alliance transformation webinar

Brighton Landing West 10 Guest Street Boston, MA USA 02135 www.vantagepartners.com

This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, or in any form or by any means, electronic, mechanical,photocopying, recording, or otherwise, without prior written permission. Copyright © 2012 by Vantage Partners, LLC. All rights reserved.

Transforming

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1Copyright © 2012 by Vantage Partners, LLC. All rights reserved.

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About Vantage Partners

� Expertise in building organizational negotiation and

relationship management capability

� Over twenty-five years of experience training and

consulting to Global 500 companies

� Recognized thought leaders

√ Three-year study on Alliance Management

√ Cross industry study of SRM best practices

√ Instructors at Harvard, Tuck and West Point

√ Authors of Getting to YES: Negotiating Agreement

Without Giving In & Difficult Conversations: How

to Discuss What Matters Most (New York Times

bestsellers)

√ Authors of articles in the Harvard Business Review and

Sloan Management Review

� Leaders in international dispute resolution through

CMG Conflict Management Group

√ New Constitution in South Africa

√ Arias Peace Accords in Central America

� Discuss together what transformation is, what triggers it, and

what Alliance Management’s role is

� Share some case studies illustrating best practices with respect to

alliance transformation

Today’s webinar


� When you hear the term “Transformation” what do you think of?

(click all that apply)

� Putting in place new operating protocols on an alliance

� Re-structuring and / or re-staffing the governance structure

� Terminating an alliance

� The film Transformers – Robots in Disguise

Poll


All of the above!

Correct answer?!

Copyright © 2012 by Vantage Partners, LLC. All rights reserved. 5

� Transformation: creating a new strategic and operational

context for an alliance

� May include:

� Changes to governance structure or membership

� New strategic direction for the alliance

� New or revising sets of operating protocols

� Alliance termination

� Effective transformations are efficient and collaborative, with a

focus on preserving the working relationship

What is transformation?


� Transition in the lifecycle of the alliance, e.g. from development

activities to commercialization

� Significant changes in personnel at either company

� A merger or acquisition impacts the structure and resourcing of

one partner

� Technical failure

� The business case is impacted by changes in the marketplace or

legal or regulatory rulings

� Alliance dysfunction sub-optimizes performance

� Poor health check results indicate a need for change

Why transform?


� Anticipate or identify jointly with the alliance partner when

transformation might be necessary

� Facilitate discussion and a decision on how the alliance might

change

� Drive creation of an implementation plan that will adapt the

alliance appropriately

� Drive execution of that plan

� Check in on the status of the alliance post-transformation as

appropriate

Alliance Management’s role


For those anticipating some type of transformation on their

alliance, what do you think will cause the need to transform?

� Transition in the lifecycle of the alliance, e.g. from development activities

to commercialization

� Significant changes in personnel at either company

� A merger or acquisition will impact the structure and resourcing of one

partner

� Technical failure

� The business case will be impacted by changes in the marketplace or legal

or regulatory rulings

� Alliance dysfunction will sub-optimize performance / a recent health check

suggests a need for change

Poll


Managing Transformation: Case Studies

� After settling a highly contentious litigation, the alliance was

left battered and with a new product to include going forward

� There was a deep lack of trust on the alliance at every level of

the governance structure

� Inclusion of a new product in the alliance created open

strategic issues as well as a need to develop and operationalize

new information-sharing agreements

Case Study 1:

Reviving an alliance post-litigation

Case

Study 1

Case

Study 2

Case

Study 3

Case

Study 4


Alliance was plagued by deeply held

partisan perceptions

Some at ACME believe MetCo…Some at ACME believe MetCo…

� Is greedy and risky

� Is unduly critical, without the expertise

and experience to back up their

assertions

� Over-inflated the value of certain

markets

� Received a disproportionate amount of

value in the settlement (i.e., that MetCo

“won” and ACME “lost”)

� Acts out of financial motivations and

not with the consumer’s best interests

in mind

� Lacks integrity

� Is greedy and risky

� Is unduly critical, without the expertise

and experience to back up their

assertions

� Over-inflated the value of certain

markets

� Received a disproportionate amount of

value in the settlement (i.e., that MetCo

“won” and ACME “lost”)

