Alliance portfolios: Designing and managing your network of business-partner relationships

Abstract

Executive Overview In today's networked economy, relationships with business partners are essential to a company's survival and growth, yet most companies are still struggling to design and manage their key partner relationships for long-term value creation. Most companies approach the design and management of their business partnerships by focusing on optimizing each individual alliance. This approach gives priority to meeting alliance-specific objectives and allocating resources based on the strategic importance of each partner. Typically, however, a company will be involved with several alliance partners, and sharing of information and knowledge across these alliances is rare. In addition, a company's alliances will often compete with one another, and with the internal organization, for limited resources. An emerging perspective is to manage alliances as a portfolio, and to understand how individual alliances impact each other and the internal organization. We offer a portfolio approach to alliance design and management that builds upon existing alliance research and practice, and offers a fresh perspective reflective of what is happening in today's business environment—networks of companies, both allies and rivals at the same time, collaborating in a dynamic and uncertain world. By understanding partners' alliance networks, thinking about potential future projects with each partner, and developing processes to share information and knowledge across alliances, this approach seeks to minimize areas of friction in the portfolio and leverage areas of synergy.