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Tap into Our Broad Experience and Deep Industry Expertise. The Rhythm of Business cross-fertilizes ideas gleaned from diverse industries and across sectors while applying our deep expertise in alliance-savvy industries such as biopharmaceuticals, financial services, and consumer packaged goods. Advance Your Collaborative Capabilities. Partner with The Rhythm of Business for: + Partnering program design + Alliance organization, staffing, and process design + Guidebooks, toolkits, and metrics + Alliance start-ups, strategic planning, assessments, and interventions + Customized education for alliance managers, teams, and executives + Alliance portfolio analysis and planning + Internal marketing and communications programs Partner with the Collaborative Business Specialists. Our consulting, education, and research services focus on driving innovation and growth through alliances and other collaborative relationships. We’re passionate about advancing the discipline of alliance management in all sectors, throughout industries, and across the globe. Visit our website www.rhythmofbusiness.com to access our extensive library of publications and presentations.
Growing Up – Just In Time
As Our Profession Comes of Age, Alliance Management Will Depend on Mature Media to Support Its Essential Role in Business By Art Canter
I’VE BEEN STRUCK BY A RECURRING thought over the past several months as I’ve worked with our editorial staff to transform ASAP’s vision of Strategic Alliance Magazine into the professional publication you hold in your hands now. The alliance profession truly is growing up—just in time to tackle some of the grandest and grittiest challenges in the business world. We’ve reached a tipping point in our globally interconnected and continually changing economy. Strategic alliances and other forms of collaboration are attaining critical mass; in industry after industry, research, development, production, marketing, and sales have been transformed from largely internal functions into operational processes that must be skillfully and professionally managed across partnering companies. As one ASAP member puts it, the Chief Alliance Officer is emerging as “the best job short of being CEO.” In this context, alliance managers and collaborative business professionals become the critical players who help their companies and their partners navigate the challenges and complexities inherent in the collaborative business environment. Just as significantly, those who are not alliance managers can no longer ignore the alliance management function; their functions inevitably intersect with alliances, therefore they also must better understand, utilize, and be guided by the expertise, tools, and metrics of the alliance management profession. That, truly, is the “meta story” that overarches every story in this, our inaugural issue of Strategic Alliance Magazine: the alliance profession matters—a whole lot Quarter 2. 2011
now. In the pages that follow, see how: – Alliances were instrumental in the decade-long makeover of France’s family-owned Ipsen into a publicly held, global biopharmaceutical player. – A sophisticated alliance management program reinvigorated the longstanding go-to-market partnership between tech giants SAP and IBM. – Another software leader engages stakeholders across the company in a rigorous process designed to maximize the potential of its most promising collaborative ventures; so-called “Path to Market” initiatives now drive in excess of 50 percent of partner revenues with SAS Institute’s largest alliance partners, including Teradata, Accenture, and IBM. – Alliances also are a critical factor—for success or failure—in an increasing number of mergers and acquisitions, so smart companies now deeply engage alliance professionals before, during, and especially after business consolidations. Because alliance management matters— because this profession is growing up—ASAP has recognized your need for dedicated, professional media that support and inform the daily work of the professional alliance manager. Led by our flagship Strategic Alliance Magazine,
our ASAP Media program is unveiling a robust array of media offerings, ranging from digital newsletters and ASAP TV to our leadership-oriented “Challenges in Alliance Management” web seminar series. As with ASAP’s Global Alliance Summits and this quarter’s BioPharma Conferences, our commitment is to deliver content and programming that are as relevant as you are. Please help us in this endeavor. Individually, you can give us feedback and story ideas, become a benefactor (i.e., a paid subscriber), and encourage all of your colleagues to do so as well; on a company level, your organization can step up as a paying sponsor of the magazine and other ASAP Media. You will be rewarded on many levels for your contribution. And, I think, helping out is one of those responsibilities that comes along with growing up—as a person, and as a profession. Art Canter, president and CEO of ASAP, is executive publisher of Strategic Alliance Magazine.
Quarter 2, 2011
The magazine of the Association of Strategic Alliance Professionals
AN ASAP MEDIA PUBLICATION www.ASAPmedia.org www.strategic-alliances.org EDITORIAL TEAM Art Canter, Executive Publisher 781-562-1630 ext. 201 firstname.lastname@example.org John W. DeWitt, Publisher 646-232-6620 jdewitt@ASAPmedia.org Jon Lavietes, Editorial Director 415-572-4408 jlavietes@ASAPmedia.org Michael Burke, Editor-in-Chief 413-345-1624 mburke@ASAPmedia.org Greg Caulton, Creative Director 413-461-7096 gcaulton@ASAPmedia.org ASAP STAFF Art Canter, President and CEO 781-562-1630 ext. 201 email@example.com Pam Goodell, Director of Operations 781-562-1630 ext. 202 firstname.lastname@example.org Lori Gold, Manager of Member Services 781-562-1630 ext. 203 email@example.com Michele Shannon, Program Event Coordinator 781-562-1630 ext. 204 firstname.lastname@example.org Brendan Ward, Administrative Support 781-562-1630 ext. 200 email@example.com Diane Lemkin Accounting Manager 781-562-1630 Ext 206 firstname.lastname@example.org ASAP BOARD & MARKETING COMMITTEE CHAIRS Russ Buchanan, CA-AM ASAP Chairman of the Board Vice President, Worldwide Alliances Xerox Corp. Jan Twombly, CSAP Chairman, ASAP Marketing Committee Member, ASAP Executive Committee President, The Rhythm of Business, Inc. © Copyright 2011 Association of Strategic Alliance Professionals. All Rights Reserved.
in this issue 8
n COVER STORY
Getting Alliances Right from the Start
Building a Solid Foundation for Alliance Success Pays Dividends Later By Michael Burke
What distinguishes successful alliances from those that fail? Putting effective processes, plans, and people in place from the outset. Good planning, coordinated communications, and realistic, fact-finding dialogue between alliance partners can pave the way for a smoother alliance path.
n ALLIANCE IN PRACTICE
Coping with the Aftermath of Those “Sweet” Licensing Deals
Wise Use of Flexibility Can Close the Deal—But Licensing Professionals Must Involve Alliance Managers to Manage the Risks | By Jan Twombly and Jeff Shuman
The aggressive pursuit of new sources of innovation and growth through alliances and other forms of collaboration has magnified competition for deals in industry after industry.
n SUCCESS STORIES
Alliance Excellence Awards Honor Most Compelling Alliances of 2010
Honorees Bring Creativity and Innovation to Get Results from Alliance Management | By Jon Lavietes
IBM’s SmartCamps Connect Start-ups with Vital Resources; HP Finds RIPE Improvement in Measurement of Its Alliances; IBM and SAP Revitalize Longstanding Partnership; Ipsen and Inspiration Create Hemophilia Drug Franchise
n ASAP CHAPTER AWARDS
Recognizing Individual Chapters’ Contributions to Increasing Membership and Raising Awareness of Our Profession
n ALLIANCE ADVOCACY
Alliances 101: SAS Institute Paves a Path to Market
A Portfolio Approach Can Unleash the Full Potential of Partner Initiatives—Again and Again | By John W. DeWitt and Jon Lavietes
Beginning in 2006, analytics software giant SAS Institute created a formal performance management process to align specific partner initiatives— co-developed products, collaborative solutions, and other joint go-to-market offerings—with overall SAS business objectives. Replacing ad hoc efforts, this Path-to-Market “portfolio approach” has increased the likelihood that partner initiatives reach their intended scale and revenue impact. Today, PTM initiatives drive more than 50% of revenues in the largest SAS alliances.
n SPECIAL FOCUS: BIOPHARMA
Expanded, Formalized Alliance Management Practice Helps Ipsen Keep Pace with Increasing Number, Complexity of Alliances By Jon Lavietes
In 2008, Ipsen moved away from an ad hoc approach to its individual alliances and instituted its new alliance management practice overseen by its Corporate Business Development department. Strong commitment from executive leadership and validated alliance management best practices have driven its alliance success and helped a relatively small company compete in the biopharma marketplace.
Regular Features: 3 n UP FRONT | By Art Canter Alliance Management Will Depend on Mature Media to Support Its Essential Role in Business 12 n FEEDBACK Comments, kudos, corrections, and other brief thoughts from ASAP members and other readers of Strategic Alliance Magazine.
Quarter 2, 2011
16 n COLLABORATIVE BUZZ Alliance News Briefs | People in the News | ASAP Calendar of Events | ASAP Chapter Updates 41 n SOLUTIONS MARKETPLACE Products and services for and from strategic alliance professionals.
Quarter 2, 2011
The magazine of the Association of Strategic Alliance Professionals
in this issue 36 n ALLIANCE IN PRACTICE
Guiding Alliances Through Biopharma Consolidations
Mergers and Acquisitions Pose Critical Challenges—But Good Alliance Programs Already Have the Skills and Processes Needed to Cope with Change | By John DeWitt and Jon Lavietes
When companies acquire or merge, it inevitably impacts alliances on both sides of the transaction. Moreover, the quiet period between announcement and consummation of public deals can trigger concern and restlessness, leaving alliance personnel on all sides feeling in limbo. The solution: involve alliance managers early, communicate proactively with partners— and know your partnership agreements thoroughly so you’re prepared for inevitable change. n SPECIAL FOCUS: BIOPHARMA
Survey: Alliance Teams’ Influence Depends on Success in Handling Increasing Responsibilities
New Study Reveals Alliance Management Teams Reach a Crossroads as Portfolios Grow | By Jon Lavietes
CEOs’ Perceptions of Alliance Management
Percent of Respondents
100% As alliance portfolios 80% grow, alliance management 60% teams do not. Consequently, 40% many alliance management 20% responsibilities get pushed 0% Essential to achieving Important tactical Expendable to non–alliance managecorporate strategy team members function Less than 3 years 3 to 5 years More than 5 years ment personnel. Realigning resources and ensuring a smooth transition when integrating alliance management teams with other parts of the company are critical to the success of alliance portfolios.
Strategic Alliance Magazine is published quarterly. Publisher is The Association of Strategic Alliance Professionals, 960 Turnpike Street, Canton, MA 02021, 781-562-1630. Subscriptions are $99 for one year, $189 for two years. Canadian subscriptions are $149 per year. All other international subscriptions are $199 (using air mail). Subscription inquiries: +1 781-562-1630. Periodicals postage is paid in Chicopee, MA, and additional mailing oﬃces. Postmaster: Send address changes to STRATEGIC ALLIANCE MAGAZINE, 960 Turnpike Street, Canton, MA 02021. Copyright 2011, The Association of Strategic Alliance Professionals. No part of this publication may be reproduced, stored in any retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. For reprints, please contact The Association of Strategic Alliance Professionals, 781-562-1630. 6
Don’t know who AM is
n POINTS OF VIEW
The Human Factor: A Key Determinant of Alliance Success The Neglected Role of Behavioral Dynamics By Curtis R. Sprouse
While companies concentrate on alliances’ contract structure, governance, conflict resolution, and general business processes, they are neglecting the most critical determining factor of an alliance’s success: behavioral dynamics. Guest contributor Curtis Sprouse says poor behaviors and dysfunctional relationships are the root cause of most failed alliances. Strategic Alliance Magazine
Make Your Alliances Work
Let Vantage Partners Help Your Company Negotiate and Manage Critical Relationships Conventional advice about alliances has not reduced their dismal failure rate. By working with Vantage, companies maximize the performance of individual alliances, put under-performing alliances back on track, and ensure coordination and optimization of their entire alliance portfolio. Success requires shifting your focus to a complementary set of principles. To help companies address and find solutions to their specific alliance challenges, Vantage Partners offers a broad range of services: Develop Your Alliance Strategy ▶ Define (or refine) an alliance strategy that meets overall corporate strategy and business unit objectives Benchmark Your Alliance Management Capability ▶ Benchmark your alliance management capabilities relative to competitors Design and Implement Your Alliance Management Program ▶ Create an alliance program blueprint and implement a framework for improved alliance success rates and better business results Launch Your New Alliances ▶ We facilitate a carefully designed set of activities between partners Remediate and Relaunch Relationships ▶ We conduct comprehensive assessments of alliance performance and help revitalize faltering partnerships
Alliance Management Training Solutions ▶ Designing and Implementing Comprehensive Alliance Training Curriculum ▶ Designing and Implementing Alliance-Specific Team Training ▶ Training Alliance Management Groups
About Vantage Partners Vantage Partners, a spin-off of the Harvard Negotiation Project, is a management consulting firm that specializes in helping companies achieve breakthrough business results by transforming the way they negotiate, and manage relationships with, key business partners. To learn more about Vantage Partners, visit www.vantagepartners.com, call +1 617 354 6090, or e-mail email@example.com.