� Acts out of financial motivations and

not with the consumer’s best interests

in mind

� Lacks integrity

Some at MetCo believe ACME… Some at MetCo believe ACME…

� Is too bureaucratic and conservative

� Over-inflates its own internal expertise,

and is unwilling to listen to viewpoints

from MetCo

� Doesn’t appropriately prioritize the

alliance within its portfolio

� Deliberately hides information and puts

up hurdles to activities and decisions

that they do not support

� Wasn’t truthful about the development

of [Product]

� Lacks integrity

� Is too bureaucratic and conservative

� Over-inflates its own internal expertise,

and is unwilling to listen to viewpoints

from MetCo

� Doesn’t appropriately prioritize the

alliance within its portfolio

� Deliberately hides information and puts

up hurdles to activities and decisions

that they do not support

� Wasn’t truthful about the development

of [Product]

� Lacks integrity

Case

Study 1

Case

Study 2

Case

Study 3

Case

Study 4


Final

Report

Out

End of

June

Final

Report

Out

End of

June

Solution:

Re-launch alliance over a six month period

Core Re-Launch ActivitiesJan. - June

Within and Across Internal andJoint Committees and Teams

Key Short-Term Activities

� Operationalize governance structure� Kick off the partnership and

conduct contract briefing

� Re-form governance committees; conduct initial meetings

� Kick off data exchange working group

� Relationship diagnostic� Conduct broad and deep

interviews of individuals in both ACME and MetCo

� Define relationship needs and identify key challenges

� Develop recommendations

� Develop overarchingre-launch plan

Vision and GoalsVision and Goals

Monitor and OptimizeJuly – Dec

MetCo and ACME are well-equipped to:

� Resolve complex issues

� Find efficiencies

� Continue enhancing relationships and operations

� Assess progress and course-correct

Governance / Decision-MakingGovernance / Decision-Making

Joint Planning & ScorecardingJoint Planning & Scorecarding

Working Together Protocols and IncentivesWorking Together Protocols and Incentives

Internal AlignmentInternal Alignment

Relationship Issue Resolution /Skill DevelopmentRelationship Issue Resolution /Skill Development

Electronic Collaboration SpaceElectronic Collaboration Space

Case

Study 1

Case

Study 2

Case

Study 3

Case

Study 4


� It isn’t just about the people! Re-staffing the governance structure was a

critical first step, but not sufficient by itself. Essential to re-operationalizing

the alliance:

� Re-chartering committees

� Aligning on committee and team goals

� Implementing operating norms, was essential as well

� Alliances need leadership. Empowering governance committees to act as

true leaders on the alliance, and ensuring they provide clear expectations,

while even using informal incentives to inspire collaborative behavior, was

effective

� A re-launch isn’t just a meeting. The full re-launch needed to be viewed as

a process, with a defined period of time, a set of deliverables and activities,

and a group of people responsible for overseeing and owning the effort

Key takeaways


Case

Study 1

Case

Study 2

Case

Study 3

Case

Study 4

� An alliance between a European-based pharmaceutical company and a US-

based biotech was approaching commercialization, but there was a sense

of malaise and some underlying frustrations. The Alliance Managers didn’t

feel a full-blown re-launch was necessary or warranted, but wanted to

understand why there was a lack of enthusiasm and a general sense of

frustration

� To better understand the lack of enthusiasm the team conducted a health

check. Results confirmed the feelings of detachment and, in addition,

brought to light additional challenges that had been creating frustration

� The health check survey results, combined with follow-up conversations

with key stakeholders, also allowed the Alliance Managers to develop a set

of specific recommendations going forward. These were presented at a

“Refresh Meeting”

Case Study 2:

Refreshing an alliance

Case

Study 1

Case

Study 2

Case

Study 3

Case

Study 4


Category

TotalAverages

CommitteeAverages

Working GroupAverages

ACME BigPharma ACME BigPharma ACME BigPharma

1. Strategic Value 4.87 3.93 4.67 4.15 5.06 4.21

2. Value Enhancement 4.34 4.04 4.22 4.25 4.12 3.35

3. Relationship Quality 4.32 3.88 4.50 4.30 4.14 3.22

4. Operational Effectiveness 4.18 3.88 4.11 3.86 4.17 3.18

Health check results and quotes

“Decisions seem to have been slow in coming

forward. This may be due to differences in

internal governance and structure. ”

“The committees seem to make decisions without all the right information – it’s the working group members that are the experts!”

