Spanning the Enterprise. Watch for your opportunity to participate in our 2012 research study on The Practice of Alliance Management in the Biopharma 足 ceutical Industry. Call +1.617.965.4777 or visit our website at rhythmofbusiness.com to access our extensive library of publications, presentations, tools, and other resources.
It’s a Complex World. Let The Rhythm of Business Help You Navigate It. Increasingly, alliance managers are being asked to do more with less. Larger alliance portfolios. More complex collaborations. Fewer organizational resources. Don’t Go It Alone. When the challenges of complexity and scale threaten the success of alliance portfolios, alliance leaders turn to The Rhythm of Business for clarity, deep insights, and step-by-step help. At The Rhythm of Business, we serve as thinking partners and guides, providing cost-effective strategies, frameworks, and tools that: + Increase alliance performance and effectiveness + Drive financial results and other measurable value + Reduce complexity (and risk) in your alliance portfolio Tap into Our Broad Experience and Deep Industry Expertise. Whether they’re starting from scratch or rethinking their alliance programs, alliance leaders call on The Rhythm of Business for our wealth of ideas and for our years of expertise in alliance-savvy industries such as biopharmaceuticals, financial services, information technology, and consumer packaged goods. Take Your Collaborative Capabilities to the Next Level. The Rhythm of Business is your “center of alliance excellence,” and a resource for comprehensive support, such as: + Partnering program design + Alliance organization, staffing, and process design + Guidebooks, toolkits, and alliance metrics + Help with alliance start-ups, strategic planning, ongoing assessments, and interventions + Customized, targeted education for alliance managers, teams, and executives + Alliance portfolio analysis, mapping, 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 and profession of alliance management across sectors, throughout industries, and around the world. Your Guide to the Future of Alliance Management Contact The Rhythm of Business today at +1 617 965 4777 or info@rhythmofbusiness.com to begin, or continue, your journey down the path toward successful alliance management.
www.rhythmofbusiness.com
The ASAP BioPharma Conference is Coming! The Charles Hotel, Cambridge Massachusetts, USA
Nov.15-16
Biopharma’s top alliance management thought leaders and companies will be there. Shouldn’t you? The ASAP BioPharma Conference gathers more prominent executives and companies associated with the development and management of biopharma alliances than any other event. It offers the most in-depth training in the “howto” of alliance management – actionable insights, practical tools, and hands-on skill building. It is the place to do business and reconnect with your current allies, or to find your new partner, employee, or potential employer. No other conference can match the ASAP BioPharma Conference’s plethora of industry-oriented professional development and networking opportunities. How can you afford not to be there? Come join us at the ASAP BioPharma Conference, where we will explore the profession’s most pressing themes, including:
Follow the 2012 ASAP BioPharma Conference on: facebook.com/asapbiopharma #asapbio2012 ASAP BioPharma Conferences
+ Creating a culture of alliance excellence + New frontiers: service alliances (e.g. CMOs, CROs) + Trends in deal making and the implications for executing long-lived alliances + Implementing a consistent partner experience + Same-drug multiparty alliances + Partnering internally with key support personnel Of course, the ASAP BioPharma Conference will still deliver the core alliance management tools, processes, people-skill training, and general knowledge that are ASAP event hallmarks. This is the premier event for alliance management professionals and all those who are responsible for the biopharmaceutical industry’s increasingly collaborative relationships. The industry’s top alliance management thought leaders and companies will be there. Shouldn’t you? Register for the event now at http://www.cvent.com/d/mcqpgft The Charles Hotel
up front
A Steady Upward Trend
A Successful Global Alliance Summit and Expanding Membership Portend Great Things to Come for ASAP and Alliance Management By Art Canter
IN MANY WAYS, It MAY NOt SEEM FIttING At FIrSt that we are putting forth an issue that prominently features articles on such “downer” subjects as terminating alliances and trying to rescue alliances that are failing—this on the heels of the unprecedented success of this year’s ASAP Global Alliance Summit, which took place March 5–8 in Las Vegas. true, our two features concern individual alliances that have reached a do-or-die, make-or-break stage; they don’t reflect the state of the alliance management profession itself. Still, it’s somewhat ironic considering that ASAP and the alliance management profession are encountering a much different inflection point—we’re clearly on the rise.
insights to members each month; and pretty soon we will be expanding the ASAP tV Youtube channel to showcase the vast knowledge of the profession’s thought leaders. In the coming months, we will also be interpreting the results of the survey we issued to our members in January and using that analysis to further build on our value proposition.
This year’s Global Alliance Summit was the most well attended in its history. In addition, ASAP signed several leading multinational companies as new Corporate and Global Members in Q1, and what’s telling is that not all are from the usual biopharma and It spaces; one is from the consumer packaged goods market, which illustrates that more folks in the business world are starting to get what we have known all along—alliances are how business gets done these days, and the latest, most sophisticated alliance management tools, processes, and training represent the smart way to help you get the most out of your collaborations.
Of course, we at ASAP still encounter our own crossroads, even in good times. In particular, our feature on the 4th State of Alliance Management Study discusses the ground our research has traversed over the past decade, and where it can go from here. The authors of this latest iteration of the study are now turning their thoughts toward which issues this research needs to focus on in order to unearth deeper insights into the profession. Which areas need closer inspection? What new questions do we need to be asking in future versions of the study? Or, as Dave Luvison, CSAP and one of the study’s authors, asked, “As pioneers in this profession, what are alliance managers going to do to take it to the next level?”
Meanwhile, ASAP and ASAP Media are translating the growing knowledge base and increased refinement of the discipline into great new services; we officially cut the ribbon on our Collaborative Buzz blog in Q1; the ASAP Netcast Web seminar series is fully off the ground, presenting invaluable strategic and practitioner-level Quarter 2, 2012
Our Individual, Corporate, and Global Members are just the people and organizations to lead this charge. They are the ones that have grown this discipline and association in numbers and influence. They have been at the prow of the
ship spotting icebergs in time to navigate around them. They are proactive in discovering not-so-obvious new ways their alliances can exceed immediate objectives and bring additional value to their organizations. ASAP Media will continue to highlight the great thinking that comes from this group. In that vein, in this issue Strategic Alliance Magazine debuts its Member Spotlight regular feature, which will aim to highlight the alliance management philosophies and practices of our Corporate and Global Members. In the context of the 4th State of Alliance Management Study, Luvison asserted, “If 10 years down the road we were still doing the same things as in 2002, we’d say we were stuck.” Fortunately, we’re not. Far from it. If the first quarter of 2012 is any indication, we are already well on our way to our next destination. By all indications, it will be an even better place. Art Canter, president and CEO of ASAP, is executive publisher of Strategic Alliance Magazine. 5
Quarter 2, 2012
The magazine of the Association of Strategic Alliance Professionals
in this issue 18
n COVER STORY
Heading for the Exit AN ASAP MEDIA PUBLICATION www.ASAPmedia.org www.strategic-alliances.org EDITORIAL TEAM Art Canter, Executive Publisher 781-562-1630 ext. 201 acanter@strategic-alliances.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
Like It or Not, There Are Many Critical Responsibilities in Winding Down Alliances That Cannot Be Ignored By Jon Lavietes
The end probably has been obvious for a while, but once the wheels are in motion for a formal conclusion to a strategic alliance, it is critical that organizations take the same care in closing out the partnership that they did in creating and maintaining it. Failure to do so can put you in bad standing legally, publicly, or professionally.
22
n alliance AT A CROSSROADS
Too Important to Fail
Getting a Troubled Alliance Back on Track | By Christine Carberry, CSAP, and Lynda McDermott, CSP
A high-profile alliance is faltering. Alliance managers are expected to turn the situation around. But how do you rescue an alliance that is just too important to fail? In this case study, the authors profile a real-life high-stakes alliance that was stumbling and lay out the road map that turned it around.
Matthew Wimmer, Design and Online Media Manager 774-316-0916 mwimmer@ASAPmedia.org ASAP STAFF Art Canter, President and CEO 781-562-1630 ext. 201 acanter@strategic-alliances.org Pam Goodell, CA-AM Director of Operations 781-562-1630 ext. 202 pgoodell@strategic-alliances.org Lori Gold, Manager of Member Services 781-562-1630 ext. 203 lgold@strategic-alliances.org Michele Shannon, Program Event Coordinator 781-562-1630 ext. 204 mshannon@strategic-alliances.org Brendan Ward, Administrative Support 781-562-1630 ext. 200 bward@strategic-alliances.org Diane Lemkin, Accounting Manager 781-562-1630 ext. 206 dianel@strategic-alliances.org Jennifer Silver, Certification Coordinator 781-562-1630 ext. 205 jsilver@strategic-alliances.org © Copyright 2012 Association of Strategic Alliance Professionals. All Rights Reserved.
27
n CEO FORUM
Q&A with Marc de Garidel, Chairman and CEO, Ipsen Group
Ipsen has always placed a great deal of critical responsibility on its alliance management practice. The importance of its alliance efforts apparently isn’t going to diminish any time soon. Ipsen’s chairman and CEO Marc de Garidel talks about the $1.6 billion biopharmaceutical company’s alliance strategy, both moving forward in 2012 and in the context of its own major changes at the executive level in 2011, in our CEO Forum. Sponsored by Quintiles. Strategic Alliance Magazine
30
n ALLIANCE AWARDS
ASAP Announces 2012 Alliance Excellence Award Winners
Oracle-Deloitte, SAS, Coherence Highlight Best-of-the-Best in 2012 | By Jon Lavietes
Last year, the Oracle-Deloitte alliance took its Asia-Pacific region joint initiatives to a new level, SAS successfully revamped its approach to managing its alliance portfolio, and Coherence facilitated a partnership that delivered critical mobile banking services to the people of Haiti in a time of crisis. For their respective efforts, Oracle, Deloitte, SAS, and Coherence were awarded the world’s most prestigious honor recognizing contributions to the alliance management field.
34
n ALLIANCE MANAGEMENT IN REVIEW
The State We’re In
ASAP’s 4th State of Alliance Management Study Shows Just How Far the Profession Has Come—and Suggests Intriguing New Directions for Where It May Go Next | By Michael Burke
Looking back over a decade of alliances and alliance management, the authors of the Study see progress: more alliances, greater use of alliance tools and best practices, and greater investment in alliance management. But does greater investment in alliance management always translate into alliance success? And where does the profession go from here?
39
n Editorial Supplement
For Better or Worse
How Understanding Personality Traits Can Help You Effectively Mitigate and Manage Alliance Conflict By John R. Hayes, MD, David Thompson, CA-AM, and Steven E. Twait, CSAP
In our last issue, the authors broadly examined the effects of conflict in alliance management. In this sponsored supplement, they take a look at how to handle two difficult personality types—narcissists and obsessivecompulsive individuals—and reduce the amount of conflict such people can potentially create. Sponsored by Eli Lilly & Co.