Helping Companies Negotiate and Manage Critical Relationships
Check Out Our New Alliance Compendium Receive “Making Alliances Work,” our new collection of complimentary Vantage Partners Alliance Management publications—including some of Vantage’s most requested HBR articles, white papers and research findings on the topics of alliances, negotiation, relationship management, and change management. To request your copy of “Making Alliances Work,” visit www.vantagepartners.com/ASAPAllianceCompendium.aspx
Getting Alliances Ri
Strategic Alliance Magazine
ight from the Start Building a Solid Foundation for Alliance Success Pays Dividends Later By Michael Burke
MOST ALLIANCE MANAGERS AND OTHERS experienced in working with partners have war stories—even horror stories—about alliances that went sour, perhaps “good alliances gone bad.” But what distinguishes successful alliances from those that fail? If there is one single factor, it may be that alliances that succeed do so by getting it right from the start. Failure to Launch? A partnership’s early phases can make or break the entire alliance; it’s where either the foundation for success is laid down or, to mix metaphors, the seeds of its destruction are planted. “There are so many things that can go wrong up front,” said Jeffrey Jewell, CA-AM, director of alliance management at the biopharma company Nycomed. “Internally, if there is not full alignment going into the discussions with the partner, pushing the process forward is problematic in many respects.” Early on, in the negotiations phase, for example, “people may say ‘we’ve got to hit the market in three months,’ and everyone goes wild,” Jewell said. “Communications are not done in a coordinated fashion, and activities begin before there is planning among the partners. They’re initializing the process without planning. More problems occur in that initiation phase when communications go wild with people—they feel they’ve got to get everything done within their department, and they don’t take time to plan the operationalization of the alliance appropriately with the partner.” Good planning, coordinated communications, and a good-faith joint effort between the partners can Quarter 2, 2011
counteract these sometimes market-driven pressures and pave the way for a smoother alliance path. “What I have done most recently is initiate a lockdown on communications until we meet with the partner,” Jewell explained. “The alliance management group can meet and decide what communications are essential immediately, and which ones can wait until the whole process unfolds. Within our organization we have a 100-day plan, which is implemented toward the end of negotiations and contract signing and is designed to guide us through the initial setup of the alliance, establishment of agreed-upon processes, alliance health monitoring, and ultimately alliance termination. It’s a standard process we follow.”
Standard Operating Procedure for Alliances Other organizations follow similar procedures, often including a 100-day plan or timeline. In fact, according to alliance managers and consultants familiar with the alliance process, successful alliances tend to have certain key features in place from the start. These include: A Negotiation/Evaluation phase, in which negotiations occur, and alliance managers and other 9
A 100 DAY PLAN TO ORGANIZE AND PRIORITIZE EFFORTS Transition from negotiation Resource internal team and prepare for launch
Build joint understanding of the alliance mission and contract
Staffed alliance team Internal negotiation debrief PR/Communication plans Communication guide
Joint negotiation debrief Commitment tracking mechanism IT infrastructure
Document detailed joint business plans Build a resilient relationship Create individual/ functional and integrated project plans
Define the alliance evaluation process
Joint alliance scorecard
Functional & Integrated project plans
Process for evaluating and adjusting the alliance
Operationalize governance structures and processes
Identify and plan for how to deal with differences
Defined governance structure Charters for committees and teams Aligned decision-making rights and responsibilities Joint escalation methodology
Business cultural assessment Guiding principles Working together protocols Skill building plan
Source: Mark Wingertzahn, CA-AM | April 2011
relevant personnel identify risks to both partners, set up a governance committee, and distribute authority, assigning roles and responsibilities to people in both organizations. During this period, a risk assessment evaluates: – The two partners’ possibly different strategies or “strategic intent” (i.e., what they hope to gain from the alliance, which might be different for each) – Each company’s experience with partnering – The impact of any competitive products on the alliance – The capabilities and resources each partner brings to the table – The business ethics and operating philosophy of each partner In terms of governance, consultants and alliance managers say, the key elements are: – Composition of governance committees: who is involved? – Decision-making authority: who is responsible? – Escalation of conflicts: how are differences and other issues and problems to be communicated and rectified? – Understanding of contract terms: alliance managers need to have a thorough understanding of the contract; other relevant personnel may need just a summary of its key terms – Determination and definition of milestones and timeline for their execution – Mutual understanding of any intellectual property involved Next, in the Planning and Launch phase, the important features include: 10
– Initiating relevant teams and establishing a schedule of regular meetings among them and between the alliance managers – Communication: coordinated, scheduled, mutual – Common understanding of priorities, especially in the short term – Kickoff/launch meeting – An alliance management plan
Culture Shock Differences in corporate cultures between two partners are a common reality that can be factored into the alliance start-up via planning and communication— or can derail the potential success of an alliance if not dealt with from the start of the process. These company differences can take various forms, and if not faced openly and explicitly from the beginning can cause “culture shock” that impedes the forward momentum of an alliance, or even brings it to a skidding halt. “Often one company tries to be the ‘alpha company,’ even though it’s not in everyone’s interest,” said Jewell. For example, “you’ve got pharma companies that are basically marketing companies—they just end-license [products], they don’t do any development. They find a product, grab the product, take it and say to the partner, ‘Thank you, have a nice day.’ That company just wants to run, and may do a marketing campaign that’s contrary to yours in the rest of the world.” Corporate culture shock and mixed messages can arise if communications are not transparent or coordinated properly, Jewell said. High-level executives thus need to talk early to establish each company’s goals and anticipate issues that could potentially be contentious down the road. Strategic Alliance Magazine
“[Sometimes higher-level executives] do not want to have what they consider ‘trivial’ conversations like that—but they are critical to alliance success,” said Jewell. “[When you have] VPs sitting around a table, and they don’t want to talk about vision, mission, differences or how to resolve them—that is a recipe for problems down the line.”
Getting to Know You— Early and Often Organizations also differ in how early in the process alliance managers get involved—some sit in on actual negotiations, whereas others enter the process only at the end of negotiations or afterward. Many in the alliance management profession believe it is a best practice for them to be present and participate in negotiations. One of those is Mary Jo Struttmann, CA-AM, senior director of alliance management at Astellas US.
develops something different, a new copier—one is a drug and one is a device.”
Pitching to the C-Suite and Wearing Two Hats Another important aspect of the alliance start-up process is getting buy-in from senior executives within one’s own company. “You’re only as effective as upper management will allow you to be,” Jewell said. “If upper management doesn’t buy into the alliance and see the value of the alliance management function, you are pretty much hand-tied to follow a natural progression of chaos.” However, beware of those internally that put their own immediate needs ahead of the alliances.
“I’m fortunate enough, here at Astellas, that my team is involved in negotiations,” said Struttmann. “Alliance management’s early interactions with potential partners focus on understanding their corporate culture. How do they approach decision making, what’s their level of commitment towards effective partnering, what’s their tolerance for risk? What’s their business philosophy? Is it similar to Astellas’? ” In fact, these interactions with the new partner—the “getting to know you” phase—are crucial, according to Struttmann. “It’s important that both corporations have a clear understanding of each other’s philosophy and approach to business,” she said. “Especially, what is each company’s level of risk? Within different corporations the tolerance for risk varies. As you begin to work together, you gain a better understanding of each other’s philosophies. [Acknowledging the] different corporate cultures—that really drives your whole approach.” Learning from your partners and optimizing the core strengths you brought them in for is rewarding—but can be challenging. And the issues that may cause frustration or misunderstanding to arise are not confined to biopharma companies, according to Jewell. “Alliances are alliances,” he said. “I don’t see a huge difference between biopharma alliances and others. Controlling the flow of information up front—everyone has that issue. We may think from a biopharma standpoint that our alliances are peculiar or different because they’re research or development based, but I don’t see how that differs from a copier company that Quarter 2, 2011
…these interactions with the new partner— the “getting to know you” phase—are crucial. It’s important that both corporations have a clear understanding of each other’s philosophy and approach to business. “You cannot represent your own interests when you have a stake in that interest,” Jewell said. “A project manager heads up a project—you can’t be objective in an alliance management discussion. You have your interest, the project, uppermost in your mind. When a problem occurs, [the project manager] can’t negotiate their way out of it, they have self-interest, they can’t remove themselves from it. They can’t even see the partner’s perspective. A true alliance manager should represent the partner, be the best ally of the partner’s interest in their organization.” Struttmann of Astellas agreed. “I’m always telling our executives, about our partners, ‘Put yourselves in their shoes. How can we mutually come together with the 11
interests of both parties in mind, and find a mutually agreeable solution that moves things forward?’ We’re doing a lot of internal alignment within Astellas. When you talk to alliance directors, you spend a lot more time trying to align internally, especially when you’re in a global alliance.”
Two Pillars: Communication and Planning Most experts in the field of alliance management concur that the two most critical elements in ensuring alliance success from the start are communication and planning. Or as one consultancy’s alliance guidebook put it, to establish a “collaborative foundation,” organizations and teams must: – Coordinate activities – Communicate information – Leverage resources – Build trust
“Communication is key, but more [important] than communication is a clear understanding of roles and responsibilities. That’s where you can run into a lot of problems, when people don’t understand their role and what are they responsible for,” said Struttmann. To get every stakeholder on the same page, Astellas reviews the alliance agreement and tailors pertinent information to each engaged functional area and internal committee. “It’s really [about] communicating effectively, coordinating your activities, leveraging your resources, letting the corporation with expertise in a particular area take the lead, understanding the governance and decision-making process,” said Struttmann. “[Then] you have to have transparency, and hopefully your trust will flow from that.” n
feed back Dear Readers, This is the space where, in future issues, we’ll print what in the magazine and newspaper business are still quaintly referred to as “letters to the editor”—comments, kudos, corrections, cheers and boos, and other brief thoughts from you, ASAP members, and all our readers. In this inaugural issue of Strategic Alliance Magazine, however, we naturally don’t have that kind of feedback yet. So I thought I’d use this space for now, in my role as Strategic Alliance Magazine’s editor in chief, to encourage you, our readers, to talk back to us: tell us what you like, what you don’t like, what you’d like to see more of, whom you’d like to see profiled, and any and all thoughts, comments, queries, suggestions, story ideas, and so on.
A magazine, or any publication, is only as good as the relationship it establishes with its readership, and especially in these much more interactive days of electronic publications, social networking, and the like, it’s even more critical that we find ways to communicate with one another. Our objective with Strategic Alliance Magazine is to create a vehicle for an ongoing conversation about the profession of alliance management—best practices, war stories, anecdotes, studies, lessons from the field, and everyday problems involving alliances and other collaborations in the business world. And the only way to have a real conversation about these topics is for Strategic Alliance Magazine in effect to facilitate a multiway discussion among our writers, editors, and most of all, our readers.
So please, as you look through this first-ever issue of Strategic Alliance Magazine, be thinking of ways you can help us improve your publication and make it work better for you with each issue that comes out. We appreciate your thoughts and your feedback on all that you see in these pages, and we’ll use it to make a better magazine that’s for you and about you and the work you do every day. To get in touch with us, e-mail us at mburke@ASAPmedia.org, call us at 781-562-1630, or write to: 960 Turnpike St, Canton MA 02021 USA And thanks! Michael Burke Editor in Chief
Strategic Alliance Magazine
New Alliances: Coping with the Aftermath of Those “Sweet” Licensing Deals Wise Use of Flexibility Can Close the Deal—But Licensing Professionals Must Involve Alliance Managers to Manage the Risks By Jan Twombly, CSAP and Jeff Shuman, CSAP, PhD
The aggressive pursuit of new sources of innovation and growth through alliances and other forms of collaboration has magnified competition for deals in industry after industry, resulting in a beauty contest atmosphere in which company after company positions itself as “The Partner of Choice.” To make their companies more desirable than other contestants, licensing and business development executives increasingly are willing to do deals they previously would have passed up, offering flexible, innovative terms and signing agreements that share more revenues, responsibilities, decision making, and risks. Not surprisingly, using flexibility to close deals has worked well—often too well. Deals get done and the licensing and business development professionals who are rewarded based on deal flow are quite happy. Unfortunately, the flexibility offered by those companies pursuing a deal can significantly increase risk due to the complexity of actually managing the alliance once launched. Risk and complexity are the enemies of value. Certainly, deals should be innovative and flexible; however, innovation and flexibility in a deal should not create such operational risk and complexity that it becomes impossible to realize the value intended.
