The principle of Quick-Connect Capabilities applied to alliances: many practical ways to start and stop collaborations in a short time.

1. Alliance experts
Quick-Connect Capability in Alliances
Alfred Griffioen
Introduction
In the last decades, the intensity of competition has
increased rapidly. The greater availability of
information is making it easier for customers to
compare products and prices, for competitors to
copy new technology and for shareholders to find
more lucrative investment projects. Entrepreneurs
and companies will need even more competencies to
survive and it is hard to develop these all on your
own. That is why collaboration is the key word today.
However, collaborations imply negotiating about prices, specifications and
responsibilities, and safeguarding prompt delivery. Companies will strive to have
low transaction costs by for example drafting framework contracts and automating
their interfaces with their business partners. But these actions usually result in high
switching costs: it becomes harder to end a relationship and start a new one.
In order to achieve both low transaction costs and low switching costs, companies
will have to develop a capability in establishing, managing and ending business
relationships. This quick-connect capability can be based on learning from previous
relationships, best practices and process standardisation. It's all about the question:
how can companies perform better in strategic alliances and networks?
How Network Ready is your organisation?
The ability to perform as an organisation in networks and strategic alliances is your
Network Readiness. In my view, Network Readiness has three aspects1 (Figure 1):
• The strategic intent of the organisation: are
management and shareholders convinced of
the importance of collaboration? Are they
willing to sacrifice short-term goals for the
benefit of the relationship and long-term
goals? If the top of the organisation is
convinced that no other company can deliver
the right quality and that full control of
partners is imperative, then the chances of
establishing an effective eco-system around
your organisation are close to zero.
• The capacity in terms of number of individuals
trained and skilled in working with
collaborations. The Association of Strategic Figure 1, Three aspects of Network Readiness
Alliance Professionals does excellent work
here in defining skill sets and certification.
• The availability of processes and tools that help to structure the process of
initiating, starting, scaling and ending an alliance and the extent to which
these are implemented. This last aspect will be elaborated in this article.
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2. Alliance experts
History of the Quick-Connect Capability
Ron Sanchez first introduced the concept of a quick-connect capability in 1995 as
‘quick connect’ electronic interfaces, to describe a situation where three or more
businesses engaged in joint product development. Van Liere and others elaborated
the concept further in 2004 in an article in the Journal of Information Technology.
In their 2008 book "The Network Experience, New Value from Smart Business
Networks", Otto Koppius and Arnoud van de Laak published their research on how
the adaption of communication standards and business process standards affects
the ease with which graphical industry companies interact with each other. They
also introduced four components of the Quick-Connect Capability, which were
slightly renamed by Otto Koppius and myself in 2011.
Quick Linking Negotiation phase a tie with another organisation has to be
established quickly
Quick Start Transition phase internal processes have to be adapted to
the other organisation quickly in order to
facilitate execution
Quick Scaling Execution phase the tie should be able to quickly handle an
exchange
Quick Unlinking Dissolution phase the tie should also be dissolved quickly if
need be
These four components describe the generic life cycle of any business relationship.
(see Figure 2).
Quick-Connect Capability in alliances
Until now, the term Quick-Connect Dissolution Negotiation
phase phase
Capability has mainly been used in relation
to the exchange of information, specifically Quick Quick
through electronic systems. However, the Unlinking Linking
concept can be applied in a much broader
sense. Linking also implies partner or
supplier selection, target setting and
Quick Quick
contracting. Start can also be joint product Scaling Start
development or making a joint offering
towards a third party. The execution phase Execution Transition
is more than just data exchange, and quick phase phase
unlinking for example requires an
arrangement to ensure service continuity or
the proper splitting of intellectual property Figure 2, Four components of Quick Connect Capability
rights.
In this article, the components of the Quick-Connect Capability are elaborated for
the formation, management and dissolution of alliances. I do not aim to provide a
complete and extensive list of all steps and aspects; for this purpose please consult
the new BS11000 standard and or the ASAP Best Practices Guidebook. My intention
is to show a number of easy-to-implement working methods that any company can
use in their strategic collaborations.
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3. Alliance experts
Quick Linking
Often, a lot of time in the linking process is spent on selecting the right partner.
Two aspects cause this delay. The first one is the lack of environmental awareness.
Who are the potential partners in the market, what are their strengths and how
strong is their willingness to partner? Standard market research only answers this
question partly. Your only choices are to spend more time on this aspect yourself, to
appoint a business development or alliance manager, or to hire a consultant.
