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Corporate alliances are taking the world by storm. In a satellite interview in January 1998, arranged by Fortune and the American Productivity & Quality Center (APQC), I facilitated a roundtable that included chief executive officers and senior executives from 3M, Chrysler, SAP, Graybar, and Amoco among others. The general consensus was that by the year 2000, up to 30 percent of the revenues of most large companies would come from new alliances. For the smaller companies, such as Net Explorer, up to 80 percent of revenues were seen to come from these relationships.
Fueling the fire, a recent study by Coopers & Lybrand showed that firms involved in alliances had 11 percent higher revenue and a 20 percent higher growth rate than companies not engaged in alliance activity.
These statistics indicate that alliances have become a crucial weapon in the battle for competitive edge. Increasing competitive pressures make it imperative that companies develop new strengths and deliver products and services quickly and at a lower cost. Strategic alliances allow companies to develop products and rapidly expand their markets while managing risk and costs through sharing resources.
While the need for and use of alliances is apparent, the road to successful partnerships is often a minefield. In spite of their popularity, the rate of alliance success is dismal. An alarming 55 percent of alliances and 78 percent of mergers and acquisitions fall apart within three years of conception. And, only 23 percent recover the costs of walking down the corporate aisle.
Recognizing the dramatic impact alliances have on organizational success, APQC recently conducted an independent benchmarking study of marketing and sales strategic alliances. The team managing the study included representatives from APQC and each of the ten sponsoring organizations. After a worldwide search for alliance experts, The Lared Group was selected to design the study, assist in the selection of the companies to be studied, and provide the team and corporate sponsors with subject matter expertise on alliances in all industries.
Many companies have overcome the odds of alliance failure and routinely create successful alliances of varying sizes and types. Four in particular-Lotus Development Corporation, Oracle Corporation, Starbucks Corporation, and USAA-were selected to be the focus of the study of best practices. Through strategic alliance planning...