“We need to build an understanding of the partner’s organization structure and how all the parts fit together.”

“It isn’t clear how we’re making decisions,

and sometimes it isn’t even clear what the

decision is!”

Case

Study 1

Case

Study 2

Case

Study 3

Case

Study 4


Some key challenges and

recommendations identified

Challenge Recommendation

Lack of clarity around how decisions are

made on the alliance

Clarify and determine decision-making roles for all

key decisions, and publicize the roles of different

committees and teams on the alliance SharePoint

site

Perception that BigPharma’s internal

organization is overly complex and

slows down work on the alliance

Provide an overview of each organization’s

governance structure, and clarify the extent to which

internal consultation needs to occur on alliance

decisions so that the time needed to do so can be

taken into account and planned for

Sense that committees make decisions

without fully leveraging subject matter

experts on the working teams

Provide a presentation on each organizations subject

matter expertise and develop a process for review of

all key deliverables and decisions so that expertise is

fully leveraged

Case

Study 1

Case

Study 2

Case

Study 3

Case

Study 4


� Yearly check-ups keep you healthy! Even though there were no

apparent, serious problems on the alliance, a health check helped

identify underlying issues that, if not addressed, may have

impacted execution going forward

� Don’t fix what isn’t broken. A full re-launch isn’t the only way to

help an underperforming alliance. In this case, identifying a few

acute issues and addressing them was all it took to make an

impact

� Simply getting the alliance team together, with the alliance

leadership, and having leadership emphasize the importance of

the work was enough to re-build excitement

Key takeaways


Case

Study 1

Case

Study 2

Case

Study 3

Case

Study 4

� Following regulatory action, the strategic focus of a co-marketing

alliance changed to exclude one key product, leaving a product

for which the patent was to expire in 18 months

� The quality of the alliance relationship felt less critical (and

alliance had become significantly less valuable for one partner).

At the same time, there was still significant value to be extracted

from the relationship prior to termination

� A small task force was convened to review the latest health check

and make some moderate, easily implementable steps

� Scorecard with key operational goals

� Relationship protocols

Case Study 3:

Living in a terminal alliance


Case

Study 1

Case

Study 2

Case

Study 3

Case

Study 4

Cross the finish line together!


� Give your partner something good to remember you by! Partners

were motivated to terminate on good terms out of interest in

possible future partnering opportunities

� Even when an alliance is at the end of its life, resources devoted

to enhancing the collaboration can make an impact — the

partners took a critical look at what was implementable given

limited resources, and this made a difference

� Don’t ignore your alliance when it’s most in need! Termination

activities themselves can create a need for close alignment and

joint conflict management approaches

Key takeaways


Case

Study 1

Case

Study 3

Case

Study 2

Case

Study 4

� A large pharmaceutical company with over 90 alliances, both development

and commercial, regularly reviewed and reprioritized its portfolio of

alliances, often resulting in a need to terminate some alliances. The

company had no systematic way of actually transforming those alliances,

leading to drained resources and wasted time

� There was no consistent approach to making the determination to

transform and implementing the transformation

Case Study 4:

Building the capability to transform alliances

22

Case

Study 4

Case

Study 2

Case

Study 1

Case

Study 3

Dimension Category Metric Sub-metric Metric Value Target Trend Status

Strategic Value

Joint and Individual

strategy / objectives

Innovation

Strategic fit

Partner survey:

Strategic value

Financial Value

Value

Revenues

Costs

Partner survey:

Financial value

Partnership Capability

Governance

Partner survey:


Partner survey:

Partnering Image

Operational

Effectiveness

Timelines

Quality

Partner survey:

Operational

Effectiveness

Alliance Z scorecardDimension Category Metric Sub-metric Metric Value Target Trend Status

Strategic Value



Innovation

Strategic fit

Partner survey:

Strategic value

Financial Value

Value

Revenues

Costs

Partner survey:

Financial value


Governance

Partner survey:


Partner survey:

Partnering Image

Operational

Effectiveness

Timelines

Quality

Partner survey:

Operational

Effectiveness

Alliance Z scorecard


Strategic Value



Innovation

Strategic fit

Partner survey:

