. Ethiopian will thus become part of an airline alliance network of some 4,382 aircraft, 409,152 employees, Quarter 1, 2012

652.24 million passengers transported per year, and sales revenue of more than $160 billion. With prearranged domestic flight discount packages for passengers arriving from international Star Alliance networks, Ethiopian hopes to be able to increase traffic flow to the country, promoting Ethiopia as a major tourist destination.

Amgen and Watson to Collaborate on Oncology Meds

Amgen, Inc., and Watson Pharmaceuticals, Inc., have announced that they will collaborate to develop and commercialize worldwide several oncology antibody biosimilar medicines. Under the terms of the agreement, Amgen will assume primary responsibility for developing, manufacturing, and initially commercializing the oncology antibody products. Watson will contribute up to $400 million in codevelopment costs over the course of development. In addition, Watson will contribute its expertise in the commercialization and marketing of products in highly competitive specialty and generic markets. The collaboration products are expected to be sold under a joint Amgen/Watson label. “The pairing of Amgen’s 30 years of experience in biologics together with Watson’s substantial generics and specialty pharmaceutical experience and complementary commercial and distribution capabilities provides great potential for worldwide patient access to high-quality oncology biosimilar medicines,” said Robert A. Bradway, Amgen’s president and COO. “Biosimilars provide an exciting long-term growth opportunity for Amgen. We have a dedicated team to leverage existing capabilities and capacity and drive the success of the collaboration.”

Numerate Collaborates with Boehringer Ingelheim on In-Silico Drug Design

Numerate, Inc., a technology platform company that is leveraging the power of

cloud computing and novel computational methods to transform the drug design process, announced in December that it had entered into a research collaboration with Boehringer Ingelheim (Canada), Ltd. The collaboration will utilize Numerate’s proprietary in-silico drug design technology to generate small-molecule drug leads for an undisclosed infectious disease target. “Using our large-scale computational drug design methods, we expect to greatly reduce the time and cost of delivering new lead-stage, small-molecule drug candidates in this important program for Boehringer Ingelheim,” said

Worldwide demand for vaccines, insulin, and other biopharmaceuticals such as antibodies is increasing dramatically. Local “in country, for country” flexible manufacturing capabilities could help overcome this critical health gap. Numerate’s CEO, Guido Lanza. “This collaboration is the latest in our growing number of partnerships with pharmaceutical companies that are looking to Numerate’s comprehensive in-silico drug design technology to help them increase their success rate in generating novel, patentable small molecule leads.” Numerate’s drug design platform features a set of proprietary algorithms that provide predictive models for molecular properties with accuracies comparable to those in laboratory testing. Used in conjunction with cloud computing, these algorithms enable Numerate scientists to search through spaces of billions of compounds to rapidly and efficiently identify those with the highest probability of activity against a specific target. n

Non-Alliance Personnel Training: continued from page 25 to execute them. Novo Nordisk allocates a portion of its seminar to governance, conflict management, and stakeholder management, and the tools its alliance practice uses in each of these phases. However, the most common detail, and arguably the most important one, covered in alliance management trainings is how to structure the basic interactions across companies—or as Simoons stated more simply, “communicating, communicating, communicating.” “Sometimes it’s important to pre-communicate a little bit, not privately or secretly, but informally with your counterpart in the partner company before you go alliance-wide with your communication,” said Bregenholt. “We actually try to teach people—and this is a lesson that carries into their normal work lives—to just try to walk in the other guy’s moccasins before you communicate.”

Non-alliance professionals don’t tend to know the scope of what they can communicate to the partner company. Arnesen confirmed that how one communicates is actually one of the more difficult responsibilities to grasp in the technology world, particularly for sales and professional services folks. “[Non-alliance professionals] don’t tend to know the scope of what they can communicate to the [partner] company. They tend to overcommunicate. They tend to say too much that we would consider confidential,” she said. “In many cases [our partners] have their own policies and guidelines, and we can’t dictate terms to them. Even basic things like anti trust and pricing—[we try to manage] what [our salespeople] can and can’t say on behalf of our partners to our customers because we don’t control pricing in most cases.” This partly explains why the rules of engagement are a major part of Cisco’s channel employee training. In covering this topic, Cisco details policy and discount exceptions as well as escalation processes. “Our field team is requested to work with their counterparts up to the executive level. They have to follow the guidelines of what they can and can’t do at the local level and what has to be dealt with at a higher level of the company,” said Arnesen.