Regular Features: 5 n UP FRONT | By Art Canter A successful Global Alliance Summit and our expanding member base portend great things to come for alliance management.
15 n ASAP MEMBER SPOTLIGHT NetApp Alliance Program Blazes Pathway to Growth With “baked-in” alliance strategy, data management company hopes cloud is just a starting point to greater heights
11 n COLLABORATIVE BUZZ Alliance News Briefs | People in the News ASAP & ASAP Partner Calendar of Events ASAP Chapter Updates
57 n SOLUTIONS MARKETPLACE Products and services for and from strategic alliance professionals.
Quarter 2, 2012
7
Quarter 2, 2012
The magazine of the Association of Strategic Alliance Professionals
ASAP BOARD & COMMITTEE CHAIRS Russ Buchanan, CSAP ASAP Chairman of the Board Vice President, Worldwide Alliances, Xerox Corp. Jan Twombly, CSAP Chairman, ASAP Program Committee Member, ASAP Executive Committee President, The Rhythm of Business, Inc.
in this issue 44
n SPECIAL FOCUS: LEGAL EASE
What Legal Needs You to Know How to Negotiate a Contract That Lays a Foundation of Success for Licensing Deals By Elana Bertram
It’s no secret that alliance managers need to be involved in contract negotiations for a new partnership to ensure that the fine print does not become an impediment to driving a licensing deal to fruition. An expert from the legal community explains what alliance managers need to be aware of when working with legal counsel to devise a pact that gives the alliance the best chance to achieve its objectives.
48
n SPECIAL FOCUS: LEGAL EASE
Get Me Legal!
What Alliance Managers Need Legal Counsel to Know—and How They Can Work Together By Michael Burke
Strategic Alliance Magazine is published quarterly. Publisher is The Association of Strategic Alliance Professionals, 960 Turnpike Street, Canton, MA 02021, +1 781-562-1630. 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 2012, 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, +1 781-562-1630.
8
Alliance managers and inhouse legal counsel may come from different places and speak different languages, but in reality they’re on the same team. Mutual understanding—plus a definition and awareness of boundaries—is in order, along with a knowledge of how each can best help the other do its job.
58
n THE CLOSE
Alliance Serendipity
When Hundreds of Partnership-Minded Folks Encounter One Another, We’re Enlightened by a Multitude of New Possibilities for Our Alliances | By Jon Lavietes and Michael Burke
The success of the ASAP Global Alliance Summit this past March shows the enormous potential value—often well beyond what was intended or foreseen— that can be derived from collaboration. 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 info@vantagepartners.com.
Helping Companies Negotiate and Manage Critical Relationships
Check out the Vantage Partners Alliance Management Webinar Series We are excited to share our collection of virtual presentations on building and maintaining exceptional alliance management teams and capabilities within your firm. This free-to-access series, organized by the Vantage Alliance Management Capability model, includes webinars on topics ranging from up front strategy setting to negotiation to launching new relationships to transforming old(er) ones. To view the Webinar series, visit: vantagepartners.com/Alliance_Webinar_Series_Webpage.aspx.
We’re right on schedule. Full ASAP Member Survey Results Are Coming Soon!
In January, we asked you to give us your thoughts about the value of ASAP membership. Over the next few weeks, you spoke your minds. Soon we will be sharing your feedback in greater detail and telling you how we will use it to improve the value of your membership. But meanwhile here’s a preview. Approximately 400 diligent and dedicated ASAP members and 300 nonmember partners to the alliance management community filled out our survey. The great news is that, according to the early results, we are meeting our core strategic objectives to: Provide knowledge and resources, professional development tools, and networking opportunities Bolster new member recruitment while retaining our strong existing member base of leading alliance management individuals and companies Strengthen our existing communities Enable you to instill a stronger alliance capability in your company Strong delivery of our services is important to us, and you, too, indicated a desire to see a continued focus on the quality of our programs. Now, thanks to your input, ASAP’s Membership Value and Experience Committee, Board of Directors, Chapter Presidents, and Professional 10
Many members are putting the Association’s core services to good use. When asked which services you use, you indicated: Strategic Alliance Magazine
72%
Regional Chapter Events
42%
ASAPeNews monthly newsletter 41% Global Alliance Summit
39%
Best Practice Bulletins
38%
CA-AM Certification
38%
Development and Programming Committees are interpreting the results and developing plans to help you get even more from the programs and services that have become a big part of your professional life, and to extend the value of ASAP as a leader in alliance management all year round. In the coming months, we will share more information with you on how we are going to improve upon what is already a very strong value proposition, according to your feedback. In other words, ASAP will be doing even more to help you become a better alliance management professional.
Thanks to all who filled out the survey for giving us your feedback. Your voice has been heard! The ASAP Member Survey was sponsored by the ASAP Membership Value and Experience Committee (chaired by Jack Pearson, CSAP, ASAP vice chairman, and executive vice president and chief alliance officer at Concentrx Pharmaceuticals). It was led by Kim Fill, CSAP and manager at Eli Lilly and Company’s Office of Alliance Management, and Lori Gold, ASAP’s manager of membership services.
960 Turnpike St, Canton MA 02021 USA Tel: +1- 781-562-1630 strategic-alliances.org info@strategic-alliances.org
Strategic Alliance Magazine
Collaborative Buzz ASAP Congratulates a New Crop of CSAPs By Michael Burke
As those readers who are tuned in to ASAP’s LinkedIn group already know, 11 veteran alliance management executives have recently earned their CSAP certification, including ASAP’s board chairman Russ Buchanan. The need for the highest level of alliance management expertise is growing in the business world, and the latest CSAPs illustrate this. They hail from multiple countries and span a variety of industries. Congratulations to the following ASAP members who have chosen to formalize their standing as leading practitioners of the discipline by passing the CSAP exam: n Russ Buchanan, Xerox n Chi Chan, IBM n Tony DeSpirito, Schneider Electric n Paula Harpham, SAS n Kevin Little, Concordia University n Brian Lloyd, Xerox n Helen Morin, SAS n Peter Simoons, Simoons & Company n Donatella Torsello, Xerox n Scott VanValkenburgh, SAS n Ronald Wehner, Nationwide
The CSAP designation is the profession’s highest level of certification. It is for seasoned veteran practitioners with a command of the full alliance life cycle from inception to termination.
with a unique set of skills and competencies required to be adept at successfully managing organizational collaboration,” he wrote earlier this spring in a blog post. “Alliance management is a profession and starting to become recognized as such. Through certification, alliance managers demonstrate their knowledge of the alliance management skills. Certification represents a level of professional achievement and becoming certified also demonstrates a commitment to the profession.”
ASAP Welcomes Four New Corporate Members
Simoons, who is president of the ASAP BeNeLux chapter and for years has administered prep courses to professionals taking the CA-AM exam to earn the profession’s basic level of certification, has now joined the CSAP club and stands as one of ASAP’s most enthusiastic advocates of the certification program. Simoons espoused the virtues of certification in the alliance management professional’s career recently after earning his CSAP credentials at this year’s Global Alliance Summit.
Leading companies from a variety of industries continue to turn to ASAP to help bolster their alliance management practices. ASAP recently welcomed the following four new Corporate Members:
“Alliance management is evolving as a recognized management discipline
The ASAP BioPharma Conference, an annual event that explores alliance
Quarter 2, 2012
n Infosys (infosys.com) n Dow Chemical (dow.com) n Woodward, Inc. (woodward.com) n Reckitt Benckiser Group plc
(www.rb.com/home)
BioPharma Conference Site and Dates Revealed
management in the biopharmaceutical industry in unparalleled depth, will take place this November 15 and 16 at the Charles Hotel in Cambridge, Mass. This year’s BioPharma Conference will explore the theme of “Creating a Culture of Alliance Excellence” throughout a traditional biopharmaceutical company, biotech, contract manufacturing organization, or other pharmaceutical entity— in other words, embedding alliances into your organization’s DNA. The world’s leading biopharma companies and exec utives will be attending—and speaking at—the ASAP BioPharma Conference. We hope you’ll be there as well. Go to ASAP’s website, strategic-alliances.org, for more information and updates.
ASAP Member Survey Results Coming Soon
In January, the ASAP Membership Value and Experience Committee, chaired by Jack Pearson, CSAP, ASAP vice chairman and executive vice president and chief alliance officer at Concentrx Pharmaceuticals, sponsored an initiative to ask ASAP members and friends to speak their minds and tell us how well they thought ASAP was fulfilling its value proposition. This resulted in an effort led 11
Collaborative Buzz by Kim Fill, CSAP and manager at Eli Lilly and Company’s Office of Alliance Management, and Lori Gold, ASAP’s manager of membership services, to poll both members and nonmembers (i.e. prospects and partners to the alliance management community). Nearly 400 diligent and dedicated ASAP members and close to 300 nonmembers filled out our extensive survey this past winter. ASAP is in the process of analyzing the data and reviewing it with several committees across the association. The early results show that ASAP is meeting its core strategic objectives to: n Provide knowledge, resources, and
professional development tools (such as Strategic Alliance Magazine, the ASAP eNews monthly newsletter, and Best Practice Bulletins—three of the top five most often-used ASAP services, according to respondents) n Deliver great networking opportunities such as the Global Alliance Summit and regional chapter events that round out the top five most-utilized member benefits n Bolster new member recruitment and retention of the existing member base n Strengthen ASAP’s existing communities. Survey respondents reported that ASAP membership has enabled them to instill a stronger alliance capability at their companies. Now, thanks to that input, ASAP’s Membership Value and Experience Committee, board of directors, chapter presidents, and Professional Development and Programming committees are looking at how to augment ASAP’s organizational structure to help members better utilize chapters and extend the value of events all year long. In the coming months, ASAP will be sharing in greater detail how it will improve upon its already-strong value proposition based on your feedback. Keep checking www.strategic-alliances. org, our Collaborative Buzz blog, and Strategic Alliance Magazine for updates. 12
Alliance News Amgen and AstraZeneca to Partner
Amgen and ASAP Global Member AstraZeneca have agreed to share the risks and potential rewards of jointly developing five monoclonal antibodies from Amgen’s clinical inflammation portfolio, including experimental therapies for psoriasis, Crohn’s disease, lupus, and other diseases. Following a $50 million up-front payment made by AstraZeneca to Amgen, the companies will share certain costs and possible profits across multiple indications in inflammatory diseases. AstraZeneca will shoulder 65 percent of the costs through 2014, after which the companies plan to split costs equally. The collaboration will provide Amgen with new money to progress its portfolio and new development expertise in inflammation and asthma from MedImmune, AstraZeneca’s biologics arm, the companies say. AstraZeneca already has an extensive portfolio of partnerships, including arrangements with Bristol-Myers Squibb, GlaxoSmithKline, and Merck. This new agreement with Amgen fits into a broader effort to externalize its drug discovery work.
