Strategic Alliance Magazine by ASAP

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

www.rhythmofbusiness.com

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

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

up front

Is Alliance Capability a Competitive Advantage?

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

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

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

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

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The magazine of the Association of Strategic Alliance Professionals

in this issue 18 n ALLIANCE governance

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

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

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

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

n COVER STORY

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

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

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

n ALLIANCE careers

The Alliance Management Career Path

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

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

n ALLIANCE IN PRACTICE

Star Alliance Continues to Soar

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

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

n SPECIAL EDITORIAL SUPPLEMENT

High Risk to High Reward

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

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

n SPECIAL FOCUS: RETAIL, MANUFACTURINg, AND SUPPLY ChAIN

Pharmaceutical Companies, CMOs Still Refining Collaborations

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

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

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

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

Quarter 3, 2011

The magazine of the Association of Strategic Alliance Professionals

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

in this issue 41

n SPECIAL FOCUS: Retail, Manufacturing, and Supply Chain

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

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

n Alliance events

Don’t Gamble with Your Professional Development!

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

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

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

n THE CLOSE

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

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

Strategic Alliance Magazine

Make Your Alliances Work

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

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

Helping Companies Negotiate and Manage Critical Relationships

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

Quarter 4, 2011

Discover a World of Fun

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

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

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

Strategic Alliance Magazine

Collaborative Buzz

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

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

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

ASAP News

ASAP’s Regional Chapters: Event Central

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

Collaborative Buzz

You are reading the Limited Edition of Strategic Alliance Magazine, the magazine of the Association of Strategic Alliance Professionals. The printed magazine is mailed free to all ASAP members and Sponsors and is also available as a paid subscription. The complete PDF is available to members by logging in to www.strategic-alliances.org For Membership and Sponsor information email membership@strategic-alliances.org or call +1-781-562-1630 ext. 200

Strategic Alliance Magazine

Quarter 4, 2011

Collaborative Buzz

Strategic Alliance Magazine

Quarter 4, 2011

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

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

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

our thanks

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

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

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

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

Strategic Alliance Magazine

Collaborative Buzz

Quarter 4, 2011

Strategic Alliance Magazine

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

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

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

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

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

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

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

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

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

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

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

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

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

Encourage Positive Behavior

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

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

Strategic Alliance Magazine

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

Quarter 4, 2011

One of the most important elements of a successful alliance is a robust governance structure: a configuration of committees, rules of engagement, escalation processes, and other predetermined ways of order that help organizations with different cultures and processes define how they are going to work together. Recently, ASAP Media convened a virtual panel of alliance professionals from a variety of industries to talk about the finer points of alliance governance.

Strategic Alliance Magazine

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The Alliance Management Career Path You are reading the Limited Edition of Strategic Alliance Magazine, the magazine of the Association of Strategic Alliance Professionals. The printed magazine is mailed free to all ASAP members and Sponsors and is also available as a paid subscription. The complete PDF is available to members by logging in to www.strategic-alliances.org For Membership and Sponsor information email membership@strategic-alliances.org or call +1-781-562-1630 ext. 200

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

Strategic Alliance Magazine

Recently I was in a meeting where a senior leader described another executive’s baffled confession to his alliance manager: “I know if I put you into the deal, it works, and if I take you out, it doesn’t. I just don’t know why.”

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Strategic Alliance Magazine

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Star Alliance Continues to Soar

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

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

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

You are reading the Limited Edition of Strategic Alliance Magazine, the magazine of the Association of Strategic Alliance Professionals. The printed magazine is mailed free to all Star Alliance has encountered several ASAP members and Sponsors and is also available economic downturns since its inceptionâ&#x20AC;&#x201D; as a paid subscription.

but none of these slumps disrupted its

The complete PDF is available to members by long-term growth significantly. logging in to www.strategic-alliances.org For Membership and Sponsor information email membership@strategic-alliances.org or call +1-781-562-1630 ext. 200

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Selected Products and Services for and from Strategic Alliance Professionals

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

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

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

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

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

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

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

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

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

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

Corporate Business Development Terms Contract Negotiation Negotiation

Evaluation of Potential Collaborations

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

Triage Business Case

Alliance Management Alliance Alliance Planning and Start-Up Organization

Implementation/ Value Creation

Transaction Preparation

DUE DILIGENCE

Source: Eli Lilly and Company

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

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

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

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

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

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

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

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

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

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

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

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

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

In partnership, there is strength

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

AnOffice Officeof ofEli Eli Lilly Lilly and Company Company An

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

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

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

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

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

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

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

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

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

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

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

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Pharmaceutical Companies, CMOs Still Refining Collaborations You are reading the Limited Edition of Strategic Alliance Magazine, the magazine of the Association of Strategic Alliance Professionals.

The printed magazine is mailed free to all ASAP members and Sponsors and is also available as a paid subscription.

The complete PDF is available to members by Success Depends on Whether Trust, logging in to www.strategic-alliances.org Transparency Can Be Manufactured For Membership and Sponsor information By Jon Lavietes and John W. DeWitt

email membership@strategic-alliances.org or call +1-781-562-1630 ext. 200 There is no dispute that strategic alliances are critical on the manufacturing side of the biopharma industry. For several years now, pharmaceutical companies of all sizes have found it economically prudent to rely on Contract Manufacturing Organizations (CMOs) for a wide variety of production needs in all phases of the drug development cycle. Over time, CMOs have snatched up manufacturing operations divested by pharmaceutical companies that no longer want the risk of maintaining expensive facilities for drugs that eventually may fail to make it to market. They have successfully built their own business models around these already fully equipped sites and are sharing risk with these facilitiesâ&#x20AC;&#x2122; former stewards.

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Strategic Alliance Magazine

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

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

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Why You Should Not Miss This Event!

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

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

Outstanding Speakers

Networking Opportunities

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

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

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

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

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

Strategic Alliance Magazine

2012 ASAP global Alliance Summit

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

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

2012 ASAP global Alliance Summit

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

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

Accommodations and Travel

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

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

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

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

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

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

See You at the Summit! 52

Strategic Alliance Magazine

Quarter 4, 2011

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

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

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

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

strategic alliance magazine | special focus | supply chain

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

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

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

Collaborative Buzz

Strategic Alliance Magazine

Quarter 4, 2011

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

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

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

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

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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.

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