Flexibility vs. the Cost of Time Our research study of over 50 potential biopharma partners, conducted for a major pharmaceutical company, found that, for licensors, the most important criterion is Quarter 2, 2011
the licensee’s commitment to expeditiously develop their asset and get it to market. The second most desirable characteristic is the licensor’s willingness to cede participation and decision making rights, usually described as “being
Governance committees need the actual authority to make the decisions embodied in their role as envisioned in the agreement. If committee members regularly have to “get back to you” after consulting superiors and other stakeholders, the partner may begin to think that decisions are made behind closed doors and not collaboratively. It also likely adds to the number of times that decisions are reconsidered for no apparent reason. 13
We didn’t like the news, so we went out and made our own. Now You, Too, Can Support the Media That Support Your Profession! For too long, we’ve done the most important job nobody knows about. Despite playing an increasingly critical role in industry after industry, alliance professionals have remained off the radar screens of most business media. So the story of ASAP and strategic alliances has rarely been heard by general business audiences – or even within our own profession. Now that’s changing, thanks to the launch of ASAP Media and its flagship, Strategic Alliance Magazine. Self-publishing helps other professional associations – such as the American Marketing Association and the project Management Institute – to share best practices, educate external audiences, and create pride in their profession. Now Strategic Alliance Magazine and ASAP Media will do the same for ASAP and the alliance profession as a whole. But we still need your help – as an ASAP Benefactor. Please consider supporting Strategic Alliance Magazine, at one of the following levels: n Silver Benefactor: $50 n Gold Benefactor: $100 n Platinum Benefactor: $150 n Titanium Benefactor: $500 All individual benefactors will be named – along with their company and ASAP chapter if desired – on a special page of the magazine. As a benefactor of Strategic Alliance Magazine, you support the media that support you. Don’t miss this one-time chance to help launch your profession’s new media. Visit www.strategic-alliances.org today!
960 Turnpike St, Canton MA 02021 USA Tel: 781-562-1630 strategic-alliances.org firstname.lastname@example.org
The value of flexibility can be eroded by the cost of time.
We’ve seen situations where one party would be economically disadvantaged by moving forward on a certain development path, but that party has final say over the development decision. Guess what—no decision made. The dispute delayed development for over a year. Or consider the case of a company that inadvertently gave their partner the leadership over the commercial team—despite the fact the partner didn’t have to opt into co-promotion until the product launched. Differences of opinion led to many unnecessary stalemates and delays. Ambiguity in what is meant by requiring input and advice when the risk and responsibility is on the other partner has resulted in costly litigation. In all of these situations, one can be sure that the licensors no longer felt they were working with a “partner of choice.” Additionally, alliance governance must be aligned with corporate decision making. Governance committees need the actual authority to make the decisions embodied in their role as envisioned in the agreement. If committee members regularly have to “get back to you” after consulting superiors and other stakeholders, the partner may begin to think that decisions are made behind closed doors and not collaboratively. It also likely adds to the number of times that decisions are reconsidered for no apparent reason.
Alliance Managers Manage Complexity, Mitigate Risk Strong alliance management capability can take out some of the complexity, charting a course to mitigate the risks caused by the “flexible” operating and governance terms of alliance agreements. When licensing professionals and alliance managers partner with one another to evaluate and negotiate with potential partners, they can be sure that the risks that exist due to having viewed flexibility as a currency are identified, planned for, and managed. Additionally, alliance managers bring their experiences in implementing and living with alliance agreements and can provide Quarter 2, 2011
MANAGE RISK TO REALIZE VALUE
MANAGEMENT COMPLEXITY POTENTIAL VALUE
collaborative.” Meeting these requirements is tough. Too little flexibility and the competition wins the deal. Too much flexibility and the deal eventually backfires because operating and governance complexity leads to squabbles that delay development.
specific examples of how well-intentioned provisions have caused operational chaos. In some companies, there is recognition of this need for internal partnering to smooth the transition from deal execution to deal implementation. Our 2010 study, Practice of Alliance Management in the Biopharmaceutical Industries, found that 67 percent of the alliance managers who participated (representing 47 companies from around the world) have a reporting relationship into business development. Additionally, 40 percent of respondents said that alliance managers in their company actively participate in the evaluation of potential partners and the structuring of the deal agreement. Getting the deal is important, but it’s not the end game. Rather, it marks the starting point for the real work of the alliance. Flexibility is a valuable currency, but unless the management risks it creates are properly identified, planned for, and managed, flexibility can become the Achilles’ heel of an alliance-centric strategy. n
Jan Twombly, CSAP and Jeff Shuman, CSAP, PhD, are principals of The Rhythm of Business, Inc. (www.rhythmofbusiness.com) in Newton, Mass. Twombly is a member of ASAP’s Executive Committee and Shuman, a professor of management at Bentley University, is co-chairperson of ASAP’s Collaborative Innovation Council. An earlier version of this article appeared in the January 2011 issue of Effective Executive.
Collaborative Buzz Leaders Look to Strengthen Alliance Management Muscle at 2011 Chief Alliance Officer Roundtable By Art Canter
One of the highlights of ASAP’s annual Global Alliance Summit is the Chief Alliance Officer (CAO) Roundtable. This invitation-only, intimate discussion is reserved for the heads of the alliance management function of ASAP Global Sponsors and other special guests. The conversation provides a unique opportunity for these executives to share their priorities for the coming year and to get insight into what their peers are thinking. This year’s discussion focused on strengthening the alliance management “muscle” and defining the initiatives underway to build the influence of their group, attract talented people, and increase the impact of alliance management. With a diverse group of people participating, representing some of the
Regardless of the approach taken, the CAOs agreed with one participant’s comment: “It is the best job short of being CEO!” most influential companies in biopharmaceuticals, consumer goods, financial services, high-tech manufacturing, and information technology, the conversation quickly proved to be enlightening. As the economy recovers, many companies are focused on growth and are looking to their alliances as a source of innovation. In some instances this implies engaging with partners in arenas they might not have considered previously. The alliance management function is becoming more strategic, too, with several participants citing a reporting relationship with the corporate strategy group, regular updates 16
to the senior executive team, and involvement in M&A work. As alliances and other collaborations take on a greater role in the growth strategies of companies, it isn’t surprising that alliance management groups are spreading their wings a bit, too. For some this means initiatives to ensure that they are known throughout the enterprise as the source of knowledge and expertise about working in alliances and other collaborations. Often, alliance management begins in a particular business or geography. It becomes well established in that business but it isn’t always so easy to spread beyond the home base and build an enterprise capability. Several participants are working on using ASAP certification as the means to develop a common baseline of understanding throughout their companies. Finding the right people to serve as alliance managers is a perennial topic of discussion at the CAO Roundtable. Vision and foresight were among the most frequently mentioned desired abilities in an alliance manager. Thus, some CAOs look for people who are entrepreneurial—who can see a vision a few years out and bring others on board to achieve it. Being able to negotiate internally and influence the organization to achieve that vision is essential.
CAOs have differing views as to the career path of an alliance manager. One perspective is that an alliance manager should be on the path to becoming a general manager of a business unit. Another is that he or she should be pretty senior to begin with and plan on staying in alliance management for awhile. However, some companies are experimenting with developing job descriptions within alliance management that allow for career progression, to get people started early in their career, perhaps as early as recent college grads. Regardless of the approach taken, the CAOs agreed with one participant’s comment: “It is the best job short of being CEO!”
ASAP News New Staff Member
ASAP is pleased to welcome Lori Gold as manager of member services. Most recently Lori was the director of member relations and sales at the Jewish Community Centers of Greater Boston, where she was responsible for directing and implementing plans and programs designed to enhance the acquisition, retention, and satisfaction of all members. Previously Lori was the director of membership and business development at the Massachusetts Biotech Council, and was senior Strategic Alliance Magazine
director of member services at the Massachusetts Hospital Association.
Harry Atkins, CSAP, ASAP’s treasurer and member of the executive committee, is now senior director, corporate development, at Dr. Reddy’s Laboratories in Bridgewater, NJ. Jay Chitnis, CA-AM, president of ASAP’s California Chapter, is now director, business development and alliances, at Isilon Systems, an EMC company.
2011 ASAP BioPharma Conferences Realizing Value Through Effective Alliance Management May 31-June 1, Basel, Switzerland June 1-2, New Brunswick, N.J. USA 2012 ASAP Global Summit Mastering the Art and Science of Alliance March 5-8, 2012 Caesars Palace, Las Vegas, Nev., US To register for these events, visit www.strategic-alliances.org
Alliance News Quintiles Supports Samsung’s Entry into Biopharma Market Through Joint Venture
Samsung Electronics Co., Ltd., the world’s largest electronics company, and its affiliated companies have entered into a strategic partnership with Quintiles, the world’s leading pharmaceutical services company, to support Samsung’s entry into the biopharmaceuticals market, Quintiles announced recently. Under an agreement signed in February, Quintiles will make a minority 10 percent investment of approximately $30 million USD to start a new joint venture company with Samsung in the first half of 2011 to provide biopharmaceutical contract manufacturing services in South Korea. Samsung will own the remaining 90 percent of the joint venture company. The strategic partnership will support Quarter 2, 2011
Samsung’s entry into the biopharmaceutical market and reinforces Quintiles’ role as an ally to help companies succeed in the new health landscape. http://www.quintiles.com/news/2011-228/quintiles-samsungs-biopharma-jointventure/
Lilly and Boehringer Ingelheim Announce Strategic Alliance to Bring New Diabetes Treatments to Patients Worldwide
Eli Lilly and Company and Boehringer Ingelheim have announced a global agreement to jointly develop and commercialize a portfolio of diabetes compounds currently in mid- and late-stage development. Included are Boehringer Ingelheim’s two oral diabetes agents— linagliptin and BI10773—as well as Lilly’s two basal insulin analogues—LY2605541 and LY2963016—and the option to co-develop and co-commercialize Lilly’s anti-TGF-beta monoclonal antibody. This major diabetes care agreement centers on four pipeline compounds representing several of the largest and most promising product classes. Boehringer Ingelheim’s innovative late-stage diabetes pipeline drives its expansion into a new therapeutic area, supplemented by two basal insulin analogues, currently under development from Lilly. The agreement also furthers Lilly’s commitment to offer one of the broadest portfolios in diabetes care and provide together with Boehringer more options for people with diabetes, their health care providers and payers. http://newsroom.lilly.com/releasedetail. cfm?ReleaseID=542971
Juniper Networks Partner Conference Celebrates Success, Looks to the Future of the New Network In April, Juniper Networks welcomed more than 700 channel partners to its 2011 Americas Partner Conference at the Arizona Biltmore Hotel in Phoenix, as well as virtually via webcast.