Lesson Received, Appreciated, and Put into Practice

For the most part, attendees of formal alliance courses and recipients of informal training are there by choice, and the rare exceptions at to the company. “This alliance is so important for the future of that part of the business that the business manager or R&D manager should also be the alliance manager.” Cisco’s less-formal training is woven into the general training given to 52

sales, professional services, marketing, and marketing communications executives that touch partnerships in some way. “We don’t even use the word ‘alliance.’ We talk a lot about partnering, and partnering is a broad term. Within that are alliance principles,” said Arnesen. Even without the cues from upper management, professional development is more than enough motivation to seek alliance training. “Because you’re doing an interesting job as a product leader or development leader, you take the time to develop yourself and take a workshop like this,” said Hoerning. Ultimately, the training is well received, in large part because an overwhelming majority of participants find that the lessons learned advance their understanding of, and ability to perform, their day jobs. Bregenholt’s course is oversubscribed and when tabulating the results of the feedback from a recent tutorial, he said respondents averaged above 4.5 on a five-point scale in their assessment of how much they agreed with the statement, “I found this course relevant and useful.” "The FAME workshop gave me an excellent overview, with real life examples, of the key drivers involved in relationships between pharmaceutical companies of various sizes and background,” wrote Maxime Poli, global program regulatory manager at Novartis, in an evaluation of a recent course. “It has shed light on some of the issues our team faced in the past and will be a great asset in the way I work with license partners in the future" One of Simoons’s pupils recently told him that he views the coursework as something broader than alliance management. “For me, it’s a business model in the way I run my business,” the student told him. In addition to its practical application to day jobs, Arnesen has observed that many of the folks who undergo Cisco’s partnership training value the global reach of the work. Moreover, these employees spend a majority of their time dealing with their own Cisco coworkers. They cherish the opportunity to connect with people outside the organization from a networking and professional development standpoint. “Just having exposure to third parties is something our internal folks like and value.” Novartis continues to evolve its curriculum. The first six workshops focused on broad alliance management philosophies and issues encountered by manager-level professionals. The company is now developing an executive track and working on new courses for the managers that delve into specific situations. The ever-changing program has resulted in several repeat customers. “A lot of people want to come back each year because we change the theme, we change the content,” said Tubbeh. Nevertheless, as alliance teams and the partnerships themselves change, ongoing training ensures that the practice of solid alliance management principles by non-alliance personnel remains business as usual. n Strategic Alliance Magazine

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!

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strategic alliance magazine | special focus | EMERGING MARKETS Translating Success: continued from page 45 When working with a Singaporean partner you may be taken aback by frequent reminders leading up to meetings and deadlines. If your Thailand-based partner shows up an hour late to a meeting, that could mean any number of things. “In Bangkok, traffic can be quite bad. That could be a reason, but it also could be disinterest, a way to emphasize your status because if you are important, you can be late,” said Griffioen. In China, wrap a gift in the wrong color wrapping paper, and you might be unintentionally shrouding your token of appreciation in the symbol of death. “Whenever I need to get something wrapped, I just bring it to the concierge desk and have them do it,” joked Benvenuto.

If you are a large multinational corporation, do not necessarily expect your local partner to pony up 50 percent of the costs. Fortunately, these types of issues are not equally prevalent across Asia. Singapore, for example, is fairly Westernized, while some who have worked in China have found that the country’s ambition to be a business superpower has led its executives to be very accommodating to Westerners who can help advance them toward their business objectives. Conrad insisted there is “a great deal of understanding if visiting American businesspeople don’t follow a particular norm or custom. There isn’t a sense of offense, just that this is how Americans or Westerners tend to do business normally.”

Bigger Business Issues Of course, even though there are many small details to be cognizant of, there are still big-picture business obstacles to keep in mind as well. For one, if you are a large multinational corporation, do not necessarily expect your local partner to pony up 50 percent of the costs. “The partners who come from Asia Pacific would look to the OEMs to spend a little more money than they would,” said C. S. Nair, chief executive officer at Core Points Group, a consultancy with a dedicated practice on alliances and partnerships and offices in the United States, United Kingdom, United Arab Emirates, Singapore, and India. “For example, if a small company 54