Smart Parking in the Future: Citi, IBM, and Streetline
Citi, along with ASAP Global Member IBM and Streetline, Inc., has announced the extension of a $25 million Citi credit facility to Streetline, in collaboration with IBM, aimed at funding innovation in parking and transforming cities for the future. As the majority of the world’s population moves to metropolitan areas, key city systems, including city streets and parking resources, are being strained to the breaking point—in addition to the air pollution created while motorists search for parking places.
The collaboration between Citi, IBM, and Streetline aims to provide a funding source to bring new technology and smarter parking to cities around the globe. The financing will enable cities to acquire smart parking technology at no initial up-front cost, thereby facilitating adoption and deployment of the latest in parking advancements. Through this relationship, cities will now have the option to adopt Streetline’s cloud-based smart parking solutions on a pay-asyou-go basis. With sensors and applications from Streetline and analytics technologies and “Smarter Cities” expertise from IBM, cities can tap historical and realtime data to help them gain a better understanding of the interdependencies between parking and their overall transportation network with other city services. Such knowledge is critical in planning for economic development, merchant services, mass transit scheduling, and infrastructure projects, among other key city functions. Streetline’s patented smart parking platform detects the presence of a car through a network of ultra-low-power wireless sensors located in individual parking spaces. This information is then made available in real time both to the city, as well as to consumers via Parker, the leading consumer guidance app for smartphones, tablets, personal computers, and—soon—in-car navigation systems, available free via the iTunes Store or Android marketplace.
Daiichi Sankyo and NGM Biopharmaceuticals Ink Diabetes Collaboration Agreement
ASAP Corporate Member Daiichi Sankyo and NGM Biopharmaceuticals have announced that they have entered into a research collaboration and license agreement to discover and develop novel therapeutics that modulate beta-cell regeneration for the treatment of diabetes. As part of this collaboration, NGM will apply its Strategic Alliance Magazine
integrated discovery technology and in vivo screening platform to identify and validate physiologically relevant metabolic targets that modulate betacell growth and function. The two companies will jointly conduct research on selected targets with the goal of identifying and optimizing drug candi dates for further development. Daiichi Sankyo will assume responsibility for preclinical studies, clinical development, manufacturing, and commercialization on a worldwide basis.
Optimer Pharmaceuticals and Astellas Announce Collaboration
Optimer Pharmaceuticals and ASAP Corporate Member Astellas Pharma have announced the execution of an exclusive collaboration and license agreement to develop and commercialize fidaxomicin tablets in Japan for the treatment of clostridium difficile infection. In return Optimer will receive a one-time, up-front cash payment of $20 million from Astellas. Optimer is also eligible to receive additional cash payments of up to $70 million upon the achievement of certain regulatory and commercial milestones. Optimer is also entitled to receive payments from Astellas equaling a double-digit percentage of Astellas’s net sales in the territory. Astellas is responsible for all future costs associated with the development and commercialization of fidaxomicin in Japan.
BMC Software and VCE Form Strategic Alliance ASAP Corporate Member BMC Software and VCE have announced a strategic alliance that will combine the industryleading solutions of both companies to address the growing market demand for best-in-class converged infrastructures in cloud computing projects. As IT departments adopt cloud at an ever-accelerating pace, the integration of the VCE Vblock Infrastructure PlatQuarter 2, 2012
form and BMC’s business-centric cloud management solutions will help joint customers for BMC and VCE automate their management of comprehensive cloud infrastructures. As a part of the alliance, BMC and VCE will enhance the interoperability and integration of their products and work together to promote and offer their solutions in the market.
Great Scots: PPD Partners for Scottish Clinical Research The Scottish Government and ASAP Corporate Member Pharmaceutical Product Development, LLC (PPD), recently announced a unique alliance designed to increase the amount of clinical research conducted in Scotland, accelerate the development of new medical ther apies, and enhance health care treatment options for the country’s citizens. The alliance between PPD and NHS Research Scotland (NRS) advances the long-standing relationship linking the leading global research organization and the Scottish Government. PPD will work closely with the major health boards across Scotland to further reduce study start-up times, streamline regulatory approval processes, increase the number of patients recruited for clinical trials, and ensure the availability of resources and training to increase the number of physicians and support staff conducting research. PPD’s team of more than 300 profess ionals in Bellshill, Lanarkshire, offers expertise in clinical management, data management, project management, pharmacovigilance, biostatistics, and quality assurance.
Boehringer Ingelheim and Xencor Collaborate on Antibodies
Xencor, Inc., a company using its proprietary Protein Design Automation (PDA) platform technology to engineer next-generation antibodies, and ASAP Corporate Member Boehringer
Ingelheim announced in February a co llaboration agreement for certain Xencor biosuperior monoclonal antibodies.
Millions of people rely on oceans for jobs and food, and as the world’s population reaches 9 billion, it underscores the need to better manage the seas. Under the terms of the agreement, Boehringer Ingelheim will provide all manufacturing and product supply from preclinical through Phase 1 development. Xencor is responsible for preclinical and clinical studies and retains all development and commercial rights to products under the agreement. Upon successful advancement of clinical programs beyond Phase 1 development, Boehringer Ingelheim has certain manufacturing rights to supply clinical and commercial material to Xencor.
Teradata and Hortonworks Partner on Hadoop Leading analytic data solutions company and ASAP Corporate Member Teradata and Hortonworks, a commercial vendor promoting the development and support of Apache Hadoop, have announced the signing of a new partnership agreement. The two companies will join forces to provide technologies and strategic guidance to help businesses build integrated, transparent, enterprise-class big data analytic solutions that leverage Apache Hadoop. The partnership will focus on enabling businesses to use Apache Hadoop to harness the value from new sources of data. Businesses will be able to quickly load and refine multistructured data, some of which is being discarded today, for discovery and analytics. The resulting insights will enable analysts and frontline users to make the best business decisions possible. 13
Collaborative Buzz An Alliance for the Oceans
The World Bank recently announced a new global alliance to better manage and protect the world’s oceans, which are under threat from overfishing, pollution, and climate change. Oceans are the lifeblood of the planet and the global economy, World Bank president Robert Zoellick told a conference on ocean conservation in Singapore. Yet the seas have become overexploited, coastlines badly degraded, and reefs under threat from pollution and rising temperatures. “We need a new SOS: Save Our Seas,” Zoellick said in announcing the alliance. The partnership would bring together countries, scientific centers, nongovernmental groups, international organizations, foundations, and the private sector, he said. The World Bank is aiming to help guide the effort by bringing together existing global ocean conservation programs and support efforts to mobilize finance
With HP and Microsoft, Polycom combines best-of-breed video collaboration capabilities and tested interoperability to make it easier to deliver, scale, and manage the disparate components of unified communications. and develop market mechanisms to place a value on the benefits that oceans provide. Millions of people rely on oceans for jobs and food, and that dependence will grow as the world’s population reaches 9 billion, underscoring the need to better manage the seas. Zoellick said the alliance was initially committed to mobilizing at least $300 million in finance. “Working with governments, the scientific community, civil society organizations, and the private sector, we aim to leverage as much as $1.2 billion to support healthy and sustainable oceans,” he added. 14
Lilly: Innovation Starts Here
ASAP Global Member Eli Lilly and Company recently announced the launch of its global Innovation Starts Here initiative, which supports Lilly’s commitment to speeding the delivery of innovative new medicines to patients around the world. Two key components of this initiative include the Lilly Research Awards Program and the Lilly Innovation Fellowship Awards. Through both, Lilly scientists will collaborate with academic researchers on projects that will aid in the advancement of Lilly’s pipeline for the future. These important programs will also further Lilly’s investment in research and development (R&D) in Europe, as well as in the United States. “Through Innovation Starts Here, Lilly is contributing to a global collaborative culture for idea generation and innovation, helping to build the Lilly pipeline for the future while also providing resources to advance important research and development programs in Europe,” said Jan Lundberg, Ph.D., executive vice president of science and technology and president of Lilly Research Laboratories. “Collab oration is a key component to discovering innovative medicines and improving outcomes for patients. Finding innovative medicines that have clear, demonstrable value for those diseases where the unmet need is great—like diabetes and Alz heimer’s disease—is not only a scientific imperative, it’s an economic one as well.”
Abbott and Galapagos Collaborate on Autoimmune Diseases ASAP Global Member Abbott and Galapagos announced they have entered into a global collaboration to develop and commercialize an oral, next-generation JAK1 inhibitor in Phase II development with the potential to treat multiple autoimmune diseases. GLPG0634 is a highly selective JAK1 inhibitor that Galapagos is developing for the treatment of rheumatoid arthritis (RA) and other autoimmune diseases. “The addition of this novel, oral
compound offers patients the potential for advanced treatment options and an improved patient experience to address RA and other autoimmune diseases,” said John Leonard, M.D. and senior vice president of global research and development at Abbott. “Abbott’s expertise in immunology, combined with a robust portfolio of investigational treatments, represents promising innovation across several areas of medical need.”
Polycom, Microsoft, and HP Working on Video Collaboration
ASAP Corporate Member Polycom, Inc., global leader in open standards–based unified communications (UC), ann ounced in March two new interoperable solutions with HP and ASAP Global Member Microsoft that combine Polycom RealPresence video solutions, HP Networking technology and services, and Microsoft Lync with joint reference architectures. The intent is to make it easier to deliver, scale, and manage UC environments that keep employees connected via video, voice, and other communications apps from anywhere. The solutions bring together the key elements of UC and video collaboration, from the networking and UC platform to high-quality video infrastructure and systems, enabling businesses to reduce total cost of ownership and allowing end users to participate in face-to-face meetings anytime, across any environment. “Together with HP and Microsoft, Polycom is delivering interoperable solutions that are greater than the sum of their parts: they combine best-of-breed video collab oration capabilities and tested interoperability from three industry leaders to make it easier to deliver, scale, and manage all the disparate applications and components of unified communications,” said Sue Hayden, executive vice president of strat egic alliances at Polycom. “We’re hearing from organizations around the world that video collaboration is a mission-critical part of how they run their businesses.” Continued on page 54 Strategic Alliance Magazine
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spotlight member
NetApp Alliance Program Blazes Pathway to Growth With “Baked-In” Alliance Strategy, Data Management Company Hopes Cloud Is Just a Starting Point to Greater Heights By Jon Lavietes
IN SOME rESPECtS, ALLIANCES IN tHE It INDUStrY’S formative years 10 to 15 years ago were fairly straightforward. Oftentimes, the goal was simply to create a more complete product or round out a solution being taken to market—making “1+1=3,” as the saying goes. today’s technology marketplace is just a tad more complex. “What we’re doing now is more than 1+1+1, it’s 1+1+1+1+1,” said Ron Long (pictured above), global partner manager for the Global Systems Integrator group at Sunnyvale, Calif.–based data management company NetApp.