This annual event featured keynotes from Juniper Networks executives CEO Kevin Johnson, CMO Lauren Flaherty, CFO Robyn Denholm, and Senior Vice President of Worldwide Partners Emilio Umeoka. Themed “It’s Time to Build a New Network,” the event offered Juniper Networks’ partners throughout the Americas the opportunity to engage face-to-face with Juniper executives and other partners about the growing business value of the new network, and to discuss how to capitalize on the megatrends affecting the IT industry. The annual conference also celebrated the mutual growth and success of Juniper Networks and its Americas partner community, and offered a closer look at the global and regional strategies, disruptive innovation, service specializations, and go-to-market initiatives that further differentiate Juniper Networks and its partners. “Juniper Networks’ Americas partner community thrived in 2010, with our top-performing partners posting double-digit, year-over-year growth and earning a record-setting number of service and technology specializations,” said Frank Vitagliano, senior vice president, Partners-Americas, Juniper Networks. “Throughout 2011, Juniper Networks’ vision of ‘Innovative Partnering’ will empower our partners to be disruptively innovative, valued, and more profitable selling Juniper Networks,” Vitagliano said. “With the recent expansion of our portfolio and new service specializations, Juniper Networks Partners are primed to not only grow their businesses, but lead the industry in building the new network. It’s our time and together with our partners we are accelerating the global adoption of the new network.” http://www.juniper.net/us/en/company/press-center/press-releases/2011/ pr_2011_04_11-08_00.html 17
Thank You to Our Sponsors and Benefactors! Thanks to you, the vision of ASAP Media has become reality with this, the inaugural issue of Strategic Alliance Magazine. ASAP Media productions – including this magazine, ASAP’s e-newsletters, ASAP TV, and our forthcoming “Challenges in Alliance Management”Web Seminar series – are only possible because of the growing financial support of our sponsors and benefactors. Sponsors are our equivalent of advertisers in a for-profit magazine; benefactors are ASAP Members who agree to pay for a subscription (even though you get it for free if you’re an ASAP member). So thanks to the companies and individuals below for being the first to step up! We look forward to many others following your lead. Charter ASAP Media Sponsors The Rhythm of Business – www.rhythmofbusiness.com Phoenix Consulting Group – www.phoenixcg.com Vantage Partners – www.vantagepartners.com Charter Benefactors Platinum Benefactors (US $150) Phil Sack Silver Benefactors (US $100) Ed Sullivan
Gold Benefactors (US $100) Lorraine Bassett, Dennis McCullough, Susan Sullivan Follow these leaders! Learn how you can be a benefactor – and your company a sponsor – at www.strategic-alliances. org or call ASAP at +1 781-562-1630. Your support makes all the difference.
Collaborative Buzz cont. USAA Launches Alliance with the West Point Association of Graduates An agreement between USAA and the West Point Association of Graduates now gives eligible members of the Long Gray Line easy access to a comprehensive suite of the insurance and investment products and services offered by USAA, one of the nation’s highestrated providers. WPAOG has endorsed USAA as its provider of choice for property and casualty insurance, car-buying services, auto loans, and investment products for West Point graduates and their families. “WPAOG enthusiastically endorses USAA insurance and investment products and services, and I encourage our graduates to consider becoming members of USAA or expanding their use of USAA’s investment and insurance products and services,” said retired U.S. Army Colonel Robert L. McClure, president and CEO of the 18
West Point Association of Graduates.
tary capabilities to accelerate growth.
“Our affinity relationship is founded on USAA’s understanding of the financial needs of West Point graduates and their families, as well as USAA’s reputation for unsurpassed customer service. Many members of the Long Gray Line have associated USAA with automobile insurance,” McClure said. “Our new affinity relationship introduces our members and their families to many additional USAA products.” https://www.usaa.com/inet/ent_blogs/B logs?action=blogpost&blogkey=newsro om&postkey=usaa_wpaog_alliance
This new business model combines P&G’s strong brand-building, consumer-led innovation, and go-to-market capabilities with Teva’s broad geographic reach, its experience in R&D, regulatory, and manufacturing, and its extensive portfolio of products.
Procter & Gamble and Teva Pharmaceutical Form Consumer Health Care Partnership The Procter & Gamble Company and Teva Pharmaceutical Industries Ltd. today announced the signing of a master agreement to create a partnership in consumer health care by bringing together both companies’ existing over-the-counter (OTC) medicines and complemen-
“This unique partnership positions P&G and Teva to be a leading player in the consumer health care industry,” said Bob McDonald, chairman of the board, president and chief executive officer of P&G. “This is a remarkable opportunity to accelerate growth for both companies’ OTC businesses. Together, we will serve more consumers in more parts of the world, more completely, by increasing access to highquality, affordable over-the-counter medicines.” http://www.pginvestor.com/ phoenix.zhtml?c=104574&p=irolnewsArticle&ID=1542509&highlight=
Strategic Alliance Magazine
Discover a World of Fun
(and Networking, PLUS Professional Development) When You Join Your Local ASAP Chapter
Every day, you tirelessly champion the value of alliances and alliance management – but sometimes you just want to go where everybody knows your name … and doesn’t need you to explain what an alliance manager does for a living. That friendly, welcoming place is your local ASAP Chapter. ASAP’s worldwide network of chapters – spanning 19 regions and four continents – provides face-to-face networking and close-to-home professional development for alliance managers and collaborative business professionals. Whatever your industry, you’ll find common ground with fellow alliance professionals in your local ASAP chapter. ASAP members convene locally for mixers, cocktail hours, seminars, training sessions, panels, speakers, and other events. Local chapter members share everything from best practices to job opportunities, discuss pressing issues and common challenges, and further develop individual and team skills. Find your local ASAP chapter – and learn about upcoming chapter events – at www.strategic-alliances.org/content/chapters. We promise you’ll have a good time – in your new professional home away from home. For more information about ASAP Chapters, contact Lori Gold, Manager of Member Services: email@example.com or call 781-562-1630 ext. 203.
960 Turnpike St, Canton MA 02021 USA Tel: 781-562-1630 strategic-alliances.org firstname.lastname@example.org
Alliance Excellence Awards Honor Most Compelling Alliances of 2010 By Jon Lavietes
Honorees Bring Creativity and Innovation to Get Results from Alliance Management Late last decade, IBM launched its Smarter Planet campaign, an ambitious initiative to utilize information technology to tackle societal challenges in almost every aspect of today’s world. Problems in transportation, retail, oil and gas, banking, government, health care, and other industries were to be addressed by infusing everyday items with intelligent systems and processes.
IBM’s SmartCamps Connect Start-ups with Vital Resources Executing a bold program like Smarter Planet obviously could not be done alone, and Big Blue knew it would need its highly successful $35 billion revenue business partner operation to achieve its goals. However, a company that for decades had achieved tremendous success partnering with large and midsized companies across many industries was about to be confronted with a new challenge: cultivating the startup community. 20
In 2010, IBM embarked on its Global Entrepreneur program, which set up several events around the globe dubbed SmartCamps that connected hundreds of start-ups with investment firms, serial entrepreneurs, academics, and tech experts that can help accelerate their solutions. Fast forward one year, and Big Blue is now engaged with more than 1,000 start-ups, including SmartCamp competition winners like traffic and parking solution company Streetline and drug counterfeiting solution company Sproxil, who parlayed their SmartCamp victories into national exposure in outlets like USA Today and The Wall Street Journal and additional rounds of venture capital funding. In addition, hundreds of other SmartCamp runners-up were referred to IBM’s Innovation Centers. Strategic Alliance Magazine
Quarter 2, 2011
IBM was one of five companies recognized by the Association of Strategic Alliance Professionals (ASAP) as a 2011 Alliance Excellence Award winner at ASAP’s 2011 Global Summit in Atlanta, along with SAP, HP, Ipsen, and Inspiration Pharmaceuticals. As is the case with all of the four award categories, the Global Entrepreneur program earned ASAP’s Alliance Program Excellence Award for reasons that go well beyond the end results. “These awards don’t just honor great outcomes such as bottom-line revenue growth. Although net results are certainly important factors in our award selections, the Alliance Excellence Awards also recognize the process as much as the endgame. The creativity that goes into how alliance success is obtained is as important as the results eventually achieved by these programs,” said ASAP president and CEO Art Canter. In a short time, IBM had to evaluate which of its core alliance management skills would work with this revenue segment that was new to them, then develop new systems and processes to fill in knowledge gaps. IBM found that three main principles were just as true partnering with small businesses as with larger ones: 1) start with your partner’s end goals and work from there, 2) help connect them with clients to grow their customer base, and 3) let partners leverage IBM’s extensive resources and ecosystem. “When you put those three focus areas or principles together, whether you are working at a small company or a large one, those apply as critical elements that will make sure you’re going to be successful,” said Mike Riegel, vice president of marketing for ISV and developer relations at IBM. The key differences in working with these new companies? Their narrow focus on immediate-term objectives and the blazing pace at which they work, both of which according to Riegel are needed for survival. “When you’re at a start-up company the culture is such that you are very focused on a very short set of milestones. You are either trying to get the design finished, you have a beta discussion with a customer or prototype, or you are focused on the right business design elements or value proposition elements to
Mike Riegel, vice president of marketing for ISV and developer relations at IBM. Riegel spearheaded IBM’s Global Entrepreneur program, which earned ASAP’s Alliance Program Excellence Award for 2011. discuss at your VC meeting next week.” Whatever near-term goal a SmartCamp participant happened to be honed in on at the moment always required urgency. “They work at a very quick speed and they want an answer quickly,” said Riegel. This, of course, can be a major obstacle at a company as large as IBM, whose valuable services and expertise are scattered throughout dozens of offices around the world. Navigating the internal protocols and red tape to find the right person or group can be tricky, especially for outsiders. IBM remedied the situation by designating a single contact for each start-up, responsible for obtaining the requisite piece of information or contact person in the vast world of IBM. Now, with one phone number SmartCamp participants had prompt access to IBM Research, Global Services, product capabilities, or specific knowledge related to the myriad of industries or vertical markets IBM has excelled in for its 100 years of existence. With Big Blue’s new partners now making a significant impact on Smarter Planet initiatives, IBM is expanding the number of countries that host SmartCamp competitions, adding China, Brazil, and India among other countries to the program. “It’s really stretching globally to capture all of the innovation and the investment happening all around the world,” said Riegel. n Strategic Alliance Magazine
While quantifying the bottom-line contributions of an alliance program to the C-level has been an age-old challenge for alliance managers, measuring the effectiveness of alliance professionals and teams is an even trickier science. Tech giant HP did not just want to accomplish the latter objective, it wanted the means to illustrate the efficacy of specific alliance elements on the fly. Thus, substandard aspects of a partnership could be adjusted before it cost the company down the road, while successful facets could be duplicated in other alliances in its portfolio. HP unveiled its RIPE program, designed to illuminate specific areas of the partner sales engagement process. The RIPE program consisted of four categories: 1) Relationships, 2) Innovation, 3) Price, and 4) Engineering support provided by HP and the engaged partner in each sales assignment. Each category was rated on a 0–3 scale, and the results of this 12-point Engagement Index were tabulated and analyzed on a monthly basis to expose weaknesses in the partner sales process as they developed, not just in individual alliances but in the alliance program structure as a whole. Now the managers within HP Enterprise Services’ Agility Alliance program—the company’s formal partnership program that includes Microsoft, KPMG, SAP, and Symantec in its ecosystem—could measure RFP performances across regions, individuals, or alliances, enabling the company to make critical modifications with unprecedented swiftness. “We have several metrics in place that measure the impact of the Agility Alliance Program [as a whole] in terms of revenue generated, in terms of win ratio, [and] how it improved our probability to win the deal. So what we did with RIPE was to take this one step further and measure the intangible benefits of how we engage,” said
HP Finds RIPE Improvement in Measurement of Its Alliances Patrik Strebel, director of global alliances for HP’s Enterprise Services division. The new insights gleaned from RIPE helped HP dramatically improve the quality of the sales engagements it embarked on with its partners. In 2010, the value of HP’s partner engagements in North America exceeded estimates by 185 percent, while the company won 50 percent more sales engagements when formally engaging with partners despite a slowly recovering economy. For successfully grappling with the quantification of its alliance program and the individual attributes of each partnership’s sales engagements, ASAP bestowed the Innovative Alliance Practice award on HP’s RIPE program. n
In the Long-Established Alliance category, ASAP honored IBM and SAP for reinvigorating one of the world’s most successful alliances after the global recession of 2009 exposed warts in the relationship that had not been fully acknowledged in better times. For 35 years, the two companies had gone to market jointly to package SAP’s software with IBM’s, hardware, middleware, and consulting services. Both companies contributed a lion’s share of the other’s alliance revenues in that time. And while global market forces can be blamed for much of the precipitous drop-off in IBM-SAP alliance revenues, both companies recQuarter 2, 2011
IBM and SAP Revitalize Longstanding Partnership ognized that it might also be time to fine-tune their partnership approach. Thus, it was back to basics. SAP and IBM alliance 23
…it was back to basics. SAP and IBM alliance personnel had to recommit to understanding their partner’s value propositions. personnel had to recommit to understanding their partner’s value propositions. Each company’s EMEA teams began the process by increasing the level of engagements at the country level and looking for truly synergistic sales opportunities. IBM personnel had to truly think about how to differentiate SAP’s
application software, while SAP had to in a sense relearn how to differentiate IBM from the other system integrators. While neither company will offer specific figures, both confirm that revenue growth accelerated once again in 2010. This comes in stark contrast to the fates of other high-profile IT alliances last year as market forces compelled HP and Cisco to end their longstanding alliance while Oracle and HP continue to squabble publicly amid rumors of an end to their partnership. n
One alliance in Ipsen’s successful portfolio (see cover story of BioPharma Special Focus p. 32) involved the formation of a new hemophilia drug “franchise” with biotech company Inspiration Pharmaceuticals. Ipsen added its innovative phase III (late-stage development just prior to submission for approval) OBI-1 compound to Inspiration’s portfolio, which included the promising IB1001 product also in phase III. Inspiration brought extensive hemophilia drug experience, while Ipsen brought its alliance management expertise and financial resources to ensure continued development.