in Asia becomes a partner of, say, Oracle, you know they tend to want to see Oracle spend a lot of money.” Once you have selected a partner, be aware that “the speed of decision making in some of the geographies can be quite painfully slow,” said Nair, citing Malaysia and Indonesia as being particularly sluggish in their pace and noting Singapore as a swift exception. This is particularly true when negotiating the initial contracts and statements of work which, according to Nair, “can be unnecessarily long and excruciatingly painful” due to protracted discussions trying to bridge differences on how to share revenues and liabilities. Tech companies will find negotiating the smaller issues will also take a great deal of understanding. “Things like the damages, warrantees, these small issues can sometimes be extremely painful to [negotiate],” Nair said before recommending that outside companies who are unfamiliar with these countries work with someone with experience working in the region to tailor a contract rather than using a global template. In China, given the legal complexities, Benvenuto has made it a priority to leverage the relationship-driven culture to mitigate potential legal pitfalls. “If you can focus on the relationships, cultivating them, getting things done, and doing good business, a win is being able to manage the business successfully without needing to leverage the contract,” he said.

Hitting the Ground in China

On the pharmaceutical side, AMAG is utilizing 3SBio’s connections to execute critical assignments after the signing of the deal that go well beyond negotiating the Strategic Alliance Magazine

strategic alliance magazine | special focus | EMERGING MARKETS political landscape. 3SBio is tapping its medical practitioners to help design a trial of the AMAG-3SBio alliance’s drug and line up participants for it. AMAG will eventually leverage these same contacts in the commercial stages as well—to “be advocates of the product in the Chinese market when the time comes,” as Conrad put it. Cubist is working with AstraZeneca, a global company but one with a lot of experience and a sterling reputation in China, according to Benvenuto. AstraZeneca manages product distribution, among other responsibilities. “[Distribution] is where a partner is worth their weight in gold,” Benvenuto said, adding that Cubist simply leaves the logistics details up to its partner, while Cubist focuses on delivering market best practices and tackling marketing challenges.

What to Look For in a Partner With these challenges in mind, what makes a local partner suited to help a North American or European-based organization unleash the vast potential of the region? Griffioen boiled it down to three main ingredients: 1. language, 2. understanding the Western style of business, and 3. network. Even though English is not the Netherlands-based alliance consultant’s native tongue, for example, he recognizes the universality of the language. Making sure your contact has some grounding in the ways Westerners do business is just as important as knowing the language itself, according to Griffioen’s philosophy. Benvenuto agreed. “When a local office is being run by a Westerner, these norms will likely infuse and permeate throughout their organization,” he said.

Given the importance of political, commercial, and other stakeholder connections, there are many questions to ask and answer when performing a background check on a potential partner.

Conrad has found that linking up with a publicly traded company helps with due diligence. “[It] allows for more transparency between companies than would likely be achievable if our partner wasn’t a publicly traded company.” “What kind of network does your partner have? How involved is he or the company in local politics or local government, so they know their way and they don’t have any disputes there? How extensive is their network in local businesses?” said Griffioen, listing some sample queries to investigate. Conrad has found that linking up with a publicly traded company helps with due diligence. “[It] allows for more transparency between companies than would likely be achievable if our partner wasn’t a publicly traded company,” he said. Nair advises his clients to make sure the partner has the time and incentive to dedicate the resources necessary to make the alliance work. He sometimes recommends partnering with a smaller company “rather than going to a bigger partner who might sign up but may be constrained to give attention later.” For companies trying to introduce a product unknown to the local population, Nair said it is imperative to contract a company with extensive marketing strengths and brand recognition.

Make sure the partner has the time and incentive to dedicate the resources necessary to make the alliance work. “[It is] worthwhile going through a partner who is somewhat dedicated in creating the right mindset [in the customer base], but a clean ‘win-win’ plan and execution ability must be ensured,” he said. Once a partner is contracted, it is imperative to have as much face-to-face interaction as possible to mitigate the potential for miscommunication. Quarter 1, 2012

strategic alliance magazine | special focus | EMERGING MARKETS “In drug development, there are exceedingly complex conversations that need to happen. These are challenging if done by teleconference or email,” said Conrad, adding

Mutual Understanding: Well Worth the Investment In general, unless you want a pure distribution partner, that local ally is critical to success in Asian countries given all of the necessary on-the-job cultural learning involved in doing business there. “It is always better to keep a relationship in some sort or form,” said Nair. “The point is you hardly know what specific services or needs you will need from your local partner in advance,” said Griffioen. “Therefore hiring an agent might be insufficient, as this agent would typically only do what you ask him. With a partner with the right profit sharing arrangement you can align business interests better.”

