The ICA Process for Developing a Successful Strategic Alliance

The ICA Model

Introduction

The ICA Process for Developing
a Successful Strategic Alliance

Definition

An alliance can best be described as a close association of groups, formed to advance common interests or causes; a connection based on common interest; a bond or tie. In today's business, this translates to an alliance, joint venture, merger or acquisition-all alliances with varying degrees of responsibility.

The Institute

In the fall of 1999, Dr. Thomas Ollerman began researching the failure rate of strategic alliances. The research described significant failures among very large corporations that resulted in financial losses of millions and sometimes hundreds of millions of dollars. Dr. Ollerman began to assemble a team of core principals and associates who could help organizations create more successful strategic alliances.

Today, Scott A. Romeo, MA and Hovey M. Tyndall, along with Dr. Ollerman, are the Senior Partners at the Institute for Collaborative Alliances. Approximately twenty associates from throughout the world are committed to helping organizations create and manage strategic alliances.

The research conducted by the Institute indicates that many strategic alliance failures are due in part to the following: 1) The deals are primarily put together by the financial experts who fail to look at the corporate and country cultures involved; 2) The alliance partners expect immediate return on their investment without trying to further develop the relationship, and once the alliances are formed, they often fail to adequate manage the alliance; and 3) Neither side conducts thorough assessment of each other's cultural (country and/or corporate) differences nor do they continue to explore opportunities as they arise.

The Solution

Following nearly ten months of research, the Institute has developed a four-phase model designed to help companies develop successful strategic alliances.

Phase One Diagnostic Assessment (4-6 Weeks)

Throughout months of research, ICA learned that in many instances, neither side fully evaluated the other side with regard to cultural issues. An excellent example of this can be found in the June 5, 2000, Business Week article entitled, "How the Daimler Chrysler Marriage of Equals Crumbled: Taken for a Ride." Using the ICA assessment tools and the model that the Institute has developed, the partners believe ICA could have been instrumental in identifying, consulting and facilitating alternatives with approximately 85% of the issues.

In order to establish a more successful alliance, it is imperative that a corporate diagnostic assessment be conducted on each organization involved in the alliance in order to determine potential compatibility issues. Each diagnostic assessment is customized based upon the characteristics of the organization, and the goals of the alliance. These assessments are completed by highly qualified and experienced ICA corporate analysts.

A diagnostic assessment typically includes a review of the following areas:

Corporate

Cultural

Financial

Strategic

Operational

The following organizational elements are assessed as related to an alliance:

Leadership Quality

Teams Strategic Planning

Finance Sales

Competitive Intelligence Management

MIS & Technology Customer Service

Human Resource Allocation Organizational Issues

Intellectual Issues Facility Utilization

Marketing Corporate Culture

Inventory Country Culture

Cycle Time Adaptability to Change

Stakeholder Impact Innovation

Strategic Alliance Issues

A complete diagnostic report is provided at the conclusion of Phase One of the project. This report will contain valuable information concerning the organization in general, and the relationship of the findings to the actual alliance.

Phase Two Development (12-16 Weeks)

After a corporation receives its Diagnostic Assessment and decides to continue with its alliance plans, the internal developmental strategy becomes critical to the success of the venture. Throughout Phase Two, ICA's staff will work individually with each side to assist with developing an initial plan, which includes Critical Success Factors, monitoring and evaluation measures, an exit strategy, and the creation and training of the implementation team that will be used in Phase Three.

Throughout the course of 12 to 16 weeks, ICA staff will guide two leaders, selected from each organization, and their transition team, as they learn about the country and/or corporate cultures of their partner and some of the working styles of their counterparts. Examples include reading about country cultures, learning negotiation techniques, studying the other organization, and making all of the preparations for Phase Three, Integration, where both sides will begin meeting at various functional levels and begin working together.

Working with the ICA consulting staff and their leadership assessment and facilitation processes, the two organizational leaders will:

Support the Visionary Plan by providing feedback to other executives regarding any changes, adjustments, or requirements of the alliance.

With the support of the executive leadership body, be responsible for the design and development of the Alliance Integration Plan to be addressed in Phase Three.

Develop, implement and measure the impact of the internal communication system designed to inform the rest of the organization about the progress of the alliance in a frequent and time relevant manner.

Information and assistance from ICA during this phase will help identify internal barriers to either collaborative efforts, provide country-specific culture profiles of their alliance partner's country, i.e., specifically, how business is conducted there, assess the recommended key senior executives who will lead the Transition Organization, train the transition teams necessary for Phase Three, and assist in the development of the Critical Success Factors desired from the alliance.

Phase Three Integration (24-48 Weeks)

The intent of Phase Three is to develop an Integration Plan that is mutually agreed upon by both alliance partners.

The success of any integration between two or more organizations is contingent upon the proactive knowledge and thoroughness of thought accumulated in Phase Two. Although this phase is the longest of the four phases (24-48 weeks), it is also the phase requiring the most intensive, face-to-face interaction between the alliance partners. It is during this phase that detailed preparation accumulated in Phase One (Assessment) and Phase Two (Development) comes to the forefront.

The greatest challenge in Phase Three is for the alliance partners to mutually agree upon the Critical Success Factors upon which each partner would like to be measured. This should not only be a listing of these factors, but more importantly, the identification of whom will be accountable for the successful achievement of each factor within each partnered organization.

Two issues need to be addressed during this phase: The first is the development of the necessary communication system between each partner's organization. This will include key personnel from the executive levels down to team members within a facility responsible for completing alliance-related tasks. The second critical issue is to create a plan to integrate the "lessons learned" during this integration process back to each of their existing corporate cultures in order to achieve other successful alliances in the future. Future partners will look for prospective alliance partners who have been successful in the past and can adjust their corporate cultures to the requirements of a new alliance.

Since ICA will have completed country and organization-specific profiles on each partner in the alliance, our role in Phase Three is to support, clarify, and facilitate the integration process between the alliance partners. This would include assisting to negotiate differences between each organization, evaluating critical success factors, measuring desired results, or any cultural misunderstandings occurring during the integration process. ICA will always remain committed to their mission of independent objectivity and strive toward a mutual acceptance of the alliance by all partnering organizations.
Phase Four Evaluation (6-8 Weeks)

The benefits of measuring, tracking and evaluating an alliance process provides invaluable information to each alliance partner.

Phase One (Assessment) data provides ICA and the alliance partners with pre-alliance information, which is repeated during the alliance process in order to assess, in real-time, individual, team, organization and culture changes as they occur. This facilitates the interventions, which, if ignored or postponed, would prove to be very costly for both alliance partners.

A variety of methods can be used to collect evaluation data such as personnel surveys, interviews, focus groups, discussions and informal conversations, records, exit interviews, industry benchmarks, and post assessments of previous measures collected from the organization diagnostic assessment completed in Phase One. These might include post-assessments and reviews of:

Organization-specific Profiles

Individual Value Assessments

Organization Value Assessments

Negotiation Style Assessments

360-degree comparisons of Transition Organization's leadership

Executive Emotional Intelligence

Alliance Leadership Competencies Assessments

The need to record evaluation data during the alliance enables all alliance partners to assess their organization's "lessons learned", which in turn, creates an incentive for other organizations to partner with them in the future when new opportunities arise.

A more subtle benefit due to assessment and feedback is that by participating in an alliance process, leaders of tomorrow will be better educated and prepared to lead organizations into the future. The need to form successful alliances will become a requirement of organizations that wish to become or remain globally competitive.