Ipsen and Inspiration Create Hemophilia Drug Franchise In their financial arrangement, Ipsen licensed OBI-1 to Inspiration and invested $85 million up front and in return got a 20 percent stake in Inspiration and 27.5 percent royalty on future sales of OBI-1. If Inspiration reaches certain clinical milestone events Ipsen would pay further milestones which would continue to fund the company and in return would get notes that could be
converted into further ownership of Inspiration. When the partnership reaches a certain set of milestones, Ipsen would have the option of buying the rest of Inspiration, thus bringing into Ipsen a fully functioning business with both expertise and income. This agreement was patterned on a previous deal Ipsen made with endocrinology biotech company Tercica. Ipsen bought a 20 percent interest in Tercica as part of a transaction in which the latter licensed an Ipsen compound in America, while Ipsen did the same for a Tercica drug globally. “We ended up buying [Tercica] out, and they became our commercial platform for entry into the United States, but [unlike the Inspiration deal] the buyout was not contractually planned when the deal was formed,” said Sean McKercher, senior vice president of corporate business development at Ipsen. The Tercica deal worked so well, Ipsen decided to simulate it in the Inspiration agreement. The creativity of Ipsen and Inspiration’s hemophilia franchise netted them ASAP’s Emerging Alliance award. n
Strategic Alliance Magazine
ASAP Chapter Awards
Recognizing Individual Chapters’ Contributions to Increasing Membership and Raising Awareness of Our Profession ASAP Hands Out Chapter Awards Major companies were not the only entities taking home awards at ASAP’s Global Summit. The organization also handed out awards recognizing the contributions its individual chapters made in 2010 to increasing membership and raising awareness of ASAP and the alliance management profession. ASAP bestowed the Membership Award on the new Asia Collaborative Business Community, which was formed over a lunch meeting between ASAP leadership, prominent ASAP members, and prospective Asia members from Australia, Japan, New Zealand, and Singapore at the 2010 Summit. Through an aggressive LinkedIn campaign and a survey aimed at assessing the needs of potential members, the new ASAP community cultivated heavy interest in, and attendance at, a series of webinars and two in-person skills development workshops in Singapore and Australia, respectively. In less than a year, the Asia Collaborative Business Community has grown to 230 members and represents more than a dozen countries.
Best Practices Award
The California chapter was honored with the Best Practices Award for implementing its new Alliance Partner Program to create and expand relationships with professional organizations and educational institutions that have heavy involvement with alliance management. The chapter held joint events with the Quarter 2, 2011
From left to right: Russ Buchanan, CA-AM, vice president of worldwide alliances at Xerox Corporation and chairman of the board for ASAP; Phil Sack, CA-AM, (accepting ASAP’s Membership award), president of ASAP Asia Collaborative Business Community; Art Canter, president and CEO of ASAP. Silicon Valley Product Management Association (SVPMA), Silicon Valley American Marketing Association (SVAMA), and Women In Consulting (WIC) and had signed five other organizations: the East Bay Innovation Group (EBIG), Association of Strategic Planning (ASP), University of Santa Cruz Extension, Business Marketing Association (BMA), and Silicon Valley Association of Startup Entrepreneurs (SVASE).
Innovation Award With a wide geography that spans Wisconsin, Illinois, Indiana, and Ohio among other states, the Midwest chapter has always been challenged to put together events convenient and accessible for its entire member base. The chapter remedied this by coupling its Executive Breakfast and chapter meeting in Chicago on back-to-back September days so that members could more easily justify attendance. A “Shameless Self-Promotion”
presentation highlighted the chapter meeting. The following day 25 executives ruminated on “Collaborative Innovation for Alliances” as part of the Executive Breakfast. Both events exceeded attendance figures of past meetings by a wide margin, earning the Midwest chapter the Innovation Award.
Program Award The Midwest and California chapters split Program Award honors. California’s Skills Mastery Series consisted of five webinars and three in-person events that touched on a wide variety of areas including social media, metrics and governance, partner ecosystems, collaborative innovation, joint business planning, and short-term alliances. The Midwest Chapter was recognized for the creation of its Minnesota Satellite Community that is now regularly drawing 30-plus attendees to its events. n 25
THE ASAP ALLIANCE MANAGEMENT CERTIFICATION PROGRAM OFFERS individuals the opportunity to demonstrate a mastery of skills in alliance management as well as in managing collaborative business relationships. The certification is based on the alliance competencies needed to successfully manage an alliance. There are two levels of certification—Certiﬁcation of Achievement–Alliance Management, the basic level of certification level of certification, and Certiﬁed Strategic Alliance Professional, the advanced level of certification. Individuals who are CSAP certified have demonstrated a command of the full life cycle of alliance management from inception to termination. CONTEXT SKILLS Business skills required in alliance management, not unique to the role. n Communications Skills n Conflict Resolution n Negotiation Skills n Financial Management n Change Management n Project Management n Team Management n Leadership Through Influence n Problem Solving and Decision Making
CORE SKILLS Critical comCOMPANY SKILLS Knowledge petencies specific to the role of elements unique to company alliance management. and competitive environments. n Creating Strategic Alignment n Company Strategic n Value Proposition Imperatives n Industry and Development n Governance Technical Drivers n Alliance Metrics Setting n Organizational and n Operating Principles Functional Structure n Joint Business Planning n Company Governance n Alliance Negotiations n Company Partnering n Organizational Alignment Culture n Relationship Management n Transition n Cultural Considerations
What’s in your future? Join ASAP today to validate your specialized career skills that have become increasingly critical to the business world through our certification programs and get valuable networking, professional ALLIANCE development, research, and other MANAGEMENT resources that will help advance your CERTIFICATION career in alliance management. For more information contact: 960 Turnpike Street Pam Goodell Canton, MA 02021 Director of Operations Tel: 781-562-1630 email@example.com Fax: 781-562-0354 or call 781-562-1630 ext. 202 www.strategic-alliances.org
Alliances 101: SAS Institute Paves a Path to Market A Portfolio Approach Can Unleash the Full Potential of Partner Initiativesâ€”Again and Again By John W. DeWitt and Jon Lavietes
Quarter 2, 2011
COMPANIES ENTER INTO ALLIANCE relationships to realize the potential embodied by the mutual value proposition. Unleashing this potential typically involves initiatives that combine your company’s assets (e.g., intellectual property, domain expertise) with your partner’s assets into a joint offer that you take to market. The challenge is how to realize the potential of collaborative initiatives, consistently and repeatedly, without wasting time, energy, or money. It was this challenge that Russ Cobb, vice president of marketing and alliances for Cary, N.C.–based business analytics software giant SAS, was looking to address when he began to articulate a new vision for how the company qualified, prioritized, and executed initiatives
Fortunately for the alliance management team, the corporate culture at SAS provided plenty of potential upside for the new PTM-based alliance approach. with alliance partners for co-developed and co-marketed products, collaborative solutions, and other joint go-tomarket offerings. Cobb was looking to more effectively align alliance initiatives with the company’s marketing objectives and achieve best in class partner impact, based on IDC’s definition of 35 percent of company revenues associated with partners. Achieving this level of impact meant placing bigger bets and engaging in more strategic efforts—a challenge for SAS for several reasons, including too many ill-defined, ineffectively governed partner initiatives within its portfolio and the lack of a cohesive framework for evaluating the trade-offs between competing opportunities. Cobb sought to instill a mind-set and roadmap that would help qualify and develop these alliance endeavors in a way that would put SAS and partner sales teams in the best position to execute.
Over the course of 2006 (when the vision was established) and 2007 (when the process was developed and initially rolled out), Cobb and his team set about bringing this vision to life. They unveiled the result in 2008, a set of practices based on the RACI (Responsible, Accountable, Consulted, and Informed) model for delegating roles and responsibilities called the Path to Market (PTM) initiatives. “PTMs are our vehicle for getting to scale and proactively working with partners on repeatable opportunities to maximize revenues,” said Cobb.
Imposing Order and Structure on Alliances When Cobb began his mission, SAS lacked a formal and consistent approach to qualifying partner initiatives. Identification and pursuit of new initiatives with either new or existing partners was done informally and tactically. It wasn’t a portfolio approach. “At that time, an overwhelming majority of revenues was very opportunistic with partners,” said Donna Peek, CSAP, global senior program manager of alliances at SAS. “There were not a lot of strategic repeatable initiatives in place.” Account executives previously engaged partners on a tactical, one-off basis. For example, if a SAS account executive was selling SAS Marketing Automation in an account where one partner was dominant, the AE would seek to tactically engage that partner to close this one deal.
INVESTMENT STRATEGY: HOW SAS MANAGES THE PORTFOLIO 2007
Portfolio management ■ Rudimentary reporting and tracking ■ Formal quarterly reviews ■ Established performance standards ■ Orion designators ■
Stakeholder buy-in ■ Qualification and approval process rollout ■ Inventory ■ Internal training ■ Compensation plan ■
Vision established RACI framework
ASAG announced ■ Validation and launch process rollout ■ Formalized reporting ■ Launch checkpoints ■ Monthly “AMFM” checkpoints ■
Source: SAS Alliance | Path to Market
Strategic Alliance Magazine
THE PATH TO MARKET PROCESS
Stakeholder Engagement Approval Gates Source: SAS Alliance | Path to Market
“Now, specific partner initiatives—PTMs—are aligned with our overall SAS business objectives through a formal performance management process. Because of that, partner initiatives are much more likely to reach their intended scale and revenue impact,” said Cobb. Fortunately for the alliance management team, the corporate culture at SAS provided plenty of potential upside for the new PTM-based alliance approach. The company makes a significant annual investment in R&D—last year, SAS reinvested almost a quarter of its top-line revenue into R&D—so the company had no shortage of innovative software solutions to fuel collaboration with partners. More important, it was not beholden to public shareholders, putting the company in a unique position to maintain the requisite patience for fulfilling partner program goals. “I don’t think there’s a universally understood recognition of the amount of effort it takes to extract value from strategic alliance relationships,” said Peek. “SAS is privately held so we had the luxury of taking the longterm view and not having to make tactical tradeoffs to please investors.”
The Discomfort of Change However, those built-in advantages did not make implementation any easier. To make PTMs work, every department outside of alliance management—product marketing, sales, professional services, global practices, PR, and analyst relations—needed not only to be onboard philosophically, but also to adopt the everyday practices required of the PTM process. Most importantly, of course, alliance managers had to get on board. “The biggest part of the hurdle was convincing people to Quarter 2, 2011
change, showing them better ways to operate, and demonstrating that this change would allow them to be more effective and credible as alliance managers,” said Peek. So, SAS used existing processes—such as the product launch process—as input for the design of the PTM process, in conjunction with an outside-in view and a lot of great thinking from a talented group of people. They then used the similarities to adjust the ways that other functional groups thought about working with partners. For example, the approval/funding/performance management process for PTMs fits perfectly with the New Offering Council and related processes.
At the heart of the new SAS PTM process was a “portfolio” approach to its alliances. Alliance managers began by enlisting an executive sponsor and the sales team whenever pursuing an idea for a new partner initiative. Once their support was secured, that initiative entered the SAS PTM portfolio. Peek added that she and her team can relate to a refrain touted by marketing author and public speaker Seth Godin that says, “It’s a lot easier for an organization to adopt new words than it is to actually change anything. Real change is uncomfortable.” SAS has also found synergy with Godin regarding the approach to business development with new partners—that companies should think “process first, ideas second. If you’re going to be bringing new 29
partners and new ideas into your organization, you need a process to do it. Professionals don’t ‘know it when I see it.’ Instead professionals think about the abilities of their company and strategies necessary to bring ideas in, refine them, and launch them,” read a Godin quote Peek had circulated widely among her internal stakeholders.