that when you do resort to conference calls, “allow for an internal discussion to occur in Chinese among subject matter experts on [the] partner’s side. You have to get used to lengthy conference calls.” When possible, it’s always best to run your communications directly through the team on the ground, versus through headquarters or a regional hub, said Benvenuto. “If I had to call the person in Singapore every time I needed a piece of information [pertaining to the alliance in China], you’d just lose time and a level of detail, especially with the translation on top of it,” he said. Pharmerging Markets: continued from page 49 Rather than trying to anticipate every possible issue that could arise in a partnership, the governing documents should focus on the processes for resolving them. A dedicated alliance management unit should work with each partnership to ensure a successful execution, using a suite of proven alliance governance tools. This unit reports directly to executive management, independent of operating units, expediting decision making and ensuring commitment to the long-term success of relationships. But the ultimate success of alliances, especially in pharmerging markets, relates not only to technical competency and governance, but also to the cultural framework. Partners need to have a collaborative alliance mindset and a culture built on trust and open communication. Alliances among such partners need fewer control mechanisms to ensure that everyone adheres to established policies. Instead, partners can singularly focus on achieving results, tapping the full potential of promising growth markets. n 56

Ultimately, it is going to take an even bigger investment of time and effort than a typical same-culture partnership to work around cultural and communication differences. “In all partnerships, it’s about mutual understanding, especially if you’re talking about cross-cultural partnerships,” said Griffioen. “The basis of mutual understanding to start with is smaller. You have to work harder on that specific aspect.” “In the alliance management community, you always hear the signing of the deal is the tip of the iceberg,” said Benvenuto. “It’s more true when dealing with some of these [Asian] markets where you overlay cultural differences on top of an already complex deal.” n Jack W. Pearson, CSAP, MBA, recently served in a role managing a team of senior level executives who compose Quintiles’ innovative, award-winning Global Alliance Management Group. The article, which contains intellectual property from Quintiles, was written shortly before he left the company. Mr. Pearson still serves as vice chairman and chairmanelect on the Association of Strategic Alliance Professionals (ASAP) Board of Directors and participates on its Executive Committee. He also sits on the advisory board of DealGen, LLC, an organization that operates to engage and facilitate strategic partnership arrangements. In his market development role, Mr. Pearson evaluated new markets and investment models as Quintiles continues to build its global presence. Recently, he led new market entry activities in Latin America and the Russian Federation, opening new channels of business opportunities for Quintiles. Strategic Alliance Magazine

How to Grow an Alliance: continued from page 21 routines”— organized processes that cut through bureaucracy and ensure that partners have direct access to the right person in the other organization; and 3) “alliance values”—including solidarity with the partner, proactive communication, empathy, and trust. Hanmer also noted the significant role trust plays in the creation of an alliance culture. “The research shows that trust is an essential ingredient in developing a successful alliance culture,” he said. “Without trust there can be no development of culture.” Both alliance managers working in the trenches and senior executives can play important roles in fostering these components of alliance culture within their organizations—and, if necessary, uprooting old ways of thinking and working that are not conducive to operating under a business climate and model that is increasingly reliant on successful alliances. Luvison argued that there are several things alliance managers and executives can do to help this process along. “First, communicate more frequently, more visibly, create more anecdotes and stories and histories of alliances—say why they’re valuable and important. It does represent a change in behavior for alliance managers; they don’t think on that scale. Second, institutionalize some of the tools and routines and best practices that alliance management uses to have a more successful alliance. If an alliance manager is using alliance tools but never has other people use those tools or procedures that are thought to be more effective, then those are never really institutionalized throughout an organization. So raise the visibility and universalize the use of those tools. Third, trying to enlist a change of mindset has to happen from the top down, where people start making assumptions about what alli-

ance behavior is. It’s not just executive ‘buy-in.’ It’s common to talk about executive ‘sponsorship’ or ‘support,’ that’s extremely important. But there’s a big difference between getting an executive to buy into, or actively support, an alliance and getting an executive to change the culture. Executives have to start acting—make procedures more consistent throughout the organization, and change the mindset from the top down.”

