Managing Alliances ( A typical example given)

Excerpts from the HBR dated feb-2010.

Recent study by mckinsey stated only half of all the joint ventures succeed. that is they get the returns above the cost of capital. an alliance usually starts with service level agreements(SLA'S). they focus on the contributions only & not what each side gets.
now comes the balanced scorecard(BSC) mngmt system which focuses from contributions,operations and to strategy management. now i will give u a typical example of SOLVAY PHARMACEUTICALS which adopted BSC tool to manage their alliance and reduced the total cycle time by 40%.

Solvay is a top pharmaceutyical company . it has to incur over $1billion to successfully bring its products into market. their usual process is to give clinical trials to patients,health care organnizations and physicians. they have less advantage in these areas. so they thought they would outsource the managemnet of all clinical trial to a single partner. they chose QUINTILES(an existing supplier) to perform all stages of its clinical procrsses. it has a good history in developing and marketing pharma products. they had a preferred relationship. solvay outsourced in return for reductions in quintiles normal prices. the 2 companies formed a ajoint clinical team. a joint development made milestones,good progresses.
the initial 5 yr contract went well. it had to renew its contract in 2006 . quintiles faced some problems because many work form solvay were outsourced. senior executives of two compnaies had to commit to alliance strategy and had to negotiate.
they knew from the previous studies about the likely shortfalls in alliance outcomes & identified the following problems it had to overcome.

THE COLLABORATION THEME SCORECARD
1.PROCESS OBJECTIVE
2.JOINT WINS
3.METRICS
4.INITIATIVES

in a nutshell, these would include
1.focussing on the contractual terms of the alliance
2. spending more time and efforts selling the alliance internally
3.concentrtaing more on alliance .

both had a BSC internally. they though it wud address all those issues. they though of preparing BSC together to have consensus on and alignment with the goals of the alliance.

BSC(an overview)
The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.

following BSC practice, they appointed a consultant to sort out few things . they came with 5 strategic themes

LIVING THE ALLIANCE(right culture,communication,trust et al)
COLLABORATION( making best use of resources)
SPEED AND PROCESS INNOVATION(leveraging global expertise)
GROWTH(improving investment mngmt and create new products)
VALUE FOR BOTH THE ORGANIZATION

they also drew alliance strategy map which involves

EMPLOYEES & ORGANIZATION (EXECUTING)
BUSINESS PROCESSES(THAT DELIVER)
CUSTOMER VALUE(WHICH DRIVES)
STAKEHOLDER OUTCOMES.

the project team had converstions with the joint streering committees(JSC) from both the companies.. they discussed lot of things which included
1.alliance progress
2.relationship issues et al.

THE PAYOFF
the new approach had yielded impressive results.it reduced thye total cycle time to 40%. it saved time,money et al.it improved service,new revenue oppurtunities,delivering alliance strategy et al.