To Partner or Not to Partner: Best Practices for Making a Decision to Ally

by Renee Jansen

As organizations seek new ways to generate value, they are confronted with the question of how best to do so. Do they build up capability internally? Acquire capability through a merger or acquisition? Ally with other organizations through partnerships?

In order for organizations to make high quality decisions, the process of making this determination must be systematic and well managed. Too often, however, we see alliances formed opportunistically — a possible partnering deal presents itself and a business unit jumps on the chance to form an alliance. While many of these partnerships add value to a company’s bottom line or meet its goal in some other way over time, many end up floundering because the partnership was not connected to the overall strategy of the organization. The internal decision to build a new capability, acquire a company, or form an alliance relationship is an important one. The following presents four considerations for making the right decision: (1) understanding the fundamental differences (and advantages) of the different options, (2) employing a systematic approach to assessing the factors that impact which option is most suitable, (3) including the appropriate decision-makers in the process of assessing and agreeing on an option, and (4) considering the portfolio implications of a decision to partner.