“There’s a big difference between getting an executive to buy into, or actively support, an alliance and getting an executive to change the culture. Executives have to start acting—and change the mindset from the top down.” Change Starts Here “It’s a question of change management,” said de Man. “Where do you start? It’s easiest to start with more visible things, like public discourse and language. It allows you to discuss alliance values.” Brad Crawford agreed. “Executive endorsement is key,” he said. “What we’re undertaking here is a major change management effort. Change is very difficult to push on anybody, especially an entire organization. You need to leverage executive endorsement to make that happen.” Crawford admitted that while Amgen, like many other companies, is growing more sophisticated in its handling of alliances, “We’re on this journey—we haven’t solved all the issues and there is still friction in the system. However, we and our partners are realizing the immediate payout as this friction gets addressed and removed.” n

Be a Part of Ongoing Research into the State of Alliances Dave Luvison, CSAP, and Ard-Pieter de Man, CSAP, have been engaged in ongoing research into the state of alliances and alliance management for several years. In the latest installment of their work, they will be presenting the results of their 4th State of Alliance Management study at ASAP’s Global Alliance Summit in Las Vegas, March 5–8, 2012, which will include an overview, a deep dive into the data, thoughts on future directions of this research, and an interactive Q&A session with Summit attendees. For their continuing work on alliances, alliance management, and the development of alliance culture, Luvison Quarter 1, 2012

and de Man are very interested in having more companies get involved by filling out questionnaires. All information gathered in these studies is kept confidential, and goes back to participants in the form of confidential reports. Additionally, there is no cost involved to participate. “It’s not a consulting gig,” Luvison stressed. “It’s just about getting good data.” To learn more or to participate in the ongoing study, contact Luvison and de Man at dave@luvison.com and ard-pieter.deman@atos.net. 57

the close Making the Alliance Investment

Companies May Be Parsimonious with Their Cash—But There’s Good Reason to Increase Investment in Alliances and Alliance Management By John W. DeWitt and Jon Lavietes

DESPITE ENCOURAGING ECONOMIC SIGNS FROM SOME QUARTERS, 2012 promises to be another challenging year for any leader—whether chief executive officer or chief alliance officer—who has to justify increased corporate investment. Even with strong profits, low interest rates, and bargains aplenty, continuing economic uncertainty has kept funding for strategic investments constrained across the board. In a 2011 McKinsey Global Survey of more than 1,500 executives in 90 countries, more than half of respondents said their companies are underinvesting in key areas across their businesses from sales to marketing to IT and everywhere else in the enterprise. Strikingly, even in the critical area of product development, two-thirds of executives said their companies are insufficiently spending—and 40 percent indicated their companies need to spend “much more” to maximize value creation. Yet, “executives are forgoing opportunities that, despite today’s volatility and uncertainty, are probably worthwhile,” the McKinsey Quarterly editors write. For alliance managers, this might mean even the most collaborative companies may not be investing what they should into developing alliances and their overall alliance capability. However, there’s no doubt that alliances are more central than ever before to the growth and competitive strategies of companies across many industries. Therefore, chief alliance officers and their CEOs certainly have no shortage of reasons to justify sustaining, and often selectively increasing, their investment in alliances—and the competencies necessary to execute them. Alliances in many cases can provide greater leverage and greater agility for limited investment dollars. “Companies have been transitioning toward smaller, more flexible structures with increased reliance and interdependence on external alliance partners for some time now,” Quintiles’ leader Dennis Gillings points out in our magazine’s new CEO Forum. Alliances offer especially compelling payback for companies in industries undergoing fundamental transformation. If you want to alter the way you do business, as Gillings says, strategic alliances represent “one of the most effective ways to become more flexible, more nimble, and more successful.” 58

That said, companies can’t leverage alliances without substantially investing in alliance management competencies. Fortunately, alliance management represents a model of high leverage in most partnering organizations—compared with, say, the IT department, alliance management offices are small, lightly staffed organizations with modest overhead that typically deliver a proportionally huge bang for every dollar spent. We have heard of alliance managers saving their companies up to seven figures simply by altering how alliance projects are categorized or negotiating side agreements that capture value left on the table. So the good news in these tight-fisted times is that—whether your company is just embarking on the alliance management journey or a veteran of many partnering voyages—massive investment in alliance management isn’t necessary to achieve success through alliances. Conversely, though, that investment—at the modest level required—is more essential than ever before. Simply put, your company can’t leverage alliances with consistent success without a certain critical mass of professional alliance management expertise and leadership. This means investing not just in the salaries (and frequent travel expenses) of professional alliance managers, but also in the professional development opportunities and resources that ASAP uniquely makes possible— CA-AM and CSAP certification, the Global Alliance Summit, local ASAP chapters, and of course ASAP Media and Strategic Alliance Magazine. It also means making the investments in alliance management consulting services, collaborative technologies, marketing and communication, and training resources that are becoming critical to manage the increasing scale and complexity of alliance portfolios. Bottom line? Investing in professional alliance management, even in a challenging economy, is money well spent. n Strategic Alliance Magazine

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