The second aspect is inexperience in using structured selection methods. Partner
selection is often conducted on a gut feeling and through existing contacts. An
approach with a longlist, shortlist and a number of checks and balances can
objectify the choice for a preferred partner. Having a thorough selection process
avoids having to reverse decisions later on.
Once a preferred partner has been selected, negotiations should lead to a business
model that benefits both parties. In my book 'Creating Profit Through Alliances' I
show that the range of potential alliance forms is limited, certainly when taking into
account a company’s strategy. Each individual alliance type has only limited
variables, and more complex alliances can be built up by combining several types.
This way, the business model structure can be designed easily and negotiations can
be narrowed down swiftly to numbers and percentages.
One other advantage of working with standard alliance types is that contracts can
be drafted more easily. With our team we recently worked out a joint offering
agreement for an installation company. This company frequently uses partners with
complementary competencies to bid on large projects, and is sometimes the main
contractor and sometimes the subcontractor. We therefore drafted a reciprocal - and
thus easily acceptable - framework agreement that the company concludes with all
its partners. This agreement arranges processes, responsibilities and liabilities in
such a way that, for specific projects, only a non-legal template and the scope of
work of each partner needs to be filled out.
Working with such standard agreements that have already been pre-checked by each
party’s lawyers speeds up the 'Connect' process enormously. We therefore intend to
work out contract modules for all alliance types, so that drafting a contract can be
reduced to picking the right modules, filling out the details and making one final
check on consistency and applicable law.
Quick Start
The transitioning phase begins at the point where it really comes down to starting a
project or new activity together. It can involve setting up a distribution channel,
making a bid, the formation of a research team or aligning work processes to
achieve cost advantages.
Where in the linking phase only management and lawyers were involved, now
operational people have to be introduced to the alliance. Although relatively brief
time-wise, the transitioning phase is crucial to creating the right framework and
atmosphere for the collaboration.
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4. Alliance experts
The first step is to decide who will be involved in the collaboration, and at which
level. The number of people, the skills required and their tools will depend upon the
actual job. In any case a meeting structure has to be created, with operational,
tactical and perhaps even strategic meetings.
Training of (middle) management is a second important point. If you have no
experience in the formation and management of alliances, how would you know
where to start? Training doesn’t necessarily need to be extensive, but concepts such
as the difference between an alliance and a transactional relationship, the
partnership life cycle and handling intellectual property and confidentiality need to
be explained beforehand.
A useful tool is 'Organisational mapping'. In one organisation the title of 'Marketing
manager' may entail a completely different status and range of responsibilities than
in another company, if indeed it exists at all. Organisational mapping means that
first the responsibilities are described, and then the appropriate people on both
sides are assigned.
A good way to start any collaboration is to organise a kick-off event. Over the
course of a whole or half day, affected employees from both sides are brought
together to get acquainted and to learn about the collaboration. Through questions
and other workshop methods any organisational and cultural differences will be
made apparent, so as to foster mutual understanding and avoid misunderstandings
later on. Work processes can be presented and discussed. A kick-off event is mainly
an investment of time that will certainly pay off.
One of the activities that can be done during the kick-off, or shortly afterwards with
a smaller group, is a joint risk analysis. Risk on the commercial side, operational
side, supplier side or human resources side can be classified in terms of probability
and possible impact. As risk is the product of probability and impact, the biggest
risks can be elaborated and mitigation plans can be drafted. Apart from its inherent
value, doing the risk analysis with representatives from both sides will most likely
lead to new insights and a stronger group spirit.
In all cases it is recommended to adhere to commonly known project management
and business process standards like Prince2, ISO standards or industry standards.
This will not only facilitate quick transitioning, but it also means lower training costs
and makes it easier to hire temporary personnel.
If we recall the framework contact for the installation company: in such a joint
offering, the Prince2 process of Directing a project could be an addendum to the
framework agreement. It would be useful if both partners would include the
Starting phase and Initiation phase in their respective scope of work, and that they
would work out the detailed Project Planning together once the project is awarded.
Quick Scaling
After the start the next challenge is to scale the collaboration, overcoming the
complexities that might arise. What matters is that the (project) organisations that
are working together are facilitated as much as possible to quickly handle any
challenge.
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5. Alliance experts
The first supportive condition is that people are able to meet and see each other.
