The modern era demands rapid development. But to create a timely solution that meets demands, companies need a network of long-standing partnerships they can rely on.
So ... should an alliance manager invest in long-term relationships, or seize revenue opportunities and develop partnerships as needed?
It’s a real question, and it deserves a thorough answer.
We brought in Ard-Pieter de Man, Professor, and Researcher at Vrije University in Amsterdam, on the #AllianceAces podcast — hosted by Chip Rodgers, VP Marketing and Alliances at WorkSpan.
Here’s what Ard told us about the tradeoffs in long-term alliance management and opportunistic alliance management:
The Differences Between Long-Term & Opportunistic Alliance Management
People use the terms ecosystem, partnership, ecosystem manager, and alliance manager interchangeably, and this has created some confusion.
Here’s what Ard said:
Essentially, there are two distinct types of ecosystems:
Online ecosystems
These are usually found in more IT-related industries and are heavily impacted by customer demands of rapid development. (An IT or cloud firm, such as IBM, will likely be in this category.)
Portfolio-type ecosystems
These are the more traditional, longstanding alliances that exist between two or more entities. (You will find these partnerships in big pharma.)
Why the distinction matters:
Within a more portfolio-type ecosystem, the role of the alliance manager is more traditional. Their goal is to continually maintain and improve the relationship (similar to an account manager-mindset).
However, in an online ecosystem, an alliance manager must be more strategic and more entrepreneurial and seize fast-moving opportunities. Here, a manager must adapt to the quick in-flow and outflow of alliances and partnerships.
There will always be a need for longer-term alliances: In many relationships, the more you invest in them over time, the more is possible. At the same time, you have to move quickly in today’s environment.
3 Types of Business Models Found Within Alliances
Besides understanding the differences between the two types of management styles, you want to understand the underlying business model you will be following within an alliance. Ard and his team have extensively researched alliances, and they have identified 3 types of business models with them:
1: Scale
This type of business model is all about cost-savings, optimization, gaining network effects.
2: Economies of skill
Here, it’s all about innovation. A partnership under this business model was created to combine the skills of (at least) two different partners to create a new offering in a market. You see this a lot in IT: One partner has the hardware, another has the software, and a third has the implementation skills.
3: Optimizing for risk
You will find this in industries where the development phase is high-risk, especially in pharma, where drug development is very expensive. There are so many compounds that may or may not lead to a marketable drug.
When entities enter into an alliance within this category, they are wondering:
Which party is best at taking on certain risks?
Every Alliance Should Start by Optimizing One Area: Scale, Skill, or Risk
You won’t be able to tackle all three business models at once — decide which of the three (scale, skill, risk) is most important. You can always move to another area of the relationship later.
1 Last Piece of Advice From Ard: Do Your Homework
Ard is a professor, so his last tip was fitting:
Do your homework.
Because everything moves so quickly in solution development, it is tempting to rush to seize opportunities without understanding what the goals of the relationship are.
In reality, we should do the opposite: We must understand what ecosystem management really is, our strategy on tackling it, and what style each alliance will require.
To hear this episode, and many more like it, you can subscribe to the Alliance Aces Podcast, or visit our dedicated Alliance Aces page.
AAC Podcast: Ard-Pieter de Man, Professor and Researcher at Vrije University in Amsterdam -- Live from #ASAPSummit • Video
WorkSpan Community
Ard-Pieter de Man: Long Term Vs. Opportunistic Alliance Management - Alliance Aces Community. To contact the host, Chip Rodgers, with topic ideas, suggest a guest or join the conversation about alliances, he can be reached by:
- Email: chip@workspan.com
- Twitter: @chiprodgers
- LinkedIn: linkedin.com/in/chiprodgers