NetApp in a Flash 159 partners Four categories of partners: Value-added resellers (VARs) Telcos and service providers Technology alliances (hardware and software)
attendees of a presentation he gave at the ASAP Global Alliance Summit in March titled “Integrating Partnering into the Core.” Thus, NetApp has placed big bets on its partners and engaged them at a very high level to help sustain its 20 percent five-year annual growth rate.
“Alliances are completely inteLong was referencing the increasGlobal system integrators (GSIs) grated and critical to our core ing complexity of technology 80 percent of business conducted through partners growth strategy. We don’t just solutions being brought to market kind of bolt them on, we build in less time than the already 60 percent of deals include technology partner them in from the very beginlightning-fast-paced It industry ning,” said Long, reflecting on NetApp’s strategy a day after has ever known. For example, said Long, NetApp might be included in a product bundle with SAP software, an Oracle the conclusion of the Summit. “We don’t make something database, Symantec security, and BMC cloud It management and try to find partners to integrate. We’re integrating with solutions. In addition, for technology vendors like the cloudthem way up front.” based storage solutions provider NetApp, the dynamics of the emerging on-demand model make it pretty much impossible “Pathway” to Corporate Success to avoid selling collaboratively with several partners. NetApp has four categories of partners, referred to as “pathways” inside the company: “The cloud is an ecosystem of infrastructure partners. It has 1) technology/ independent software vendors (ISVs), to be a partnership model. No one can do it alone,” Long told Quarter 2, 2012
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2) value-added resellers (VARs), 3) service providers and telecommunications companies, and 4) global system integrators (GSIs) such as Accenture, CSC, HP Enterprise Services, Wipro, HCL, Infosys, Cognizant, Atos, Fujitsu, and IBM Global Services.
Although it has been a great challenge to build out its large portfolio of core technology partnerships with ISVs, great and small, the hard work is paying off handsomely in several ways. For one, NetApp now has a diverse set of offerings its salespeople and counterparts in partner organizations can leverage. It is this first pathway that is core to NetApp’s business. Service providers and enterprise customers are looking to build their own applications off the flexible cloud infrastructure, which has put pressure on the company to create and maintain tight relationships with leading technology companies. The company has dedicated resources for key technology partners such as Microsoft, Cisco, and VMware, and it has devoted additional assets to smaller and emerging technology players and ISVs. Although it has been a great challenge for NetApp to build out its large portfolio of core technology partnerships with ISVs, great and small, over the past decade, the company says the hard work is paying off handsomely in several ways. For one, NetApp now has a diverse set of offerings its salespeople and counterparts in partner organizations can leverage. “There’s a lot of complexity but then there’s a lot of adaptability in that stack now,” said Long. More important, the myriad of technology partner combinations are being used by other partner segments to create mutual value for the partners and NetApp as well as the joint customers they share. “Our technology integrations are being picked up by GSIs and resellers,” said Ashley Eikenberry, director of alliance operations at NetApp. Long added that there is a good “triangulation with our GSIs and our key alliance partners.”
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information across these different partner types,” she said. “We’re making sure all the technology partners we’re working with—whether they are global [or] geography-based—have a way to connect with each other and also with other common pathways.”
Driving Growth
Eikenberry says NetApp’s partnering philosophy is centered around three main objectives: 1) enable partner innovation, 2) be a good partner, and 3) provide differentiated business value. With these broader values as a guide, the company takes a biggerpicture view of how its partnerships can impact all aspects of its business—whether it be integration and development, go-to-market strategy, sales planning, common partner mapping, or executive-level influence. “We want to be working closely with companies like Cisco, Microsoft, and VMware, and look at how our teams can partner and how our company is going to partner across all aspects of business,” said Eikenberry. “How can we partner with one another to really take advantage of the market opportunity?” “Sometimes alliances get stuck in functional areas in the companies, and they don’t collaborate out,” added Long. “For us, it’s very cross-functional, across the board. One of the tenets of NetApp is cross-functional integration and innovation everywhere you are.”
Next Step: Continue to Drive Awareness of the Alliance Program
For NetApp to maintain the success of its collaborative selling efforts and drive continued revenue growth, Eikenberry says more formalized, systemic measures are required to evangelize the company’s capabilities and those of its partner ecosystem. “We’re continuing to innovate in how we ‘programitize’ engaging our partners,” she said, citing recent examples of online initiatives in which NetApp and its technology partners showcased their joint solutions globally. However, staying true to its alliance-oriented business philosophy remains the key to staying ahead of the fastmoving cloud computing business.
Eikenberry said the challenge now is to increase awareness within its technology group on how NetApp-based stacks can help GSI and VAR partners sell to their enterprise customers and make sure information is being shared appropriately across all of its pathways.
“We’re in this extremely volatile and adaptable changing business environment [and] the bet we make with our partners is that they can help us manage that adaptability,” said Long. “It’s critically pointed out in our organization that alliances are [a] key way to grow and innovate.”
NetApp is evaluating “how we can leverage and share
And blaze new pathways to success. n Strategic Alliance Magazine
Earning and Filing Certification Qualification Points Will Soon Be Easier Than Ever!
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, 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.
Beginning July1, Members Will Have Nine New Ways to Earn Points This summer, ASAP is making it easier and more efficient than ever for members to secure and register qualification points toward CA-AM or CSAP renewal and to be eligible for the CSAP exam. Beginning July 1, ASAP will institute a new system that will feature: Several new ways to earn points – 15 total point categories (up from six) Straightforward criteria – categories are spelled out in greater detail Fast and easy point processing Members with current CA-AM or CSAP designations can still submit certification points under the current system up until June 30. To submit points under the current system or to get a sneak peek at the new system, please visit ASAP’s Web site (www.strategic-alliances.org). For questions regarding point submission, please contact ASAP’s Certification Coordinator, Jennifer Silver, at +1-781-562-1630 ext. 205 or jsilver@strategic-alliances.org.
ALLIANCE MANAGEMENT CERTIFICATION
960 Turnpike Street Canton, MA 02021 Tel: +1-781-562-1630 Fax: +1-781-562-0354 www.strategic-alliances.org
Heading for the Exit
Like It or Not, There Are Many Critical Responsibilities in Winding Down Alliances That Cannot Be Ignored By Jon Lavietes
When it is time to end a strategic partnership, the “departure” of an alliance has much in common with that of an airplane. The work of the journey’s last leg has only begun, not ended, and a lot of attention to detail is required to see the vessel to its destination— including, sometimes, navigating through a fair bit of turbulence. 18
Strategic Alliance Magazine
When the decision is ultimately made to dissolve a strategic partnership, the actual winding down of the alliance could take a month, a year, or even longer depending on the contractual agreement and dynamics of the partnership. Along the way, there are many things that need to happen to protect each partner company’s legal standing, reputation, and core business, both during and after the breakup. The first step in the journey, of course, is knowing when it is time to book a one-way flight out. Sometimes, this is as easy to see as the top line of an eyesight test chart. A clinical trial may have fallen short of expectations. A company may have acquired a competing solution rendering the partnership less critical to one party’s goals. Or, the alliance’s conclusion could be the result of its own success once it has achieved specific objectives. Other times, it is not so obvious that a partnership has outlasted its usefulness. Every alliance runs into conflicts, and it is not always easy to distinguish between routine disagreements and rifts that are symptomatic of larger troubles in the relationship’s foundation. However, most of the time it is pretty clear for a good long while when discord has reached a point of no return. “When the value is much greater than the conflict, you can manage it. It’s when the conflicts become disruptive and grow over time that at some point you make it a tactical relationship as opposed to a strategic relationship because the conflict starts hitting more and more accounts,” said Mike Thomas, who served as the director of Cisco’s alliance with HP from 2002 to 2009, in which role he was responsible for overall business strategy, key initiatives, and tactical objectives such as go-to-market strategy, funding, and contract negotiations. The HP-Cisco alliance grew significantly over that period of time but ultimately underwent a split in early 2010 that played out very rancorously, at least as the story was told in the mainstream business and IT press.
Winding Down Similarly, pharmaceutical companies clearly see the writing on the wall. Ann McAuley, CA-AM and director of alliance management at Astellas, said she knows the bigger picture may be amiss “when you start seeing a consistent pattern of issues that all come back to the same problem… If that commonality is deep-seated enough, it may cause a breakdown in the asset.” Likewise, this could be the result of disharm ony, or simply that both parties respectfully agree the alliance is failing to achieve objectives. For Angela Bylancik, CA-AM and executive director of BD&L alliance management at Novartis, an ASAP Global Member and a company that has seen an Quarter 2, 2012
alliance with RNAi therapeutics company Alnylam Pharmaceuticals come to an end in recent years, the main criterion is less emotional and more objective. “The end is near when we’re truly seeing that we’re not going to achieve the original objectives of the deal,” she said.
When the value is much greater than the conflict, you can manage it. It’s when the conflicts become disruptive and grow over time that at some point you make it a tactical relationship, because the conflict starts hitting more and more accounts. Of course, not every alliance ends in bitterness and disappointment. Astellas recently chose to exercise its contractual right to assume full commercial responsibility for bladder drug VESIcare, an asset it shared with GlaxoSmithKline (GSK), thus ending the nine-year Astellas-GSK alliance. The two companies (both ASAP Corporate Members) organized a dinner attended by major players in the partnership to celebrate the alliance’s success in reaching its ultimate long-term goals. “We had senior people and governance folks at the event to congratulate one another. It helped those involved long-term in the alliance to have closure—they were able to reflect,” said Mary Ann Borton, CAAM and director of alliance management in the infectious disease and oncology areas at Astellas, a company that has also recently concluded partnerships with central nervous system disorder drug company Zogenix and bacterial infection product company Theravance. When it is time to initiate the wind-down of an alliance, there are three main areas that need particular attention, according to McAuley: 1) the contract, 2) an internal and external communications plan, and 3) execution.
