How to Collaborate with your Competitors for Continued Success
Why alignment of mindset, beliefs and values is critical to the ongoing success of a strategic alliance.
“Collaboration between competitors is in fashion”. That’s the first line of a Harvard Business Review article written 30 years ago (Collaborate with your Competitors – and Win, HBR, Jan-Feb 1989, Hamel, Doz & Prahalad). Over the decades, the number of strategic alliances between firms collaborating with another to build secondary markets, accelerate speed to market or innovate has doubled – possibly, tripled. A good example is the pharmaceutical industry.
Between 2000-2002, investment in global alliances in the pharmaceutical industry grew 75% reaching $US19B (Cortada & Fraser, 2006). Today, we continue to see alliances between competing organisations in the pharmaceutical industry as they each attempt to maximise their market share and leverage their unique specialisms.
Open Water has also witnessed an increasing number of alliances being formalised between our traditional banking clients and fintechs – the fast-growing financial technology firms. It’s a way for old-school banks to ‘become cool quickly’, speed up digital transformation and create easy, seamless experiences for a new generation of smart phone customers.
For fintechs, the collaboration signifies an opportunity for banks to adopt their services and introduce them as new features to a mainstream public of an existing customer base. This saves them costly customer acquisition. Together, they hope to be strong enough to defend their positions against “Big Tech’: Google, Apple and Facebook. To put it in context, the top five banks in Europe have 100 million combined customers; Facebook has 2.25 billion monthly active users and will be offering financial services in early 2019. In this scenario, successful alliances can mean the difference between survival or extinction.
Best-practice in alliance management
But not all alliances will succeed. There is research that suggests that 50% of alliances simply don’t make it. PwC analysed 50 alliances across nine industries and identified five stages of an ‘Alliance Lifecycle model’: Initiation, Formation, Growth, Maturity and ‘Reinvent/Decline/Exit. (PwC, 2014) They used interviews and data analysis to identify the critical elements that organisations were implementing, across the five stages of the lifecycle, to ensure a successful partnership. The resulting model would help establish best-practice in alliance management.
Strong personal relationships, effective leadership, good communication, building a team that embraces the vision, and forming a common alliance identity are all included as key success factors in the first two stages of the PwC model.
However, it’s one thing to recognise that these factors are necessary – another is making them happen.
When alliances underperform
In 2014, Open Water Development was brought on board to work with the Pfizer and Bristol-Myers Squibb alliance team. The alliance had been created to develop and commercialise an innovative new drug. The drug had had been on the market for a number of years but was failing to meet its expected market share. A new alliance leader from Pfizer was brought in to identify why it was under-performing. He quickly became aware that there was a disconnect between – and within – the leadership of the alliance. Everybody shared the vision and the mission. Everybody expected this product to do well. The problem was a misalignment about how to get there. Put simply, the alliance business team wasn’t working.
Mindset, beliefs and values
Mindset, beliefs and values are the foundation of identity. If an alliance is to start well and grow successfully the team needs to celebrate its differences. This is what creates the value-add and is the raison d’être of the collaboration. They must then focus on what unites the team so as to operate from a single team identity rather than cling to the identity of their legacy organisations.
Open Water set about creating a shift in mindset, purpose and identity to create a genuine collaboration that would see a step change in performance. Implementing methodologies founded in the principles of emotional intelligence and cultural change, we were able to help the alliance team members create an environment of trust and build a culture of winning. The results paid off; the alliance saw a step up in business performance as the projected $1 billion brand became a prospective $5 billion brand after just six months.
The alliance turns four
Fast forward to 2018. Many of the original BMS-Pfizer alliance team members have built on their success and taken their skills and knowledge elsewhere. Its leaders have moved on to effect change in other parts of the business. The vision and mission of the alliance are still shared but the people have changed. The alliance has new leaders, new team members and new ambitious targets to meet. Different relationships on both sides of the alliance mean different communication styles and beliefs could undermine the winning mindset they enjoyed as top performers.
What is becoming clear is that unlike many of the activities that PwC identified within each stage of their Alliance Lifecycle, building trust, realigning values and beliefs doesn’t just happen in one stage and then never again. Rather they need to overlay each of the stages, each one building on the first.
Working with Open Water over the last few weeks, the new leaders of the BMS-Pfizer alliance have quickly established the importance of creating a unified identity: one team, ‘one alliance’ . And more importantly, how to achieve it.
Secrets of a happy alliance
Alliances are often aptly described as marriages. When two people leave their families to create a new one of their own, they still respect and have feelings of loyalty to their parents and in-laws. But if the relationship is going to thrive, the new spouses will need to recognise they now have new priorities. They’ll fend off the expectations, demands and judgements made by the in-laws. They’ll bring to the table only the best of their family traditions and themselves – with a focus on their new family goals and future.
Today, the BMS-Pfizer alliance have re-aligned their mindset, beliefs and values and re-affirmed their identity as ‘One Alliance’. There is no doubt in my mind that they are setting themselves up to continue growing and outperforming their targets. By continually aligning mindset, purpose and beliefs, collaboration between competitors can win – and stand the test of time.
Read how Open Water helped bring two contrasting organisations together through shared mindset and values to achieve extraordinary performance.
To talk about how to help your team alliance achieve extraordinary performance, contact Open Water.