Right from the Start: The Seven Virtues of a Successful Alliance Launch

The importance of alliances is unquestionable. In a cross-industry study by United Nations University and others, executives predicted that alliances will be responsible for, on average, more than 60% of their company’s market capitalisation by 2013 (deMan et al., 2009). From pharmaceuticals to software to petrochemicals, alliances are an increasingly significant strategic tool – one with the potential to contribute all along industry value chains. Moreover, alliances generally enable faster deployment than internal initiatives without the capital commitment and many of the risks associated with acquisitions.

Not surprisingly, many leading companies have explicit alliance-centric strategies. In 2000, Eli Lilly & Company’s addition of an alliance section to its annual report was unusual. Less than ten years later, such sections are common and, in some industries, required. Proctor & Gamble is aggressively pursuing its connect + develop SM approach, which makes clear the central role for external partnerships and alliances, and SAP touts its ‘ecosystem strategy’ as core to its competitive advantage.