Bad Produce and “Going Ugly Early” At the heart of the new SAS PTM process was a “portfolio” approach to its alliances. Alliance managers began by enlisting an executive sponsor and the sales team whenever pursuing an idea for a new partner initiative. Once their support was secured, that initiative entered the SAS PTM portfolio. The next challenge was to validate the new initiative, either by securing a customer win or closing a proof of concept with a customer. “That shows the PTM is ‘a dog that will hunt,’” Peek said. Each initiative is entered into the SAS PTM SharePoint portal with metadata such as revenue, pipeline, industries, business units, solution areas, targeted geographies, and other examples that can be retrieved in various forms, including PTM pipeline and revenue reports, as well as reports on retired initiatives,
A solid alliance initiative will eventually flourish once customers see value and validate the program. To earn that customer endorsement, Peek recommends narrowing in on specific customer challenges rather than pursuing bigger-picture, global issues. initiative status, initiative by product area or industry, etc. The reports, which are reviewed by upper management, illustrate which PTM initiatives are healthy and which are stalled. “[There are] a number of good and valid reasons to retire initiatives,” said Peek. “PTMs are like produce, they go bad if they’re left lying around. You have to keep them moving through the process.” The nitty-gritty execution and management of each initiative in the portfolio begins with internal and partner stakeholders answering nine pages’ worth of tough and sometimes uncomfortable questions pertaining to all facets of the alliance initiative. “What’s the market? Who is the decision maker? Who are 30
our competitors? What is the three-way value proposition? What is our solutions profile? What kind of buy-in and traction do we have from sales? Are there IP issues or concerns? How will we deliver this? How will we sell this?” said Peek, reciting a cross-section of questions that illustrate the qualification document’s broad nature. What might seem like a laborious and tedious task from the outside—Peek refers to it as “going ugly early”—is actually appreciated both within SAS and across its partners. “Experienced, high-performing alliance managers never complained,” said Peek. “Over time, as they started using the document, it started helping them avoid major problems. Sometimes we find out [through the process] that one or both parties may be making assumptions that are not correct. Stopping something from moving forward can be just as valuable as getting everything lined up because you end up not wasting nine months of effort to find out something is not going to work.”
Putting Alliances on the Path to Market With the initial landscaping out of the way, the PTM process goes deeper into execution mode, which predictably involves the sales teams heavily as SAS and its partners march a product or service to market. Alliance managers do most of the heavy lifting during the qualification phase. Once the PTM is in launch mode, the sales and marketing teams are heavily involved, with coordination from the alliance managers. The sales and marketing teams are charged with preparing sales decks, specific to their alliance initiatives, that provide basic selling points, competitive differentiators, breakdowns of roles and responsibilities between SAS and each respective partner, customer references, partners’ reputation among SAS sales reps, and general messaging. By the time the alliance team brings its product or service to market, the PTM process has put it in good position to succeed—at least that is what the numerical and anecdotal evidence suggests after two full years of practicing it. The PTM portfolio is a dynamic one, with that number changing as PTMs are retired and new ones enter. Currently, SAS counts more than 65 initiatives. Moreover, PTM initiatives drive in excess of 50 percent of partner revenues with SAS Institute’s largest alliance partners, including Teradata, Accenture and IBM. SAS employs approximately 120 alliance management professionals worldwide, roughly equal to the number of staff memStrategic Alliance Magazine
bers at the time of the PTM process’s inception, a testament to the effectiveness of the program.
er challenges rather than pursuing bigger-picture, global issues.
“What has grown is our capability. We are able to do more with the same amount of resources and be a lot more effective. When you are qualifying initiatives in a particular way, you’re engaging scarce stakeholder resources on the right opportunity. When you are not qualifying with discipline, you carry stakeholders through a bunch of initiatives that don’t necessarily work out,” said Peek.
Ultimately, though, it still comes down to a staff’s execution and its willingness to make the behavioral and organizational changes necessary to drive alliance success.
The increased efficiency and growing top-line revenue has raised the profile of the alliance management function to new heights within SAS. “We’ve gone from chasing opportunities to driving opportunities, and that’s elevated our internal credibility with SAS,” said Peek.
Openness and Forward Momentum In addition, SAS partners are very pleased with the process, even if it is demanding at times. “Small partners are relieved to know how to navigate SAS. Large partners are surprised to see that SAS has a process and are happy to be guided by it,” said Peek, adding that innovative SAS technology “would be nothing [to potential partners] if they did not have a clear, predictable way to engage with us.” Peek says it helps that SAS makes a point of being as open as possible in its dealings with partners—for example, the company shares templates, best practices, and other tactics with its partners.
“You don’t have to have everyone in the boat. You just need a critical mass. Get moving and the rest will follow,” advised Peek. In order to motivate employees to willingly move out of their comfort zone, Peek recommends constantly reminding all stakeholders what is in it for them and making their contributions tangible wherever possible. For instance, incorporating PTM tags in the SAS customer relationship management system “made it real to the alliance team,” according to Peek. Couple that with an incentive program that rewards alliance managers and business development professionals for PTM compliance, and suddenly SAS employees were motivated to commit to the program. While change may be hard to elicit, SAS cannot succeed if its staff cannot continually adapt to the ever-changing core nature of each alliance. “The secret sauce is the people and the execution and the passion,” said Peek. If SAS and its alliances team have it their way, the company will be pouring more sauce as the number of thriving alliance initiatives piles up on its plate. n
Thus far in the journey, Peek says SAS has learned a few core lessons in the execution of its PTM program. Getting internal buy-in is a must, particularly from the sales department; the lack of a sales sponsor will put a “full stop” on an alliance initiative, she said. Once an alliance initiative is moving, those responsible for its success cannot let up. Internally, SAS reminds its staff of its AMFM philosophy—“Always Maintain Forward Momentum”—because alliance projects risk retirement if they remain stalled for long periods of time. A solid alliance initiative will eventually flourish once customers see value and validate the program. To earn that customer endorsement, Peek recommends narrowing in on specific custom-
Quarter 2, 2011
Expanded, Formalized Alliance Management Practice Helps Ipsen Keep Pace with Increasing Number, Complexity of Alliances By Jon Lavietes
Strategic Alliance Magazine
STRATEGIC ALLIANCE MAGAZINE | SPECIAL FOCUS | BIOPHARMA “DON’T MESS WITH SUCCESS.” “If it ain’t broke, don’t fix it.” On the surface, it might seem that the $1.6 billion pharmaceutical company Ipsen was going against these clichés when it decided to reorganize its alliance management duties in 2008. The company had a successful alliance portfolio replete with happy two-decades-old partners, a deep commitment to its alliance function from its C-level executives, and the resources of its Corporate Business Development practice dedicated to seeing alliances to fruition. In reality, Ipsen was illustrating another old axiom when it decided to make new hires and drastically reshape the way it went about managing alliances: businesses must adapt. The 2008 restructuring was the culmination of a company transformation that had been taking place over the course of the decade. In 2001, a family-owned business transitioned to newly hired professional management whose goal was to transform a primary care productoriented company that sold mostly to the France marketplace into a company with a more diversified product portfolio complemented by specialty care offerings operating in a more global arena.
To ensure that alliances were integrated with the company and aligned with its goals, alliance management professionals became part of Ipsen’s cross-functional Portfolio Management Teams (PMT), which consisted of representatives from several parts of the company, including among others Legal, Finance, Regulatory Affairs, and Drug Development. PMTs became vital for basic communication with the rest of the company—“we only have
“If you play cards with yourself, you get bored very quickly. Those sets of cards, if you could play them with other people, there’s a lot of opportunities for modifying your portfolio of products,” said Christophe Jean, COO at Ipsen. “We saw within partnering the necessity and the opportunity to reshuﬄe the cards we were given, which fortunately [Ipsen] had many cards to play to serve this [new specialty care] strategy.”
The alliance manager has to rely on his or her relationships and knowledge of the alliance partner’s business to understand how changes in their operations will affect its own bottom line.
Getting Down to Operational Basics In 2005, Ipsen went public. Three years later, the more heavily R&D-focused company depended increasingly on alliances for innovation and was now utilizing them for commercialization purposes. Ipsen’s alliance portfolio had grown in number and complexity to the point where for the first time in its history it needed a formal alliance management function. “Ipsen needed a consolidated approach to managing alliances—operational basics needed to be agreed [upon],” said Sean McKercher, senior vice president of corporate business development at Ipsen. The company established its new Alliance Management practice with three full-time dedicated alliance directors. It instituted a common set of tools and methodologies that could be applied across all of its alliances, which were eventually captured in a 90-page alliance management guidebook in 2010 that spells out standards and provides tools for governance, internal alignment, communication, strategic oversight, and contract maintenance. Quarter 2, 2011
to make one person aware [of critical issues pertaining to an alliance], not a whole department,” said McKercher— but more important, they also shouldered much higherlevel responsibilities within the company, giving alliance management an active voice in setting Ipsen’s direction. “They set Ipsen’s [long-term] strategy in [each] therapeutic area. Our alliance managers are core members of the PMTs creating [that] strategy,” said McKercher.
Integrating Alliance Management Across the Organization Of course, the true challenge of integrating Alliance Management into the rest of the organization was figuring out how to balance alliance activities across alliance management and nonalliance personnel. As is the case with most pharmaceutical companies, Ipsen needed employees from other departments to help shoulder critical responsibilities of the alliances in their portfolio (see BioPharma Study article, p. 38). Fortunately, the company only had to evolve its existing operations somewhat to achieve this objective. Prior to 2008, Ipsen’s alliances were the responsibility of its Corporate 33
strategic alliance magazine | special focus | bioPharma Business Development department. The head of Corporate Business Development would select a cross-functional team similar to the PMTs filled with employees with the right competencies for the particular situation and the personnel “close to the people you were dealing with [in each alliance], [whether] that’s research, marketing, or development,” according to Jean, who added that this selection process was performed on “an ad hoc basis” from alliance to alliance. Now, Alliance Management and Business Development were placed side-by-side to manage alliances together while being overseen formally by Corporate Business Development. In fact, by McKercher’s estimates, the Alliance Management group manages approximately 20 of Ipsen’s 50 alliances, while Business Development actually handles a majority “on a contract management basis.” When Ipsen forms an alliance with a new partner, it is Business Development that takes the lead in negotiations. In addition to dayto-day management, alliance managers “take responsibility for ‘post-contract negotiations’— if there is a new or revised agreement with an existing partner,” says McKercher, adding that he or another business development professional from the department might occasionally be called upon for especially contentious negotiations with existing partners.
…the company not only staffs up its Alliance Management department, but does so with extreme care given the importance of alliances to the company’s success. “We do this as we do not want the alliance managers to lose the healthy relationship that they have established,” he said.
A Slow and Steady Start With Alliance Management’s place within Corporate Business Development defined and formal tools, practices, governance procedures, and rules of engagement established, Ipsen was ready to advance its alliances to another level. However, even with the right people and spirit behind the program, progress was slow but steady in its first year.
Sean McKercher, senior vice president of corporate business development at Ipsen. signed more than 40 major partnerships over the course of the last decade to accomplish a variety of preclinical, clinical, regulatory, and commercialization objectives. In the past year and a half, Ipsen’s alliance program moved three drugs to market—antiwrinkle skin products Dysport and Azzalure (which were brought to the commercial stage with partners Medicis and Galderma, respectively) and gout remedy Adenuric (Menarini). Six other drugs have either been moved to or through phase III. Although the reorganization of the Alliance Management function has been critical to Ipsen’s partnership success, people within the company also credit its leadership’s longstanding respect and commitment to the discipline for assisting the program’s development. “My experience in the past is there’s usually a champion or two in an organization, but it’s unusual that our whole management team participates in the process and believes in what we do,” said Brooke Paige, senior director of U.S. alliances at Ipsen. “It’s really an incredible opportunity to have such commitment, not to have to sell the profession of alliance management.”
“We advanced our relationships but not so much the process, the discipline, and the structure of alliance management,” said McKercher.
“It’s a broad executive commitment as well,” added McKercher. “I’ve seen [the commitment to alliance management in other companies] from commercial operations, for instance—that’s a no-brainer. Here, we have it across the board.”
