To measure the value of mitigating risk and solving problems, alliance management must first define and communicate the services the group provides. We categorize our services along a continuum ranging from managing alliance risks to solving alliance problems, with execution midway between (see Figure 1). Starting on the continuum’s left, risk mitigation services are the preventative activities that have no clear beginning, middle, and end. These are the ongoing activities administered by the alliance management professional to ensure a healthy alliance. Just like putting gas in the car before a trip, the idea is that preventative measures will make the realization of risk less likely. Services in the strategic influence, operations administration, and execution categories are risk mitigation activities. On the right side of the continuum, alliance managers add value by solving problems that arise in the collaboration. Alliance professionals deal with day-to-day issues within the alliance as well as the more significant problems that manifest themselves. These activities do have a clear beginning, middle, and end, and require active participation by the alliance management profesQuarter 3, 2011
Two key leading indicators are used to make sure the alliance management team is providing the best service level possible and that the risk is being mitigated. The first indicator involves monitoring which services our professionals are providing, with the goal of ensuring the right mix and balance. The second is to forecast key decisions and events that could potentially affect the alliance. This indicator makes it possible to take proactive action to provide effective support in solving potential alliance problems. These indicators are reviewed on a regular basis to ensure that a balance of services is being provided and that potential problems for the alliance are being mitigated.
FIGURE 2: SERVICES PROVIDED DURING Q2-11 88%
UPCOMING KEY EVENTS/ DECISIONS Source: Eli Lilly and Company
Full Range of Services Key
Understanding the value provided by these services starts by measuring their uses and outcomes. Highly complex alliances will span the continuum of services, while less complicated alliances might use a subset. Regardless, measuring the frequency and duration of alliance activities is critical to communicating their value to key business partners.
Low Medium High
In our experience, successful alliance management addresses—and adds value at—both ends of the spectrum: managing risk and solving the problems of alliance risk realized.
Measuring Service Value
Conflict Mgmt Significant Issue Mgmt
To use a familiar analogy, a spouse who fills the gas tank up before a family trip has managed the risk of running out of gas, but is unlikely to be thanked for having the foresight to keep the tank full. If that vehicle breaks down on the road and that spouse fixes or manages the problem in such a way that the family is able to continue on its vacation in a timely fashion, that spouse is likely to be praised as a savior of the trip. Both filling the tank and solving the roadside breakdown resulted in a successful vacation, but to the family, remedying the breakdown will be valued more than filling up the tank.
Playing a key role in execution positions the alliance management professional to initiate preventative measures in operational administration (scorecards, onboarding documents, etc.) and to influence corporate policy and strategy (new policies, new partnerships, etc.). This blend of proactive and reactive services enhances alliance management’s value to both the customer and the organization.
However, many companies reward employees for solving problems. Successful marketing, sales, manufacturing, and medical organizations—often the same groups that are the clients of alliance management—all strive to solve customer problems. It should come as no surprise that these organizations are unwilling to pay a premium for the avoidance of risk. They are, however, willing to pay for solutions to their problems.
Note that execution—governance, start-up, joint process, alignment, etc.—sits between risk and problem-solving services, because execution is the linchpin in the alliance management process. Day-to-day involvement and active execution of key activities puts the alliance management professional in position to effectively manage conflict and significant legal or business issues.
In business, most organizations do not recognize and reward for risk that has been avoided. For example, most firms would not distribute a bonus to senior managers for having avoided business ethics scandals. And while no legitimate group would say that avoiding business ethics scandals is unimportant, most would not pay extra for avoiding that risk.
sional during resolution. Services in the execution, conflict management, and significant problem management categories are problem-solving activities.
managers and their customers—and in developing a metric for alliance management.
No Controversy Controversy–Low Controversy–Med Controversy–High
The next step is to translate the value inherent in owning alliance risk mitigation and problem solving to assess the contributions of alliance management. In short, if alliance management successfully Continued on page 53 25
Non ASAP Member Limited Edition, Q3, 2011