Newsletter June 2000B

RELATIONSHIP LEADERSHIP: Alliance Vocabulary

Whenever we attempt to do something new, we are often presented with a whole new, activity-specific vocabulary list. If we want to do some plumbing, we need to know what a "fitting" is; if we want to sew, we need to know about "bobbins". The use of words helps to set standards for communication, just as the "ISP", "link", and "internet" define newly created realities for the computer user.

With the subject of vocabulary in mind, we look at trends in business. There seems to be a lot of talk about alliances, in addition to joint ventures (that were commonplace in the 80's). However, with so many rapidly erupting changes, most people don't have a communicative tool to express how today's businesses are forming relationships with others. The following is a vocabulary list that will enhance your ability to communicate about new ways in which many are conducting business. There's a good chance that your company has formed alliances and that you participate in them daily. Has your company set up links on your web site to other vendors such as amazon.com or have you partnered in a project with another firm to create value for your product? Does your company ever look at purchasing another company or just working together on a project for a short period of time? These are definitions that may become useful as alliances become more common.

1. Affiliate: The internet buzz word for "we work with you and the only expense to us is paying for real estate space on our site." The value for company B is normally in gaining exposure, and the value for company A comes from being related to company B. In some cases, the company B does not provide compensation for the relationship.

2. Ad Hoc Pool: Two parties agree to work together, yet no one is really putting forth resources, and the companies remain separated. This might be in the form of an agreement between companies to sell or distribute their product in a common forum or show, enhancing everyone's visibility.

2. Consortium: Companies are interested in putting in more resources than the minimum amount, yet the partners each maintain their own value. Pharmaceutical companies or technology-based businesses might share R&D; however, each pursues its own direction.

3. Project-based Joint Venture: Two parties create a common organization to create value. Resources from both parties are added to the mix. The value is given back to the company by dividends or royalties. Lycos, a strong alliance company, might need a partner to enter into a new country to sell their products. The relationship requires a minimum of resources, yet creates value.

4. Full-blown Joint Venture: Two parties create one business that they both share in the cost of operations and set up. Resources in this relationship are extremely high. Staff and management must be fully engaged. The result is a business that is a separate entity and considered a long term project.

5. Merger: Company A and company B meld together, combining assets to create new company, C. Many joint ventures are testing grounds for mergers. Successful projects move to the merger phase as relationships build.

6. Acquisition: One firm outlays assets to bring the other on board. Company A purchases company B. Company B is no longer a separate entity. It now belongs to and is a part of company A. The firm acquiring sees long term value in expending time and money to build that the acquisition into their company structure.

By realizing the distinction in alliances, companies can pursue several types of relationships with other companies, producing different results. To create a successful alliance, all parties involved need to understand their role in the relationship as well as select the proper type of alliance to create a win-win combination

(Modified 1993 Lorange & Roos)

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EDUCATION & TRAINING: Technology Implementation

It's a love hate relationship. People love what technology can do for them, but they hate the actual processes of converting and initially implementing that technology. Here are 2 tactics from which to choose when instituting new initiatives:

1. Full integration

2. Progressive integration

Full integration is an all-at-once approach. Usually this involves communicating to staff that "this is now how we do it." If a company must put in the new banking system, inventory system, office automation tool or accounting system, the team instituting the program must address three key areas when offering a full integration method of implementation. The three key areas are (1) training, (2) benchmarks and (3) reports. The reason why full integration can be unsuccessful is because one or all of these three areas have not been properly employed. When technology is being introduced, fear within the ranks leads to resistance and/or disorganization. (1) Allot ample time for training and provide the best training method for the type of technology you've chosen. (2) Set up a benchmark system that corresponds to a schedule. For example, by x(date), we will have completed x, y and z. (3) Obtain necessary reports from the system, from the trainers (if applicable) an from the staff using the technology. Timely reports will alert you to any problems early on so that minor problems are addressed before they become major.

Progressive integration is a "some now, some later" approach. Recently, a sales manager wanted his 5 person staff to use Goldmine Software more often so that he could obtain stats and use the stats to better manage the force. He initially wanted to use full integration with his staff, and he planned to have a trainer come in for a day to educate the salespeople. However, his sales staff wanted to sell, not to learn a new software program. The resolution was progressive integration. In stage 1, the manager will only require that the staff keep the data base current with name, contact and sorting/filtering information. This will take a minute or two per contact. The staff will not initially use the entire program, but will enter phone call notes from incoming and outgoing calls into the system. They will also note, using a drop down menu, whether a call was successful or not. In this case, the sales manager will get his first stages of information: number of calls, numbers of contacts, etc., which will be enough to start assisting his staff. Stage two will involve the institution of other basic functions to the most successful and most eager-to-learn staff members. By using the progressive integration approach, the manager has limited training costs and transmitted to his staff what's expected without rocking the boat. As new members join the team, the same approach will be taken so that the new-hire will be productive immediately. Existing staff will retain the ability to use the system properly, and the manager will receive more accurate, qualitative information about his team's performance. Ultimately the corporate culture will change and the process of using the technology will be common place.