strategic alliance magazine | PROFESSIONAL PERSPECTIVES service business that we’d successfully penetrated eight years ago—but more complex. Our entry strategy to introduce our Cisco grid technology involved changing our model to engage the manufacturing systems of electrical meter and power companies for distribution automation within grids. We also had to build new relationships as part of this new type of alliance partner program. We had to really think through how we were going to fill major gaps in the value chain. We couldn’t just fall back on our old cast of partners. For instance, we began knocking on doors and engaging with engineering firms that advised utility companies. We also had to reach out to meter companies to make sure that their products would work with ours in the new smart grid. We connected with the electric utilities themselves as well. We often found that we had to reach out beyond the number one or two industry players. The biggest guys are usually too comfortable with the status quo. For your ecosystem, you have to find partners who are nimble, open to opportunities. When we did find a potential partner, we had to carefully work out the value exchange—what is each bringing to the party? How will we work together? What is the framework and reporting structure, and how will we measure results? These are just a few of the issues that need to be carefully outlined to assure a sustainable, win-win relationship. To create a new ecosystem, we also needed to build bridges inside our organization. We had to align multiple product and business models. One key challenge in working with our colleagues who take Cisco’s market leadership as a given: convincing them that in these new-to-Cisco markets we’re not the big dog on the block and that we have a lot to learn from our ecosystem partners.
Laying this type of groundwork takes time, so we had to do it right. We’re pleased with the early returns: solid partnerships, key sales wins, and early revenues. We know this is a long-term investment: it takes five to 10 years to have a major impact in a new vertical industry.
Final Thoughts None of this prescription is set in stone, and you’ll need to adjust your partnering strategy to each situation. We’re now living in a more dynamic, global market, so you need to be willing to: – Think differently—creativity and an open mind are essential – Be nimble—alliances and alliance models can’t be static – Adjust your strategy—one size doesn’t fit all With an open mind and an adaptable alliance strategy, you’ll be better positioned to deal with the brave new partnering world. n Steve Steinhilber is vice president of Cisco’s Emerging Solutions Ecosystems (ESE) group, responsible for driving the development of relationships with new partners to help the company enter new adjacent markets. For the previous eight years, he led Cisco’s award-winning strategic alliances program, responsible for relationships with key partners such as IBM, Accenture, Motorola, HP, Nokia, Fujitsu, Wipro, Microsoft, Intel, Apple, and a dozen other global technology companies. During Steinhilber’s tenure Cisco’s business with these partners grew to over US $5 billion per year. Steinhilber is the author of Strategic Alliances: Three Ways to Make Them Work (Harvard Business School Press, 2008).
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