Contract Helps Set Agenda, Crystallize Responsibilities In the world of biopharma, most alliances are acc ompanied by a contract containing a termination clause, termination conditions, or a section that spells out, among other things, who gets the resulting intellectual property once the curtain is closed on the partnership. It is in the negotiation of these 19
termination clauses at the outset of an alliance that you can sow many seeds of a successful wind-down. A contract that covers a wide range of technical and nontechnical scenarios can smooth the path toward the exit. “Negotiators and lawyers need to think through all of the possibilities that can lead you to that point,” said Bylancik. “If you have an agreement that covers only breach and insolvency, but you have a failed clinical trial, you don’t actually have an exit for either party.” Confidentiality agreements are critical at this juncture because the companies are about to walk away with sensitive intellectual property and/or an intimate working knowledge of some of each other’s core business principles and processes. If nothing else, adhering to the contract will not only keep your company out of legal trouble, it will guide your team in going about bringing the partnership to a close. “Know your contract, know your rights and responsibilities and the rights and responsibilities of the other party. Now more than ever is when you really need to follow the rules,” said Bylancik. Of course, as important as the contract is, even the most meticulously constructed termination agreement will need some negotiation around particular details. “The contract is definitely a guidepost, but there are still a lot of layers of detail underneath,” said Borton. For example, she added, a contract may not say how long the partner companies can use a dual-company trademark. “The agreement will often not go into that specific detail.” And if the legal language no longer fits the current situation—a very possible scenario given that some pharmaceutical partnerships last for decades—get legal teams to draft amendments that mutually benefit the parties. A side amendment “can be effective,” according to McAuley.
Plan Accordingly by Communicating Effectively To mitigate chaos that could ensue when you begin to conclude an alliance, communication—both internal and external—must be clear, broad, and focused. Executive sponsorship is critical to keep employees with alliance management responsibility engaged in activities required to transition the partnership. In the technology industry, the end of the alliance is not truly the end. Instead, it’s often the transition from a strategic alliance to a tactical one. Since the parties are more often than not simultaneously competitors and partners, they likely will 20
continue selling together in niche areas, at the very least, selectively choosing individual cases to collaborate. Thomas said that field salespeople, business unit personnel, and corporate executive sponsors are critical in mending fences in partnerships—where conflict has escalated on several fronts both during growth and, more important, as large partnerships are winding down. The key is selecting a high-ranking executive who will be active in the role. “Perhaps you pick an executive with a vested interest in relationships because [the partnership] still has high value [in certain areas] on both sides,” he said. “You need a champion [for the exit] somewhere in your organization just like every alliance needs a champion at a level people can rally around. [The champion] doesn’t necessarily have to have the glamorous title, [just] the respect of your peers, coworkers, and salespeople,” said McAuley. On a pragmatic level, initial internal communication has to lay the groundwork for the execution by outlining at a high level the timeline and responsibilities, but it is also a time to remind everyone to “keep both companies’ interests at the fore, not just your own—focus on the greatest needs for the asset,” said Borton. But the real value of executive communication lies in keeping the entire organization informed as to why the decision to opt out was made and what it means for everyone. Strategic Alliance Magazine
they can be redirected toward something that clearly has more of a future,” said Bylancik. This propensity for top executives to cut back is the “biggest challenge” to winding down an alliance, according to Borton. Biopharma alliances often have to be concluded in a finite time period that can range from 30 days to more than a year, or any length of time in between. Cutting back resources can leave companies scrambling when timeframes for concluding a partnership are tight.
Both companies need to think about how press releases are to be distributed (e.g., a joint release or separate statements from each company) and about the content of the announcements. “That sets the tone. You have senior leadership establishing the guiding principle,” said McAuley. “Team members want something tangible to rally around.”
“It could be crunch time—only a week left—and you’re in crisis mode. The goal is not to be in that situation,” she said.
Once senior executives have endorsed the course of action, alliance managers have the complicated task of coordinating communication both within their own companies as well as with their soon-to-be-former strategic partner. Rumors might run rampant in each partner organization, and the alliance manager must manage multiple work streams to ensure that both companies stay on message in what is conveyed to their own employees as well as to each other.
Even sufficiently staffed teams will find it only natural for their focus to drift a bit.
With publicly traded companies, issues of disclosure come into play. Both companies need to think about how press releases are to be distributed (e.g., a joint release or separate statements from each company) and about the content of the announcements. “You have to align with your partner on key messages around the termination,” said McAuley. “Whatever this partner does next is going to be impacted by whatever Novartis says publicly,” said Bylancik.
The Biggest Impediment to Execution: Retaining Resources and Maintaining Positive Engagement Once a company has given termination notice, senior management often tends to downplay the importance of the exit process. “Senior leadership [is] anxious to pull resources because Quarter 2, 2012
“Sometimes it’s hard to keep people on track and engaged to do the work that needs to be done for the wind-down,” said Bylancik, adding that perceptions, true or false, can influence the mindset of “employees who do not want to be stuck on a tainted project.” This is where alliance managers are put to the test, because keeping everyone on schedule to meet contracted deliverables is arguably their most critical task. “As an alliance manager, my job [is to be] a coach. As people get into the details and there are things that aren’t going well, my job is to bring them back to what this is all about and make sure they stay on track [on items specific to the wind-down],” said McAuley. Of course, there’s also the matter of keeping any bitterness or aftereffects of conflict from affecting relationships with the folks at the partner company and the day-to-day aff airs of the alliance at large. This can be tricky in situations where the breakup isn’t mutual. “By the time Novartis is terminating unilaterally, we’ve already destroyed a lot of trust. As an alliance manager, whatever I do helps to retain whatever trust is left,” said Bylancik. Continued on page 55 21
Too Important to Fail Getting a Troubled Alliance Back on Track By Christine Carberry, CSAP, and Lynda McDermott, CSP
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Strategic Alliance Magazine
FrOM tHE OUtSIDE, tHE ALLIANCE LOOKED LIKE A HUGE SUCCESS. After years of codevelopment in the risky business of pharmaceuticals, the two partners had launched a promising new drug that attained positive commercial results. revenue from the drug was a major growth driver for both companies, and there were plenty of opportunities to expand its value. So why was the alliance faltering? Let’s start where the alliance began. The alliance was formed more than nine years earlier when the drug was still in early development. The deal was a complex, global codevelopment and cocommercialization arrangement. The alliance required joint decision making, shared operational responsibilities, and equal profit sharing. Since the risks and value of the alliance were unknown at the time of the deal and the drug was many years away from the market, the contract could only cover anticipated outcomes. Meanwhile, a lot had changed in the nine years since the alliance started, and dealing with those changes put stress on the relationship. Navigating and anticipating change is a critical skill for alliance managers. Developments within each organization, the joint teams, and the external environment can all affect alliance success. The presence in an alliance of disruptive internal and external behaviors can signal a need to take action. In this instance, this type of conduct was clearly observed, the alliance consequently was in peril,
Quarter 2, 2012
and a significant effort was needed to turn the situation around. (See sidebar, “Fault Lines”)
The Tipping Point As stress in this alliance grew, communications became more difficult. Joint teams were unable to resolve issues, and disputes were being escalated up to the Joint Steering Committee (JSC), the governing body that served as the last step before entering formal conflict resolution proceedings. Unfortunately, the JSC’s meetings were ineffective, with issues simply left unresolved. Now, nothing seemed to be moving forward and value was starting to be left on the table. Given the critical importance of the alliance, two of the JSC members stepped in to force the companies to face the fact that they could not continue the alliance without making changes. When a high-stakes alliance reaches this level of discord, the last line of defense is to bring in the highest-ranking officers to get the rest of the organization in line. The JSC members agreed to get the two companies’ CEOs together for a meeting. Though the meeting was tense, both CEOs agreed that the drug alliance was too important to both companies to let the situation deteriorate further. Now that the CEOs were engaged, everyone knew that fixing the alliance was a priority. Part of this process entailed injecting fresh blood into the partnership. Knowing when to bring in someone new is an important aspect of managing long-term alliances. recognizing the need for change, both companies used the CEO meeting as an opportunity to appoint new alliance managers. The two new alliance managers were tasked with coming up with a plan to turn the situation around.
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The Turnaround Of course, given the critical importance of the alliance to both companies and the level of complexity of managing an alliance in turmoil, these were not just any alliance professionals; they were very senior industry veterans who were comfortable with assessing the situation, developing a course of action, and openly discussing it with the JSC. Shortly after the CEO meeting, the six-person JSC was convened and the alliance managers proposed their plan.
With an outsider’s perspective and a shot of energy from new team members, the alliance had the feeling of a fresh start, which allowed the alliance managers to avoid the pitfalls of dwelling on the past and slowing down progress. The first recommendation was to engage an objective third party experienced in alliance management to diag nose the situation. After initially resisting the idea, the JSC agreed to bring aboard a consultant with an unbiased view, untainted by the emotion of past events. From there, the alliance managers promised to report on progress at each subsequent JSC meeting. Now, with an outsider’s perspective and a shot of energy from new alliance team members, the alliance had the feeling of a fresh start, and the new landscape allowed the alliance managers to avoid the pitfalls of dwelling on the past and dredging up old grievances that would just slow down progress. And with top executives closely engaged in the partnership’s affairs, team members now had good incentive to start self-correcting their behavior. The external consultant started by meeting with the alliance managers to obtain an overview of the alliance and
Fault Lines
What to Look For in a Faltering Alliance
Focusing on positions versus solutions Communicating less and at a distance Slow or stalled decision making, issue resolution, and progress Drifting away from the original governance structure and discipline Issues escalating too high in the governance structure Lack of senior management engagement 24
get an initial perspective on how and why it was misaligned. The critical first step from there was to evaluate the original agreement and determine whether it was obsolete or still a viable framework for the partnership. If the contract was out of date or the value proposition was no longer viable, there was little use in trying to turn the alliance around. Fortunately for the partnership, every one agreed that the alliance was still creating significant value and would maintain its worth to both companies under the original agreement terms. (See sidebar, “Should This Alliance Be Saved?”) Next, the alliance managers worked with the consultant to create an assessment. Armed with some preliminary information, they agreed to issue an electronic survey and interview a cross-section of team members to more specifically assess the alliance’s problems. In addition to the JSC, there were a large number of joint working teams responsible for various strategic and operational issues supporting the marketed drug and investing in its continued development. Moreover, the leaders of various functions—such as Regulatory, Manufacturing, Drug Safety, Marketing, and Development—also played an important role in influencing the alliance even if they were not part of a joint team. All of these parties were surveyed as well as key stakeholders, including function heads and executives, to provide a comprehensive view of the alliance’s dynamics. The results of the assessment showed that there was no quick fix to turn the alliance around. Team members agreed that they had found ways to work through chall enges under pressure in the past, given the tremendous importance of the alliance’s product; individual team members also had satisfactory working relationships with their counterparts. However, the survey revealed that senior management was not serving as a role model for an effective alliance. This led to confusion about decision-making authority, a lack of discipline, and the creation of ad hoc teams that existed outside the formal governance structure.