While the global economy slumped in 2009 and 2010, it did not stall the progress of Ipsen’s revamped alliance management practice. The company maintained a firm handle on its growing alliance portfolio, which had
For example, Ipsen’s Finance department issues quarterly reports on the performance of critical alliances and recently reorganized to more directly look after the largest collaborations in Ipsen’s alliance portfolio. Strategic Alliance Magazine
strategic alliance magazine | special focus | bioPharma “We have found that more places are doing this with Finance. It’s becoming a trend for companies to have financial professionals specializing in accounting for alliances,” said Jan Twombly, CSAP, president of The Rhythm of Business, who has consulted with Ipsen on its alliance practice for more than two years. “We’re seeing P&Ls created for individual alliances more often now.”
“There is a greater onus on the alliance manager to monitor financial performance before the partner is required to report. The alliance manager has to rely on his or her relationships and knowledge of the alliance partner’s business to understand how changes in their operations will affect its own bottom line.”
More Resources, More Recognition
To keep pace, Ipsen has moved into the next phase of its alliance management practice’s development. Its internal Project IMPACT (Implementing Management Practices for Alliances and Collaborations) initiative aims to educate the rest of the company on the role Alliance Management plays and what it can do for other departments, instill collaboration skills within other employees who engage partners, such as researchers and product managers, advance governance procedures, and tighten up consistency of Ipsen’s approach across alliances.
The significant resources dedicated to Alliance Management illustrate this executive commitment. Ipsen’s leadership has made sure that the company not only staffs up its Alliance Management department, but does so with extreme care given the importance of alliances to the company’s success. “There’s not only this recognition, there’s this encouragement that these are important positions and, boy, you better have the right people in them as opposed to ‘well, this is just a relationship manager, what’s the big deal?’ There’s that real emphasis across the organization—recognition that these are business positions,” said McKercher. It also means greater access to key executives. Ipsen’s alliance professionals and their counterparts at partner companies have “exposure directly to the CEO and our executive committee,” according to McKercher. Another key to Ipsen’s success is a humility that underlies its alliance strategy. McKercher is adamant that Ipsen abstains from “the not-invented-here” arrogance. “We also don’t have the attitude that we’re the only ones who know how to make this work,” he adds. “If we have something but we don’t think we have the people to maximize it, we’ll partner it out and vice versa.” Ipsen currently has a dozen in-licensing and half-dozen out-licensing agreements. Alliances are contributing 40 percent of Ipsen’s revenues today, and analysts are scrutinizing their performance more closely than ever. The company knows there is no going back. “As soon as alliances are a sizeable portion of your business, you simply cannot ignore it,” said Jean. “Alliance management is no longer a technical aspect of business. It’s not only a method to manage certain relationships, it becomes basically your business.” However, Twombly says alliance managers should not wait for analyst scrutiny to start paying attention to partners’ financials. Quarter 2, 2011
Alliance Management by the Book
To these ends, Ipsen’s alliance guidebook remains key. The Alliance Management group has augmented it on an ongoing basis since it was first published and in 2011 it plans on adding a number of tools, including its new partnership planning procedures. In addition, Ipsen is assembling shorter customized versions for other departments that outline the alliance management practice’s core principles. One adaptation is serving as the foundation for a webinar series designed for Ipsen’s Global Regulatory Affairs group. Meanwhile, as partners become more integral to Ipsen’s day-to-day affairs, they will increasingly need access to Ipsen’s senior management, placing a greater premium on streamlined governance procedures. “[We have] to control our partners’ access to our executives; otherwise they skip over lines of communications. That’s where good governance comes in, and we have some good governance systems set up,” said McKercher. Ipsen will have to continually evolve and enhance its alliance management function as partnership success is ultimately the only way the relatively small (by pharmaceutical company standards) $1.6 billion company can successfully compete with the giants in its field. “The issue is we’re not a big company, so you don’t have thousands of people to refer to,” said Jean. “When [alliances] start to become more numerous and also more complex, then you’re probably well advised to at least have the commonality of methodology and other tools to manage that.” n 35
Guiding Alliances Through Biopharma Consolidations
Strategic Alliance Magazine
STRATEGIC ALLIANCE MAGAZINE | SPECIAL FOCUS | BIOPHARMA
Mergers and Acquisitions Pose Critical Challenges—but Good Alliance Programs Already Have the Skills and Processes Needed to Cope with Change By John DeWitt and Jon Lavietes
WHEN COMPANIES ACQUIRE OR MERGE, alliances on both sides of the transaction are inevitably affected. Moreover, in the biopharma space, acquisitions usually involve at least one public company, legally imposing a gap of 30 to 90 days between announcement and completed transaction. This quiet period can trigger concern and restlessness, leaving alliance personnel feeling in limbo. “It is only natural to question how an impending merger or acquisition will impact an alliance,” said Brian Daly, head of global human health alliance management at Merck in Whitehouse Station, N.J. “That sense of uncertainty can lead to anxiety.” Speculation ultimately will lead to questions about what the acquiring company’s plans are for the acquired company’s alliances, whether the two companies have similar or complementary alliance programs, and how much more or less advanced one alliance program is than the other. This “stub period,” the time between the announcement of intent and the actual closing of the deal, may sound daunting, but it doesn’t have to be, according to Steve Twait, CSAP, director of alliance management and M&A integration at Indianapolis-based Eli Lilly and Company. “It provides a nice opportunity for us to work internally to learn as much as possible about the partnerships of the company we’re acquiring. The deal process [helps] us to become familiar with who the players [are] and understand a bit about the products and history and decisions and the market.”
Know Your Contract Even before an acquisition is on the table, alliance management teams need to review the contract language of the alliance to assess what rights each company has and how they could be impacted by the changes that come with a transaction. “Each alliance manager should know what the contract says and beyond the contract think proactively about what should happen if our partner goes through a change,” said Daly. Quarter 2, 2011
Begin Dialogue Although a lot of information is confidential during a merger or acquisition, there are still avenues for the acquirer, acquired, and third-party partners to have initial discussions and obtain some preliminary information about the potential role the new alliance can play in the newly combined company. The amount of information that can be unearthed varies with each transaction, but it’s still important for these discussions to take place. “We understand a lot is confidential, but we still ask the partner keep the lines of communication open throughout the process so that we can determine if the collaboration is going to survive” when a partner is going through an M&A, said Daly. “Where does the collaboration fit in the merged company’s ecosystem?” He added that these conversations are equally critical for the acquirer if they want to get off on the right foot. “If you don’t provide information when you can, people start to worry.” Meanwhile, the door also has to be left ajar to partners of the two companies in the transaction. “It was fair for other companies to ask us about the impact on our partnerships—to have the right people on the phone, think it through together, being prepared, having underlying knowledge,” said Daly, referring to Merck’s partners that were affected when it was announced Merck was merging with Schering Plough.
Identify Potential Alliance Champions Who you get on the phone is just as important as the conversation itself. Continued on page 46 37
strategic alliance magazine | special focus | bioPharma
Alliance Teams’ Influence Depends on Success in Handling Increasing Responsibilities By Jon Lavietes
Alliance managers and their teams in the biopharmaceutical industry are being charged with seeing an increasing number of alliances to fruition. However, the powers-that-be behind this additional responsibility are not keeping pace supplying extra resources for the increased workload. According to a new study, how well alliance teams manage this quandary will determine not only the success of the alliance management program, but also whether or not alliance teams receive the recognition from upper management they may deserve. Titled The Practice of Alliance Management in the Biopharmaceutical Industry, this study, conducted by The Rhythm of Business, surveys Association of Strategic
Throughout the first half-decade of the average alliance group’s tenure, the alliance team sees its responsibilities grow steadily to a point where it has to make decisions on which tasks to relinquish. Alliance Professionals members from 47 companies headquartered in North America, Europe, and Asia. According to the survey results, alliance management teams are seeing more alliances added to their plate, yet 38
the size of these teams generally remains fewer than five people. Alliance managers, who according to the research commonly service two to three alliances at any given time, end up relinquishing or ignoring specific responsibilities on existing alliances, delegating tasks to project managers and other non-alliance personnel, or neglecting alliances that are viewed as basic to manage or less essential to the company. “[Alliance management] has to get creative about how to innovate itself and take charge of realigning the resources available to manage alliances and collaborations,” said Jeff Shuman, CSAP and principal at The Rhythm of Business. One trend is that companies are almost unanimously placing significant alliance management responsibilities in the hands of functional managers—so teaching these Strategic Alliance Magazine
STRATEGIC ALLIANCE MAGAZINE | SPECIAL FOCUS | BIOPHARMA employees alliance skills becomes part of the alliance manager’s job.
According to the survey authors, the three-year mark of this five-year curve is a critical time in heading off potential pratfalls. By then, the team should not only have an established approach to alliance management, it should educate supporting functions and high-level executives on what roles they do, and do not, perform as well as the value alliance management brings to the company. With this foundation, alliance teams can define the types of collaboration required for each alliance and allocate resources effectively as responsibilities evolve over the next two years. “If the alliance management capability is diversified with appropriately trained non-alliance personnel it will enable all parties to effectively manage an ever-changing alliance portfolio and increase the likelihood the portfolio achieves its objectives,” said Shuman. More successful alliance management will help alliance managers accomplish bigger career goals. Where a majority of respondents say corporate management sees them as essential to achieving corporate strategy, and 68 percent say they have greater sway in their companies’ direction, two-thirds are unhappy with the current influence. However, in a classic chicken-and-egg situation, to gain more recognition and resources, alliance teams will have to maintain performance in the face of increasing responsibility and portfolio complexity. More information on The Practice of Alliance Management in the Biopharmaceutical Industry study can be found at http://www.rhythmofbusiness.com/uploaddir/ 02aedc27AllianceManagementinBiopharma.pdf. Quarter 2, 2011
Percent of Respondents
60% 40% 20%
100% Percent of Respondents
The consequences? An increasingly complex portfolio may begin to underperform due to an ineffective allocation of limited resources. Additionally, the value seen from alliance management may be diminished when these key tasks are not executed.
CEOs’ Perceptions of Alliance Management
Essential to achieving Important tactical corporate strategy team members Less than 3 years 3 to 5 years
Expendable function More than 5 years
Don’t know who AM is
Alliance Management Influence
80% 60% 40% 20% 0%
100% Percent of Respondents
To understand how alliance teams have arrived at this juncture, The Rhythm of Business says it is imperative to see the arc of an alliance team’s responsibilities over a five-year period. Throughout the first half-decade of the average alliance group’s tenure, the alliance team sees its responsibilities grow steadily to a point where it has to make decisions on which tasks to relinquish. Alliance managers, according to the survey, most often surrender planning and evaluation.
Losing Maintaining influence influence Less than 3 years 3 to 5 years
Growing Dissatisfied influence with influence More than 5 years
Number of Alliances per Alliance Manager
80% 60% 40% 20% 0%
One to three Less than 3 years
Three to five 3 to 5 years
More than five More than 5 years
According to the survey authors, the three-year mark of this five-year curve is a critical time in heading off potential pitfalls.
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an alliance is only part of the job; n Starting a function from scratch; n The start-up process: The first 100 days; n Alliance management excellence without an alliance management function; n Capturing value with a balanced scorecard.
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PRS Enables Companies to Pre-Assess Ability to Partner Ann Arbor, Mich.–based Allinnova is a company that helps organizations achieve competitive position, growth, and innovation through the use of alliances. It offers a service that measures the organization’s capability to engage in Quarter 2, 2011
single partnerships or more expansive partner ecosystems. Its flagship product, the Partner Readiness Score (PRS), combines the company’s alignment gap analysis and optimization process. Customization to the unique situations of their customers, partners, and industry norms is available. PRS is derived from accepted industry best practices, the alliance experience of its key executives and other industry practitioners, and the latest academic research related to alliances. The independently managed instrument consists of an online component comprising processes and scales to weight relative importance of practices within companies, representing real-world practices and evaluation methods. Companies are applying the gap analysis to help assess the competencies of personnel involved in alliance activity and determine whether additional training is needed, to identify risk areas due to poor alignment between partners, and evaluate potential partners on their partnering competency, in order to develop and maintain a high-value, sustainable alliance. For more information, visit http://www. allinnova.com/joomla/product-menu.
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When managing alliances, most companies focus initially on contracts, structure, and processed resources, not people, but that is beginning to change.