Telephone and email are perfect means to communicate at a content level, but if
working procedures and relationships between people are not crystal clear, these
can easily lead to escalations. Collaborations between two companies with their
head offices at less than one hour's drive from each other are more likely to succeed
than others. A joint location, or at least video-conferencing, helps resolve problems
quickly.
Koppius and Van der Laak studied the use of communication standards and
business process standards. Digitisation of information and the use of the same
standard for all collaborations were shown to have a positive effect on quick-
connect capability, both for the customer and the supplier. Adhering to business
process standards showed a more ambiguous outcome: on the customer side this
had a positive effect, on the supplier side a somewhat negative effect. This
difference can be explained through the wide choice in business process standards
and the power of customers to decide for a standard that might not suit the
supplier.
In my experience, the electronic exchange of data is nowadays a common good, and
the next step are joint data storages like Google docs or Sharepoint. Instant
messaging functions like MSN and Jammer, accessible for all parties involved, are
also a good way of sharing more informal and operational information. Video
conferencing is advisable when locations are more remote. The ability to implement
these kinds of tools within a few days, and in such a way that these are also fully
accessible for the partner, is very useful for a company pursuing Quick-Complexity
Handling.
Business process standards were already mentioned with respect to Quick Start.
Also for Quick Scaling, such standards can be useful and can lead to better
collaboration, as both sides share the same framework for their processes. That
doesn’t necessarily put an end to all differences and misunderstandings, but the
chances of chaos erupting will reduce strongly.
One of the reasons that collaborations do not scale up is that people have different
personal interests. Some simple HR approaches can prove effective here. First, one
can (temporarily) change the reporting lines to the management of the
collaboration, for example to the project manager or the joint venture manager.
Second, one can create a reward structure that depends primarily on the outcomes
of the collaboration rather than on the outcomes for the individual companies.
The final means of enhancing Quick Scaling in the execution phase is to hold
periodic evaluations on the success of the collaboration. It is important to not only
measure lagging indicators such as the number of patents or the profits, but also
leading indicators like the mutual trust, the attendance rate at meetings, and the
belief that the partnership will bring the own organisation enough benefits.
Negative or deteriorating outcomes can be discussed jointly to avoid bigger
problems later on.
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6. Alliance experts
Quick Unlinking
Ending a collaboration may sound easy, but in many cases there are a lot of pending
obligations and assets that must be split. In case of a separate legal entity, this
must be dissolved or sold to one of the partners. Service delivery, archiving and
intellectual property rights are aspects that should be considered.
First, whether one has a contractual relationship or has formed a new legal entity
such as a joint venture makes a lot of difference when it comes to unwinding. In
case of a contract, partners are more or less forced to arrange for the potential
dissolution of the partnership beforehand. With a joint venture it is easier to rely on
the decision-making structure of that entity, and to leave the dissolution scenario
unmentioned. However, also in this case it would be wise to already agree upon
some guidelines in the negotiation phase.
One of these aspects that can easily be arranged when drafting the contract is the
perpetuation of service obligations, for example in collaborations for a joint
offering. Service aspects are often limited, can be described properly, and the
execution can be performed by each party independently. These can therefore be
arranged as transactional relationships, with a main contractor and subcontractor
structure.
Already while setting up a joint information sharing structure, one should think
about the dissolution of the partnership. Each party should retain access to all
documentation, and should be able to integrate this with their own archive to
comply with legal standards. Having a suitable and repeatable solution for this
problem is truly a Quick Unlinking capability.
Finally, the intellectual property rights of the alliance should be assigned to the
respective parties. It is most important that both parties remain entitled to use
those rights that are essential to the delivery of their products and services,
including rights that can be characterised as 'background knowledge.' On the basis
of principles defined by Slowinsky and Sagal, we have developed two concise
arrangements, one for joint ventures and one for contractual partnerships, which
facilitate this aspect of quick unlinking. These are available on our website.
Checklists that are used by M&A consultants for the sale a company or business unit
can also help cover the more practical aspects.
Conclusion
The Quick-Connect Capability as described above is very much connected to alliance
lifecycle management in general. It stands out for its practical approach, focus on
speed and the aim of creating new standards. Businesses and governments will
increasingly benefit from successful collaboration with new partners. Those
organisations that have the capability to quickly connect en disconnect will certainly
have a competitive advantage.
For more articles of Alfred Griffioen search on Slideshare or go to www.allianceexperts.com
1
Adapted from Janice Twombly and Jeffrey Shuman, Designing the Enterprise Capability for Managing
Collaborative Relationships, The Rhythm of Business, Inc., 2011
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