Take It from the Top The alliance managers’ plan was straightforward: fix the JSC first, then align the joint teams and the rest of each organization accordingly—a top-down approach. This meant it would take more time to conduct the turnaround, but any other approach would have risked not addressing the root causes of many surfacing issues. After an evaluation of the JSC, executives with even more seniority were added to accent its authority, while the alliance managers were added to round out its composition. Strategic Alliance Magazine
Should This Alliance Be Saved?
Before trying to turn an alliance around, evaluate the intentions behind the agreement and assess whether there is still enough value to move the alliance forward.
Is the alliance creating the expected value for both companies? Can additional value be created through the alliance? Does the existing agreement provide a suitable framework?
find that several new teams and subteams had been formed over the years. Some of these informal groupings materialized around a specific need and remained intact well after they had completed their project.
Teams were not clearly connected to one another, and over time sen ior team members were replaced with more junior ones. Not surp risingly, the team discussions started to wander into more detailed tactical and operational issues that were out of scope. The drift away from the original govern ance structure, the proliferation of teams, and the increasing team size made decision making more difficult. Taken together, these factors explained why issues went unresolved despite being escalated up the governance ladder; the right people weren’t sorting out the issues.
Have the companies and/or the external environment changed in unanticipated ways? Does the alliance still fit each company’s strategy? Having the alliance managers actively participate in JSC meetings provided a conduit for communications between and within each company. They were able to quickly debrief teams and stakeholders on JSC discussions and decisions even while formal minutes were in progress. The new JSC members developed a charter based on the alliance agreement that outlined specific roles and responsibilities. The presence of a living, breathing document helped reinforce the importance of the JSC’s role in the newly revamped alliance. The charter also helped the JSC members understand how the contract could be translated into a working document. Finally, the JSC’s charter served as a template for the other joint teams to follow. In parallel, the alliance managers took a hard look at the backlog of unresolved disputes. They worked together and engaged many of the functional leads to better understand the root causes of disagreements and to find mutually acceptable solutions to them. Each alliance manager had to do significant internal work to separate true issues from mere preferences and internal process. By instilling an understanding that failing to resolve iss ues meant the alliance was stuck, wasting time and losing value, this exercise helped bring focus to the alliance managers’ efforts. This openness and flexibility was rewarded; within three months of starting the turnaround, the JSC agreed to the resolutions and work started flowing through the alliance again.
The escalation process is critical in any alliance; if constructed correctly, it collectively keeps both companies close enough to the details of an issue while maintaining the authority to make a decision when one needs to be rendered. Thus, additional work was done to reorganize team composition, establish individual team charters, and restore discipline in working together. By streamlining
Drifting Away Moving down the chain, the next step for the consultant and the alliance managers was to address the underlying joint teams. Since the alliance was almost a decade old, they were not surprised to
Quarter 2, 2012
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the team structure and clarifying the escalation process, the teams were once again able to handle issues at the appropriate level. If they needed to escalate a matter, they still owned the issue and the implementation of its resolution. Keeping these teams accountable meant that they needed to bring forward all relevant information to the next level above them; from there, they had to accept and live with whatever outcome resulted from that higher-ranking group’s decision. Ironically, this decreased the number of issues being escalated, as teams began to understand that they were really in the best position to find a solution.
There was a fresh momentum now, and new ideas started to turn into proposals that obtained approval and moved into execution. The teams worked together to refine how to work collaboratively and identify further improvements. The key was putting the agreements into practice and calling out any behaviors that were counterproductive to the alliance. The alliance managers kept the JSC informed of progress and facilitated communications across the alliance. There was a fresh momentum now, and new ideas started to turn into proposals that obtained approval and moved into execution. Over seven months, the teams worked together to continue to refine how to work collaboratively and identify further improvements. The key was putting the agreements into practice and calling out any behaviors that were counterproductive to the alliance. There were difficult conversations when a potential conflict started to Christine Carberry, CSAP, currently consults with businesses and organizations committed to delivering the value of collaboration. She has global alliance management experience spanning technology alliances, contract manufacturing, codevelopment, and cocommercialization. She also has extensive experience in all aspects of product development, from research through life cycle management. She can be reached at carberryconsulting@myfairpoint.net. Christine is an ASAP member and serves on ASAP’s board of directors. 26
brew, but addressing issues head-on meant they were resolved before they turned into a stalemate. The alliance managers knew that their work would not end with the formal turnaround effort. Constant vigilance was required to keep making adjustments in the face of change and stay ahead of potential issues.
Celebrate and Move On Of course, getting the alliance back on track was more than a structural issue. The alliance managers also had to rebuild morale and get staff members emotionally invested again. The 10-year anniversary of the alliance proved to be well timed in this regard; it provided a significant milestone to celebrate the turnaround’s success. Both CEOs attended the celebration, and a spirit of renewed commitment to the alliance could be felt throughout the event. A pause to celebrate the partnership’s success reminded each company why they were working so hard—to create value for patients, and for each of the two allied companies. One year after starting the alliance turnaround, a jointly developed long-range strategic plan provided a clear framework for making investment decisions. It brought new value to the alliance by crystallizing the drivers for creating future value, discussing risks, and defining success factors. This new framework made operational decisions easier, since everyone agreed on the forward direction. The turnaround was a success for this alliance, which was deemed “too important to fail.” Understanding that even highly strategic and valuable alliances can falter demonstrates the importance of having seas oned alliance managers involved during all stages of an alliance. n Lynda McDermott is president of EquiPro International, a strategic consulting firm that specializes in alliance management, strategic planning, and team/leadership development. She is the author of the best-selling book World Class Teams and is a Certified Speaking Professional (CSP). She can be reached at lmcdermott@ equiproint.com.
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Q&A with Marc de Garidel, Chairman and CEO, Ipsen Group Strategic Alliance Magazine: Ipsen unveiled the direction of its overall corporate strategy last June. What business objectives are the focus of the alliance management practice in the next two to three years? Marc de Garidel: Ipsen’s long-term aspiration is to become a global leader in targeted debilitating diseases. The strategy we announced intends to capture the full potential of our core assets by focusing on, and investing in, a limited number of technological platforms and disease areas, as well as leveraging our existing global footprint to drive growth. We’ve implemented a market-oriented franchise model and are building a patient-centric r&D organization focused on our core platforms of peptides and toxins. Ipsen will now focus on four franchises: 1) neurology (with our drug Dysport), 2) endocrinology (Somatuline), 3) urology-oncology (Decapeptyl), and 4) hemophilia (through our partnership with Inspiration Pharmaceuticals). Our ambition is to more than double revenues and triple earnings before interest and tax (EBIt) by 2020. Partnering is a core aspect of achieving this strategy. We partner across the business from research to marketing, so our alliance management practice is fully invested in ensuring that our many partnerships are aligned with this strategy and delivering the anticipated results. For example, our global Dysport franchise, which includes some very complex Quarter 2, 2012
partnerships, is an important component of realizing our intended growth. The alliance management team will be working both within our organization and with our partners to ensure that our financial and pipeline objectives for the franchise are met. The business objectives of the alliance management practice and the overall business objectives are fully aligned. SAM: What are your high-level expectations of Ipsen’s alliance management practice? de Garidel: Within Ipsen’s organization, alliance management is part of the corporate strategy department. Thus, alliance managers have to not only manage the daily business of our collaborations, but maintain the longer-term “big-picture” view—to be able to understand what is happening on the ground level, but also understand how it impacts strategy— and take appropriate action to ensure that actions today produce the intended longer-term results. The alliance manager really needs to own the business and ensure that the alliances are managed from a financial standpoint—to monitor the financial performance of our partnerships and the impact they have on our financials. I understand from our team that this is a bit beyond the expectations of many alliance managers, but it is essential if alliance management is to be an integral part of the business.
Also, the alliance manager must ensure that everyone throughout the Ipsen organization understands what it means to be on an alliance team or a member of a governance committee—and is prepared to carry out their respective roles on those teams.
The alliance manager needs to carefully monitor the financial performance of our partnerships. Additionally, it’s critical that alliance managers really understand their partners’ businesses. They are my senior management team’s eyes and ears into the partners’ businesses. They have to help us “see forward” in terms of the potential impact changes in our partners’ businesses may have on our own affairs. I encourage the alliance managers to invest all they can in learning and understanding the partner’s culture and to obtain a solid understanding of how we are perceived by that partner—sit on earnings calls, be face-to-face as often as practical, be aware of what is written about the partner. As alliances are seen as significant creators of value for Ipsen, I expect our alliance management group to rally people and their resources to achieve the visions of our alliances—for the benefit of both Ipsen and its partners. In that respect my objective is for Ipsen to be seen as a reliable, positive-minded partner that is 27
Copyright Š 2011 Quintiles
realizes the value of committed Alliance Management.
