Why strategic alliances fail
Strategic alliances may fail if a transactional mentality prevails among top management, meaning that leaders focus on extracting value from the alliance instead of creating mutual value. However, creating mutual value is the very purpose of an alliance.
To avoid this problem, leaders must design the alliance wisely to make it flexible and ensure it can subsequently be dissolved without a fight.
What really inhibits cooperative behaviour are the transactional aspects of ownership and control. If managers claim to be collaborating, but in reality only care about the benefits for their company, the alliance will not go well.
Mutual dependency
When thinking about forging a strategic alliance, companies need to consider whether there is a fit in terms of strategy, organisation, resources and culture. An alliance is always formed with the intention of changing the economic status of partners. This brings a certain strategic dependency and also requires regular adjustments in governance and processes for the alliance to remain successful and fruitful.
If partners change, the alliance must change too
Strategic alliances are very important nowadays as they enable swifter responses to changing market conditions and the need for innovation. When two companies collaborate, it may be easier for them to craft a strategic advantage. However, these partnerships should be routinely revisited. That is the only way to ensure they are still creating value for the parties involved. Revision helps to find out whether benefits are distributed evenly, according to an article on the website of the INSEAD business school.
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