Strategic Alliance Magazine
The Human Factor: a Key Determinant of Alliance Success The Neglected Role of Behavioral Dynamics By Curtis R. Sprouse
A crazy thing happened over the last 10 years: the revenues of pharmaceutical and biotechnology companies derived from alliances and collaborations zoomed to over 33 percent, according to some sources, while the number of collaborations grew by 25 percent per year. Itâ€™s only a matter of time before more than 50 percent of all revenue will be tied to collaborations.
Quarter 2, 2011
The bad news: according to a study in the Harvard Business Review by Jonathan Hughes and Jeff Weiss, 60 to 70 percent of these alliances fail (“Simple Rules for Making Alliances Work,” November 2007). Of the pharmaceutical and biotechnology companies that once focused exclusively on their own research and development, BusinessWeek Research Services says 75 percent now rely on partnership efforts to develop new products. Furthermore, there is an ever-expanding effort to identify, develop, manage, and commercialize third-party science while leveraging partnerships for all key operational business functions. Yet our research shows that some industry experts believe 90 percent of all alliances suffer inefficiencies, cost overruns, and time delays resulting in an inability to reach clinical or economic potential—a sobering statistic.
When the Stars Align
The cause of most of these failures? Behavioral dynamics. Also known as “the human factor.”
“Outside of technical and clinical outcomes, the difference between success and failure of an alliance often relies on a couple of senior-level individuals setting the example and influencing the teams. Having these star leaders on an alliance is a key factor of success,” Avat says.
Companies must gain better insight into the behavioral strengths and weaknesses of each team member. From small academic to large clinicaland-commercial alliance initiatives, behavioral factors have a significant negative effect. This issue can be rectified quickly and inexpensively. Why Alliances Fail A 2010 study of 223 pharmaceutical directors, managers, vice presidents, and CEOs conducted by EurekaConnect found that leaders in alliance management have been focusing primarily on: 1) Contract structure, 2) Governance, 3) Conflict resolution, and 4) Process “Going from an integrated business model to a collaborative one—which is the new norm with most companies’ pipelines and more and more marketed products springing off or relying on alliances—is proving challenging across the industry,” says Xavier Avat, director of alliance management at Gilead. “Business processes have to adjust and sometimes lag the changes required by the collaborative model.” In addition to the business process is the human factor. Avat says that in his previous roles he has seen “promising alliances with large investments struggling unnecessarily because of poor behaviors or dysfunctional leadership.” 44
Conversely, difficult products coming late to competitive markets have sometimes done better than anticipated, which Avat credits to outstanding collaborative efforts.
Kimberly Brue, CSAP, director of alliance management for the Prospective and Strategic Initiatives division at Sanofi-Aventis, agrees. “While the relationship is often cited as the cause of delays and technical failures (much of this relates to the behaviors of individuals), companies have put very little focus, thought, or effort into addressing this major determinant of successful product development,” she says. “At Sanofi-Aventis, we see this as a major opportunity to immediately impact alliances and dramatically affect project initiatives through better understanding, training, and alignment of our team and our partner’s team.” Many alliance groups focus on identifying measures that satisfy financial models and measure task completion but often fail to assess the human capital that can make or break a new product. “Most alliance managers, scientists, clinicians, and business personnel involved in alliance management have little knowledge of the tools that are used to analyze behavioral dynamics,” says Mike Leonetti, CSAP, executive director for HealthCare Partnerships at Boehringer Ingelheim and former ASAP chairman and Biopharma Council chair. “Most are not trained to address behavioral issues. While many HR departments are technically skilled in addressing behavioral issues and career development, the unique dynamic that exists with collaborations and alliances typically limits internal efforts to interaction with a partner’s team.” Strategic Alliance Magazine
The Human Factor: Behavioral Dynamics There are proven tools and models for identifying and resolving most behavioral issues that impede efficient, effective teamwork. Why are these tools not implemented? Why are companies not benchmarking optimal performances by discipline and addressing the factors costing the industry billions of dollars and limiting the availability of important therapies? When managing alliances, most companies focus initially on contracts, structure, and processed resources, not people, but that is beginning to change. “We are just beginning to develop industry standards and best practices. I believe that Merck Vaccines and other companies are now taking steps to address behavioral dynamics in a more systematic and objective manner,” says Michael Pergine, senior director of alliance strategy and commercialization for Merck Vaccines. Pharmaceutical and biotechnology companies can quickly adopt proven tools and strategies to assess and measurably improve team performance. Adoption of behavioral dynamics best practices in particular can boost alliance efficiency and success from preclinical to commercial stage. “Behavioral dynamics assessments are a strategic tool to quantify the relationship at the joint team level, leveraging strengths and correcting weaknesses to maximize alliance progress by creating a high-performing joint team,” Pergine says. Implementation of these strategies allows companies to better align teams, assign responsibilities, and manage collaborations more effectively. Companies that incorporate behavioral dynamics into alliance management optimize governance, process, and structure, creating strong teams that accomplish goals on time and within budget.
Looking Ahead According to Seeking Alpha, nine of the top 13 pharmaceutical companies will see 17 major products lose patent protection by 2012, and the loss of major products will reduce the $112 billion R&D spending of the top 50 companies by some accounts. The economics and timelines associated with current R&D approaches are not yielding the number of products necessary to sustain current revenue and profit levels. By some accounts, market consolidation combined with patent expirations will force companies to introduce one new U.S. product yielding $400 million a year in revenue for every 1 percent market share to maintain existing market position. Quarter 2, 2011
Reduction in R&D spending will decrease the number of scientists working to cure diseases, as evidenced by the large layoffs in 2009 and 2010 at major companies such as Pfizer and Merck.
The Four Requirements for Success Executive management must acknowledge the importance of alliance management to the pharmaceutical and biotechnology business model. Companies must clearly define alliance management. Currently, companies often mix project management and alliance management. Unlike project management, which focuses on the discipline of planning, organizing, and managing resources to ensure successful completion of a project, alliance management focuses on: Contract structure—aligning objectives and resources to achieve a well-defined, jointly shared objective. Material conflict resolution. Good structure, clear objectives, and appropriately skilled personnel will eliminate costly inefficiencies that plague alliances. Companies must extend benchmarking and personal assessments to identify and develop the correct skills for each key functional area of an alliance. People in key roles, particularly scientific and clinical, need to develop interpersonal and collaboration skills to improve efficiency, effectiveness, and success. Companies must gain better insight into the behavioral strengths and weaknesses of each team member. From small academic to large clinical-and-commercial alliance initiatives, behavioral factors have a significant negative effect. This issue can be rectified quickly and inexpensively. The tools and knowledge are available. The time is now. The industry can experience significant gains by defining and aligning skills of people they employ and collaborate with. This approach will be an important factor in advancing science and increasing efficiency and revenue.
Curtis R. Sprouse is president of Boston Market Strategies, Inc., and EurekaConnect, LLC.
Continued from page 37 “From the very beginning, identify who within the acquiring company will be the sponsor or champion of the alliance,” said Twait. “Identify those [executives] during the due diligence phase.” If the alliance management team has successfully identified the right alliance champions, these executives should be involved long after the initial transition and throughout the governance of the alliance.
…with the right attitude, alliance professionals are just the people to handle the flux that comes with an acquisition. Accelerate Talks After the Deal’s Completion Once the transaction goes through, the dialogue must pick up the pace immediately, with all levels of executives from the acquiring company calling their counterparts in their new partner—from the CEO to high-ranking senior management officials to alliance managers. “It can be very comforting to the partner when you speak. ‘Here’s the news coming out, here’s what we see the impact is on the collaboration, do you have any questions or concerns based on this new news.’ Partners hate to be blindsided,” said Christine Carberry, CSAP, former vice president of program and alliance management at Weston, Mass.–based Biogen Idec, who also was involved in the merger of Biogen with Idec. “Make sure they know it’s not a secret program, it’s a collaborative program. Surface what the concerns are of the new partner. Make sure our new partner understands how focused we are in making sure the alliance is going to work even in light of the change,” said Daly.
Apply Core Alliance Management Skills to Weather Change Of course, if the two companies utilize alliance management best practices, they probably already have the skills to create an open environment in which alliance professionals can build trust. In fact, Twait feels an acquisition is not that much different from some of the changes your average alliance encounters throughout its lifecycle. Often, biopharma companies need to relaunch or restart an alliance when a drug reaches the next stage or when
key personnel leave to pursue other opportunities. Lilly utilized these skills of openness after it had acquired ImClone to maintain the latter’s fruitful partnership with Bristol-Myers Squibb. “We brought ImClone folks working on the team, Bristol folks, and Lilly folks all together,” Twait explained. “We utilized our alliance management start-up process to get Lilly’s expectations on the table as well as Bristol’s. This allows you to make sure expectations are shared, think about goal setting and where we want the alliance to go.” Besides, biopharma alliances often have to last a decade or more, so pharmaceutical and biotech companies are used to dramatic change over the course of alliance agreements. Carberry feels with the right attitude, alliance professionals are just the people to handle the flux that comes with an acquisition. “Embrace being on a continuum and take a longer-term perspective on the relationship. Recognize you created the relationship thinking you were better off creating this relationship than not—some capability or capacity, a product, whatever it is—and you both feel there’s more value that can be created together.”
Acknowledge When an Alliance Cannot Survive the Transaction Of course, there are going to be times when moving the alliance forward is not the best option for one or more partners. “One thing I think biopharmaceutical companies are not particularly good at doing is thinking about exit strategies,” said Carberry. Nevertheless, the end could come immediately if the acquiring company already has a better version of the capability or product being handled by the acquired company’s alliance. “The reason we’re collaborating is to stay focused in this disease area together. If you no longer feel that you can do that—that’s tough but it’s fair—what we need to do is figure out how to unwind the collaboration in a way that works for both sides,” said Daly. In the end, consolidations are just another external force alliance managers need to deal with. The good news is that they already should have the requisite capabilities to take control of the situation. n
Strategic Alliance Magazine
Advance Your Career Don’t miss the chance to hone your skills and stay atop the ever-changing dynamics of business collaboration. Phoenix Consulting Group’s Collaborative Skills Mastery and Alliance Best Practices Workshop is headed your way—to prepare you to take that next step in your professional development. In the coming months, these workshops will travel the world to California; Mumbai, India; Sydney, Australia; Singapore; Auckland, New Zealand; London, UK; Amsterdam, NL; and Washington, D.C. Our courses utilize a skills inventory, tools, templates, references, real-world scenario role-playing, and practice exams to help you define and enhance your core alliance management knowledge. At Phoenix Consulting Group’s Collaborative Skills Mastery workshops you will: • Inventory skills and identify gaps • Review a common vocabulary for alliance management practices • Exercise the application of skills and knowledge of alliance and partner management • Participate in simulated collaborative scenarios and team problem-solving exercises • Learn to apply tools, frameworks, and best practices • Prepare for ASAP’s CA-AM or CSAP exam For more advanced skills development, we offer a complete curriculum of alliance lifecycle workshop modules that delve deep on a single subject such as Alliance Strategy, Value Creation, Governance, Metrics and many more. Decades of alliance management experience have honed Phoenix Consulting Group’s alliance management workshops. We’ve trained thousands of alliance management professionals, from over 60 companies and five continents. Courses are taught by CSAP-certified instructors who have advised and driven multi-million-dollar partnerships for companies of all sizes across a variety of industries. Leverage our wealth of real-world experience to develop your alliance management skills and advance your career. Join us at the next workshop in your part of the world. For more information, including comprehensive descriptions of upcoming courses and our other educational offerings, please visit www.phoenixcg.com or e-mail us at email@example.com.
Phoenix Consulting Group Brings Alliance Skills Mastery Workshops to a Location Near You
Collaborative Skills Mastery & Collaborative Innovation Workshops In partnership with the ASAP Asian Collaborative Business Community Mumbai, India Singapore
June 29-30, 2011 July 6-7, 2011
Additional workshops in Europe and the US London, UK May 25, 2011 Mountain View, CA September 20, 2011
Sydney, Australia July 11-12, 2011 Auckland, New Zealand July 14-15, 2011 Amsterdam, NL Washington, D.C.
July 6, 2011 & September 11 October 13, 2011
For other workshop locations and dates, visit www.phoenixcg.com/events.
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The magazine of the Association of Strategic Alliance Professionals