The stakes are too high to go it alone. Anticipating pitfalls while embracing transformation takes a veteran guide. From start to finish, you need expert insights to recognize viable opportunities — supported by best-in-class resources to design flexible solutions. It takes a culture dedicated to Alliance Management and to working harder to help partnerships succeed. More at www.quintiles.com/capital/alliance-management/
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always trying to seek solutions to any issues that arise for the ultimate benefit of the partnership. SAM: Most, if not all, portfolios have trouble spots. How does Ipsen go about evaluating and improving alliances that are not on track to meet objectives? de Garidel: Our major alliances are rigorously reported on to the executive management committee, both in terms of performance and projections. We have a dedicated finance team just for alliance activity. We conduct annual strategic planning for each major alliance. Alliances are a key component of our strategy. This level of oversight, coupled with the operational assessments and day-to-day engagement of the alliance managers, gives us the ability to highlight and resolve problem areas quickly. SAM: Ipsen is different from many organizations in that it reputedly does not require “champions” of alliance management to sell the discipline to the rest of the company. How does the alliance management group play a role in getting the rest of the organization to make its alliances succeed? de Garidel: Alliances are so core to our business that nearly every function is touched by them. Our alliance management group has also done a very good job in making themselves known to the different functions through a variety of means, including presentations and educational sessions. The regular reporting to the executive management committee that I mentioned earlier is also critical. SAM: What investments does Ipsen plan to make in its alliance management capability in 2012? de Garidel: In 2011 we separated our alliance management group from business development, and both are part of Ipsen’s corporate strategy department. In 2012, we are growing the team. So we are investing from a personnel Quarter 2, 2012
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standpoint. We have also recognized that we have many positions across the business that have an alliance management component and are working to implement a center of excellence model that supports a dispersed capability to manage alliances, while maintaining a core central function that ensures a consistent approach to alliance management throughout the company. SAM: Do alliances play a more import ant role at a midsize pharmaceutical company like Ipsen than your average biopharma company? de Garidel: Alliances are how business is done today. At one point I might have said that they were more important to a company our size, but today, they are essential to every biopharma company’s strategy, regardless of size. SAM: ASAP bestowed one of its Alliance Excellence Awards on the Ipsen-Inspiration alliance. How is that alliance progressing a year later, particularly in light of Inspiration’s hiring of a new CEO, CMO, and chief commercial officer? de Garidel: Ipsen and Inspiration were, of course, delighted to be recognized by ASAP with its 2011 Emerging Alliance Award, and the partnership has continued to develop significantly over the past year. Inspiration has moved forward with the development of the recombinant hemophilia portfolio. The lead product, IB1001, a recombinant factor IX (FIX) for the treatment of individuals with hemophilia B, has been filed with the European Medicines Agency (EMA) and is currently under review with marketing authorization anticipated by the end of this year. An application for marketing approval will also be submitted shortly in the United States. In addition OBI-1, recombinant porcine factor VIII, which is manufactured by Ipsen for Inspiration, is progressing well
and currently is in two pivotal phase III clinical studies—one for the treatment of bleeding in individuals with hemophilia A complicated by the presence of coagulation inhibitors, and another in people with acquired hemophilia. In preparation for the commercial
Alliances are how business is done today. They are essential to every biopharma company’s strategy, regardless of size. launch of IB1001 in Europe, Ipsen and Inspiration have extended their partnership with the creation of a European hemophilia commercial organization called Inspiration-Europe designed to leverage the combined strengths of Ipsen’s well-established European commercial infrastructure and medical network with Inspiration’s expertise in the field of hemophilia. This highly specialized commercial team will serve as the exclusive sales organization in Europe for all hemophilia products commercialized under the Inspiration brand nested within Ipsen’s existing commercial organization. The addition of a number of individuals with significant commercial and medical experience in specialty pharmaceuticals to Inspiration’s senior management structure has provided further impetus to driving the alliance forward in its mission to establish a significant platform in hemophilia and make recombinant coagulation factor products more widely available to treat patients globally. n Editor’s Note: Marc de Garidel was the keynote speaker at ASAP’s 2011 BioPharma Conference held in Basel, Switzerland. Ipsen is an ASAP Corporate Member.
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ASAP Announces 2012 Alliance Excellence Award Winners Oracle-Deloitte, SAS, Coherence Highlight Best-of-the-Best in 2012 By Jon Lavietes
Left to right: Russ Buchanan, CSAP, ASAP board chairman and vice president of worldwide alliances at Xerox; Scott VanValkenburgh, CSAP, senior director of alliance partnerships at SAS, accepting an Alliance Excellence Award; and Art Canter, president and CEO of ASAP
Left: Aaron Carson, senior manager at Deloitte Consulting. Right: Philip Sack, CSAP, APAC alliance director at Oracle and president of the ASAP Asia Pacific Collaborative Business Community.
As is the case every year, alliance management professionals from around the world gathered at the annual Alliance Excellence Awards Recognition Dinner, an indelible part of the ASAP Global Alliance Summit in Las Vegas on March 7, to honor alliance initiatives and programs that are not only novel, game-changing, and just plain successful, but represent the most up-to-date thinking about the discipline itself. Past Alliance Excellence Award winners have tackled a variety of internal challenges and executed external corp orate strategies to increase revenues, innovation, and positive impact on global society. And in an ever-changing worldwide business landscape, the 2012 honorees held up this tradition as they have every year since the inception of the awards in 2004. 30
“ASAP’s mission is to be the premier destination for alliance management knowledge, networking, and practices,” said Art Canter, president and CEO of ASAP. “The Alliance Excell ence Award winners exemplify the best uses of the discipline and serve as a model for the rest of the business world. Our annual Recognition Dinner gives professionals in the industry a chance to hear from leaders in the profession firsthand.” Strategic Alliance Magazine
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“The envelope, please...” Las Vegas Fox 5 television personality Jason Feinberg announcing the winners of ASAP’s 2012 Alliance Excellence Awards, with Russ Buchanan and Art Canter looking on.
Oracle-Deloitte Capitalizes on Major Market Opportunity in Asia-Pacific It is almost universally acknowledged that if global businesses want to thrive in tomorrow’s world, they will have to capitalize on the tremendous opportunities presented in the Asia-Pacific region. So it was curious that two global corporate behemoths—Global 100 company Oracle and leading professional services firm Deloitte, both of which had achieved great success on a corporate HQ level—had been slower to optimize their alliance to mine the region’s vast potential. Deloitte and Oracle decided to rebuild their alliance in the Asia-Pacific region using a “start-up” approach—that is, reevaluating the alliance as if it were a new venture in and of itself. The organizations fused a hybrid of tools, processes, and methodologies from several disciplines— sales, marketing, project management, and yes, alliance management—that fit the needs of the alliance. “Essentially we reinvented our alliance, sometimes in markets with no previous history of engagement success, by leveraging and tailoring combinations of business expertise, relationships, and sales savvy,” said Philip Sack, Oracle’s APAC alliance director for Deloitte. Oracle and Deloitte took a hard look at their product and services capabilities, as well as their relative engagement and market position within “niche” areas. They decided which geographic areas they could best serve, based on the complexity of the situation, the organizations’ internal history within each market, current market landscape, product/service compatibilities, time-to-market, and political feasibility within the organizations, among other criteria. Then, they went about stakeholder mapping— Quarter 2, 2012
identifying supporters and detractors in each relevant department and geographic territory, and recruiting the former to advance the cause of the alliance. “We really unlocked our alliance by developing spec ific relationships, understanding and navigating each organization, and having open and honest dialogue about how we can add value together for our joint clients,” said Robert Hillard, technology lead partner for Deloitte Consulting in Australia. The next step was to expand support beyond those first champions of the alliance program—a particularly critic al task in relationship-driven Asian cultures. Achieving those first joint Oracle-Deloitte customer wins provided the building blocks to expand the visibility of the alliance and gain additional backers. Those customer wins, and the people involved in bringing them to fruition, were celebrated within the organizations, and word began to spread that each partner could help the other mutually achieve their combined objectives. “We have built good momentum within our identified target areas, ‘becoming famous’ for our strong client focus and successful delivery capability,” said Teng Sherng Lim, director of Deloitte’s South East Asia Oracle practice. With the visibility of the alliance expanding, the organ izations moved to tailor the global programs to the specific needs of each locale. The alliance management group worked to provide the sales, marketing, and technical information needed for seamless knowledge transfer, delivery assistance, and relationship development with the teams on the ground in each country. 31
Similarly, governance structures replete with workshops and executive reviews were implemented at the alliance and executive levels and adapted to each geography. This infrastructure facilitated conflict management, issue escalation, trust building, and general discussions about new opportunities and the overall direction of the all iance. Dave Farrelly, Deloitte Partner New Zealand, noted in this regard that “regular and consistent alliance governance is a critical component to developing the supporting ‘people infrastructure’ of an alliance partnership.” This customizable cross-discipline approach has generated significant momentum and improvements in several benchmark sales, marketing, customer, and alliance metrics for Oracle and Deloitte. “We are seeing strong growth and momentum across our Oracle practice, with positive returns on the investment we have made through the alliance,” said Stanley Dai, partner at Deloitte China. The success in boosting results across the Asia-Pacific region, the use of an innovative “start-up” approach, and the ability to collaboratively deliver successful customer outcomes has earned the Deloitte & Oracle APAC alliance the Emerging Alliance Excellence award.
SAS Aligns Resources to Optimize Management of Alliance Portfolio With a team of 135 alliance management professionals and more than 300 partners in its base, ASAP Global Member SAS had a great challenge making sure resources for its growing alliance operation were top-notch, eff ectively deployed, and aligned with core corporate goals. An overhaul of its approach to managing its partner portfolio accomplished these objectives, earning SAS awards in two categories—Alliance Program Excellence and Innovative Alliance Practice. SAS’s reorganization was centered around a brand-new partner portfolio scoring process. This multistep procedure entailed the development and application of new measurements of its partners, categorization of partners into new tiers, alignment of resources around the newly redefined partner base, and training personnel to execute new tasks associated with each partner type. SAS began its scorecarding overhaul by assessing two broad attributes of each partner organization: 1) the value the partnership brings to the company, and 2) the partner’s overall alliance management maturity. To assess value, SAS developed what it called “GDP” metrics, a series of criteria that fit into three subcategor 32
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ies—Grow, Develop, and Protect. Concurrently, SAS classified each partner’s maturity as tactical, Emerging, or Advanced—dubbed internally as the “tEA” measures—based on their alignment, stakeholder commitment, joint business planning capabilities, governance, executive sponsorship and engagement, and dedicated alliance management resources. “We wanted to make sure [these categories] measured the impact back to the strategy of the company,” said Scott VanValkenburgh, CSAP and senior director of alliance partnerships at SAS, in a presentation summarizing the award-winning program delivered at the Global Alliance Summit. “We wanted it [to be] part of the culture. Why that is really important was because every decision we were going to make—on our staffing, our approach, and our investments—was core to what we were doing, when, and why.” Based on the GDP and tEA rankings, partners were distributed into five tiers. The tiering provided a basis for determining where SAS makes investments and places bets to drive strategic execution with partners. With these delineations in place, SAS then had to align its internal staff to properly manage these collaborative relationships today, while developing them into more valuable and mature alliances in the future. The company dedicated single alliance management teams to partners ripe for expansion and introduced a new portfolio coverage model to focus on developing the value and maturity of a portfolio of partners. An individual alliance management team would be dedicated to all of the company’s technology alliances, for example, while a different specialized team was charged with handling responsibilities for all consulting-oriented partner organizations. Hybrid oneQuarter 2, 2012
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© Copyright 2010, SAS Institute. All right reserved.
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to-one and one-to-many teams were developed to maintain alliances targeted for niche objectives. Of course, to ensure execution of this newly aligned alliance portfolio, SAS needed to instill within its staff members the appropriate skills required for each partner type. The company created five job functions and formally integrated them into the company’s Hr framework. SAS borrowed best practices from a variety of training organizations and blended its own SAS-specific skills to create a career development and training curriculum. In addition, every alliance management professional was required to obtain CA-AM or CSAP certification from ASAP as appropriate to their job level. SAS is now able to allocate the right level of resources for each partnership, including staff members with skill sets that fit the particular needs of each alliance. The company can also reallocate its assets as the market changes and partner relationships evolve.
