ILLUSTRATION BY RUTH MACAPAGAL
With my global network of business owners and billionaire entrepreneurs with a combined net worth above $135 billion, it is understandable that many of our clients approach me and my company to make introductions to the rich and famous. They want to forge successful alliances and partnerships to accelerate their business expansion and growth.
But what makes a partnership successful?
In the dynamic business environment where competition is fierce, strategic alliances and partnerships have emerged as a pivotal strategy for growth and expansion. For family businesses, which often operate on a smaller scale, forming partnerships can be a game-changer, allowing them to compete with larger entities and access resources and markets that were previously out of reach.
I will delve into the importance of these alliances, providing practical insights for CEOs and business owners on leveraging partnerships for sustainable growth.
The essence of strategic alliances
Strategic alliances are collaborative arrangements where companies combine resources and capabilities to pursue mutual goals. They can take various forms, such as joint ventures, licensing agreements or equity partnerships. These alliances enable companies to share risks, costs and rewards, fostering innovation, market access and enhanced competitiveness.
Family businesses, characterized by their ownership and management within a family, often face unique challenges, including limited resources and market access. Strategic alliances can mitigate these challenges—not just for family businesses—thereby empowering businesses to leverage external expertise, technology and networks. This allows them to drive growth and expansion.
Practical lessons and examples1. Diversification and risk mitigation
Example: The Ferrero Group
The Ferrero Group, a renowned family-owned confectionery company, has formed numerous strategic alliances, allowing it to diversify its product portfolio and mitigate risks. Ferrero has expanded its product range and geographical presence by partnering with companies like Nestle and Coca-Cola, reducing dependency on a single market or product.
Lesson: Diversification through alliances can help businesses mitigate risks and enhance stability, especially for family businesses with a concentrated focus.
2. Access to new markets and customers
Example: The Reliance Industries Limited
India’s Reliance Industries, led by Mukesh Ambani, has entered into various partnerships, including a recent one with Facebook, to expand its digital and retail footprint. This alliance has provided Reliance with access to Facebook’s extensive user base, enabling it to reach new customers and markets.
Lesson: Partnerships can serve as a gateway to new markets and customer segments, allowing businesses to increase their market share and customer base.
3. Enhanced innovation and technological advancement
Example: The BMW Group
The BMW Group, a largely family-owned automobile company, has allied with tech companies like Intel and Mobileye to advance its autonomous driving technology. These partnerships have accelerated BMW’s innovation cycle, allowing it to stay ahead in the competitive automobile industry.
Lesson: Collaborating with technologically advanced partners can accelerate innovation and technological development, enabling companies to maintain a competitive edge.
4. Optimized resource utilization and cost efficiency
Example: The Roquette Frères
The family-owned Roquette Frères, specializing in plant-based ingredients, formed a joint venture with the Dutch company Royal Cosun to optimize resource utilization and achieve cost efficiencies in producing plant-based proteins. This alliance has allowed Roquette to enhance its production efficiency and reduce costs.
Lesson: Alliances can enable optimal resource utilization and cost reduction by leveraging the complementary strengths of the partnering companies.
5. Strengthening brand image and reputation
Example: The Barilla Group
The Barilla Group, a family-owned food company, has partnered with various nongovernment organizations and entities to promote sustainable agriculture and responsible sourcing. These partnerships have strengthened Barilla’s supply chain and enhanced its brand image as a reliable and sustainable company.
Lesson: Strategic alliances with reputable partners can bolster a company’s brand image and reputation, attracting more customers and stakeholders.
Strategies for successful alliances
Few business owners and CEOs understand the strategies necessary to forge successful alliances. Here are a few key points to consider:
1. Aligning objectives
At the core of any successful alliance is a shared vision. Aligning objectives means ensuring that all parties involved mutually understand the goals and are working toward the same end.
When partners come together, each brings its own set of goals, values and expectations. It’s crucial to identify common objectives and ensure they are prioritized. This involves open discussions, workshops and brainstorming sessions where partners can lay out their expectations and find common ground. A well-defined road map can then be developed, detailing the steps and milestones toward achieving these shared objectives. This ensures that everyone is on the same page and fosters a sense of shared ownership and commitment toward the alliance’s success.
2. Effective communication
Communication is the bridge between confusion and clarity. In the context of alliances, effective communication means ensuring that all partners are well-informed, aligned and engaged throughout the collaboration.
Open and transparent communication builds trust, a fundamental ingredient for any successful partnership. Regular check-ins, meetings and updates ensure all partners are in sync. It’s also essential to establish clear communication channels and designate points of contact for different aspects of the alliance. This structured approach helps promptly address concerns, resolve conflicts and make informed decisions. Moreover, fostering a culture where feedback is encouraged and valued can lead to continuous improvement and more vital collaboration.
3. Performance metrics
Performance metrics are quantifiable measures used to track, assess and optimize the performance of an alliance over time.
For an alliance to succeed, measuring its progress and outcomes is essential. This involves setting up key performance indicators (KPIs) that align with the alliance’s objectives. These KPIs could range from financial metrics, such as revenue growth or cost savings, to operational metrics, like customer acquisition or product development milestones. Regularly monitoring these metrics provides insights into the alliance’s performance, highlighting areas of success and those that need improvement. It also ensures accountability, as partners can see the results of their collaborative efforts and make data-driven decisions. INQ
Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email
Tom.Oliver@inquirer.com.ph.