Strategic value

Financial Value

Value

Revenues

Costs

Partner survey:

Financial value


Governance

Partner survey:


Partner survey:

Partnering Image

Operational

Effectiveness

Timelines

Quality

Partner survey:

Operational

Effectiveness

Alliance Y scorecardDimension Category Metric Sub-metric Metric Value Target Trend Status

Strategic Value



Innovation

Strategic fit

Partner survey:

Strategic value

Financial Value

Value

Revenues

Costs

Partner survey:

Financial value


Governance

Partner survey:


Partner survey:

Partnering Image

Operational

Effectiveness

Timelines

Quality

Partner survey:

Operational

Effectiveness

Alliance Y scorecard


Strategic Value



Innovation

Strategic fit

Partner survey:

Strategic value

Financial Value

Value

Revenues

Costs

Partner survey:

Financial value


Governance

Partner survey:


Partner survey:

Partnering Image

Operational

Effectiveness

Timelines

Quality

Partner survey:

Operational

Effectiveness

Alliance X scorecardDimension Category Metric Sub-metric Metric Value Target Trend Status

Strategic Value



Innovation

Strategic fit

Partner survey:

Strategic value

Financial Value

Value

Revenues

Costs

Partner survey:

Financial value


Governance

Partner survey:


Partner survey:

Partnering Image

Operational

Effectiveness

Timelines

Quality

Partner survey:

Operational

Effectiveness

Alliance X scorecard


Strategic Value



Innovation

Strategic fit

Partner survey:

Strategic value

Financial Value

Value

Revenues

Costs

Partner survey:

Financial value


Governance

Partner survey:


Partner survey:

Partnering Image

Operational

Effectiveness

Timelines

Quality

Partner survey:

Operational

Effectiveness

Alliance Acme scorecardDimension Category Metric Sub-metric Metric Value Target Trend Status

Strategic Value



Innovation

Strategic fit

Partner survey:

Strategic value

Financial Value

Value

Revenues

Costs

Partner survey:

Financial value


Governance

Partner survey:


Partner survey:

Partnering Image

Operational

Effectiveness

Timelines

Quality

Partner survey:

Operational

Effectiveness

Alliance Acme scorecard

Alliance

Review Meeting

Copyright © 2012 by Vantage Partners, LLC. All rights reserved.

Developing a function-wide approach

23

Case

Study 4

Case

Study 2

Case

Study 1

Case

Study 3


Transform Guide:

Step by step guidance

24

Case

Study 4

Case

Study 2

Case

Study 1

Case

Study 3


Transform Guide example tool:

Guidelines for Terminating an Alliance Case

Study 4

Case

Study 2

Case

Study 1

Case

Study 3


� The Guidelines for Terminating

an Alliance provides guidance on

the key things to keep in mind

when terminating an alliance and

ensures that the alliance

management function across the

globe is able to leverage the key

lessons learned from past

experience

� The guide has multiple tools like

this, and each can be updated

over time to truly develop a best-

in-practice approach

� Avoid zombies! Approaching alliance transformations in a

systematic way allowed for identification of best practices and

the ability to perfect the process over time, while ensuring

alliances never became the living dead

� Enhance your brand. It was important for this company to be

viewed as a partner of choice, and making an explicit decision to

work to preserve the relationship, even when terminating

alliances, helped preserve its reputation

� Actively manage change. Many people are afraid of changes, but

putting place a diagnostic process allows you to have those

difficult conversations and be proactive about portfolio upkeep

Case Study 4:

Key takeaways


Case

Study 4

Case

Study 2

Case

Study 1

Case

Study 3

Questions?



The Vantage Partners Alliance Webinar Series

� Watch webinar presentations from

every element of the Vantage

Alliance Management Model by

clicking on the part of the lifecycle

that you’d like to learn more about

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management from industry experts

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alliance counterparts

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quarter!

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Vantage Partners

A spin-off of the Harvard Negotiation Project,

Vantage Partners helps companies achieve

breakthrough business results by transforming the way they

negotiate with, and manage relationships with, their

suppliers, customers, and alliance partners.

10 Guest Street

Boston, MA 02135

T: +1 617.354.6090

F: +1 617.354.4685

Renee Jansen, [email protected]

Patrick Petitti, [email protected]

www.vantagepartners.com


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