Coherence, Scotiabank, and Digicel Deliver Tcho Tcho Mobile e-Wallet to Aid Haiti Earthquake Recovery On January 12, 2010, a massive earthquake registering 7.0 on the richter scale ravaged Haiti, leaving in its wake widespread damage to the country’s physical infrastructure and thousands of citizens living in tent cities. Among the damages were 35 percent of the country’s small network of bank branches and AtMs, which forced many residents to travel arduously long distances to retrieve cash or conduct financial transactions. Many others were left with no means of accessing their money at all. Continued on page 54 33
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Strategic Alliance Magazine
The State We’re In ASAP’s 4th State of Alliance Management Study Shows Just How Far the Profession Has Come— and Suggests Intriguing New Directions for Where It May Go Next By Michael Burke
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Call it a crossroads, an inflection point, or a plateau—alliance management is not where it was 10 years ago. As Dave Luvison, CSAP, principal of Misty Creek Enterprises and professor at the Keller Graduate School of Management, put it recently, “We’re now a profession. We’re not just making stuff up.” But now comes a puzzle: while more companies are entering into more (and increasingly complex) all iances, formalizing alliance management programs, and employing certified alliance professionals who implement recognized tools and best practices for alliance manage ment, alliance success rates have remained in roughly the same band over the last decade. This is one of the key findings of ASAP’s 4th State of All – Companies that invest more in alliance management tend to perform better than those that try to “econoiance Management Study, coauthored by Luvison, Ard- mize” by scaling back investments in their alliance Pieter de Man, CSAP, principal at Atos Consulting and management practices. professor at VU University Amsterdam, and their coll eagues Geert Duysters, CA-AM, professor of entrepre- – Alliance success is based not only on the “fit” between partners, but on their respective alliance capabilities. neurship at Eindhoven University of Technology in the – The better developed a company’s “alliance culture,” the Netherlands, and Anyes Krijnen, a graduate of Eindbetter its alliance success rates. hoven University and project team member at LogiZ. – Alliance management is still not always in companies’ DNA. The average level of alliance culture found in the study was 3.2 on a scale of one to five. In other words, according to de Man, “Most companies do not yet have a strong alliance culture.”
There’s room for improvement in alliance culture. People have the tools available, but they think they can wing it. This fourth iteration of the study, which began in 2001 and was redone in 2007, 2009, and most recently in Sept ember 2011, surveyed 272 individuals representing app roximately 230 companies—both ASAP members and nonmembers—on the number of alliances they manage, their use of tools and best practices, the success of the all iances in their portfolio, and other related questions. Acc ording to de Man, about 50 percent of the respondents were U.S. companies, 25 percent were European, and the rest from the Asia-Pacific region and elsewhere around the globe. Twenty-nine percent of respondents came from the realm of IT, 23 percent from the pharmaceutical sect or, followed by smaller percentages in other industries. Among other conclusions unearthed in the study: – The number of “very alliance-intensive” companies— defined as those with 40 or more alliances—is four times higher now than in 2007. – Companies have made a substantial investment in alliance management tools since 2001, and the use of such tools and processes has increased—perhaps even to “the point of saturation”—but these tools are not always applied consistently across alliance portfolios. 36
Good Questions Both Luvison and de Man presented some of the highlights from the study at the recent ASAP Global Alliance Summit in Las Vegas. In his interactive talk, which closed the Summit, Luvison noted that while the use of alliance management tools has moved upward fairly steadily, from around 30 percent of companies surveyed in 2001 to around 80 percent in the most recent study, alliance succ ess rates have remained relatively flat, hovering between 50 and 60 percent over the course of the decade. This finding provokes a couple of questions: Why hasn’t the documented increase in the use of alliance tools and best practices led to greater alliance success rates? And was it ever reasonable to expect that it would? There is no one solid answer, but two more findings hint at poss ible reasons: first, only a quarter of companies surveyed used alliance management tools consistently across their portfolios; second, much of the work of alliance management, according to Luvison, remains “over the transom—we’re still managing a lot of alliances we didn’t have much say in.” A quote from the Study itself may also shine some light on this “mystery”: “Even though the results showed an Strategic Alliance Magazine
increase [in average alliance success rates] in 2009 to 57%, the average alliance portfolio performance in 2011 has decreased somewhat to 53%. Interviews showed that this small decrease in the success rate, apart from maybe being statistical noise, may be caused by the economic recession, which appears to have affected marketing and sales alliances in the IT industry in particular.” Interestingly as well, the Study notes that ASAP members’ average alliance success rate is 56 percent, whereas nonmembers’ is 49 percent. In his presentation in Las Vegas, Luvison polled the ass embled audience via text message and email—yielding an admittedly unscientific yet fascinating sample—to elicit their own responses to the question of the relatively flat success rates. Of those polled, 40 percent cited a need to change organizational cultures, 27 percent said alliance managers need to refine their skills, 13 percent said that alliance managers need to be integrated early on into the partner selection process, another 13 percent said that the 60 percent success rate is probably “as good as it gets,” and 7 percent gave “something else” as the reason. (In some informal polling I did myself, people mentioned how all iances have sometimes gotten stuck with “impossible sales quotas” in the down economy and thus weren’t as successful as expected, or as they might have been in the past. Under these conditions, there may in fact be a number of reasons why sales could decline that have nothing to do with how well an alliance is managed, so it may not be a fair measure of the quality of alliance management.)
performing companies tend to use those things.” In other words, they have an alliance culture. “We measured [alliance culture] by looking at alliance values, partner focus, and alliance language and displays—we measured how companies use those on a scale of one to five,” said de Man. “There’s a lot of room for improvement in alliance culture. What is the relationship with the tools? Can you improve alliance culture by using these tools, or is it the other way around? The cause— why don’t they use it consistently—is it culture? People have the tools available, but they think they can wing it.”
“Overall average performance levels beg the question: If on average we’re seeing a leveling effect, what are the questions alliance managers need to think about? Culture? Improving quality?”
As de Man indicated, both consistency of tool usage and the presence or absence of an alliance culture are critic al elements, and one may influence the other. Luvison noted, “If you think of the mindset, and then the tools that somebody uses, people can be using these tools and processes, but using them in a culture that isn’t conducive to alliances—a culture that thinks it’s about using alliances for advantage over your partner, for example. People may fundamentally think a partner is somebody to be preyed upon, rather than to work with. That is the anomaly ArdPieter is talking about. Alliance managers are having Culture Club “If we look at companies that are successful,” said Luvison, to put more tools in place, maybe as an offset, a way of “there are certain factors that seem to account for why. compensating, trying to do their job better in the face of Metrics, performance pay, use of an intranet—better- the fact that the organization doesn’t support it.” Quarter 2, 2012
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Alliance Anthropology Given that the study is in its fourth edition, it seems clear that each new study begets the next one, and its findings suggest promising future directions for new research. “We have to look at what’s next,” said de Man. “We can still do a lot with this data we have, see what the relationship is between culture, tools, experience, and success. It will be interesting to monitor how culture develops over time in organizations. We’ve seen how interesting it is to follow these tools over a 10-year period. It will only add to the value of the study.” It starts to sound a bit like anthropology, but again and again both de Man and Luvison explored the culture-tools nexus. “Using the results of the voting we did at my [Summit] session,” said Luvison, “people seem to feel culture is an important area. In fact they suggested it was the important area—the culture of alliance managers, the culture of the organization. There’s a lot of opportunity to tie that together with tools. The other area [to study] is, how effective and competent are alliance managers with these tools? That might be a new element to start thinking about. I’m personally of the opinion that culture is probably something we should be paying more attention to.”
Deal Me In Another important consideration for Luvison, and one that may merit further study, is the notion that things may go better for alliances when alliance managers are able to play an influential role early in their formation—“present at the creation” as negotiations are happening and deals are concluded. “Even though the prescribed best practice is that alliance managers need to be involved from the beginning in strategizing the alliance, what I hear is that someone else in the organization forms the alliance and we have to manage it,” Luvison said. “To get a seat at the table and be involved early on would be of value. I was trying to suggest that’s a potential cause of the limitations [on alliance success rates]. That’s a real challenge—maybe that’s why 60 percent is a limit. We don’t really ask the question about where are you in the process. How much are you involved in the selection of the partner, in negotiations with the partner—we haven’t looked into that.” The quality of alliance management practices in the partner’s org anization is yet another crucial factor. As Luvison observed in his Summit presentation, you can have a world-class alliance management program, but if your partner’s is less than stellar, it can create problems in the relationship that may have a deleterious effect on the alliance’s success. “I always wanted to look into [partners], but the logistics and complexity—there are a lot of issues in how to research that, but it would be very interesting,” said de Man. “You could certainly ask an alliance manager what their percept ion is of their partner, and you’d get a rounded-off opinion,” added Luvison. “The holy grail would be to start doing this research in looking at participants in multiple alliances—measure experience, 38
team dynamics, etc. That would be intriguing. Maybe we can figure out an approach to do that.”
The Next Level In the end, Luvison feels the key takeaways from the study are the picture it paints of a maturing profession and the questions it implicitly asks about its future. “Two things I would emphasize,” Luvison elaborated. “One: The four studies over 10 years really suggest a profession that is starting to mature into certain kinds of practices and behaviors, but the questions that remain now are qualitative questions. We need to start asking more nuanced questions about how and why people are doing things, understanding the effect of that on performance. Two: Overall average performance levels beg the question: If on average we’re seeing a leveling effect, what are the questions alliance managers need to think about? Culture? Imp roving quality? As pioneers in this profession, what are alliance managers going to do to take it to the next level? I’m not sure just using tools is the answer. And it’s obvious to me that not every alliance is going to be successful. If we can’t be at 100 percent, what is the right percentage?” De Man agreed. “Alliance managers only want to see those numb ers go up, but there’s always going to be failure, and we need to be realistic about it. What is a reasonable percentage? Look at mergers and acquisitions, reorganizations, and the introduction of new products—the success rates aren’t very high either. There’s a clear limit. With mergers and acquisitions, 80 percent fail. With new products, 80 to 90 percent fail. With reorganizations, it’s also 80 percent, though it’s not well studied. [Compared with that], alliances are actually doing pretty well.” While recognizing the many questions and ambiguities remaining, both de Man and Luvison are optimistic, seeing the “glass half full” where alliances are concerned. “We’re at a more nuanced point now where we have to start thinking about those things and figure out how to transfer them across the profession,” said Luvison. “A number of people at the Summit presented some interesting things, practices, shifts in how you manage alliances—now it becomes, how do you begin to capture and understand and implement them across the profession? It goes beyond just tools. The profession’s at a great point. The 10 years of study suggests that it’s matured quite a bit. If 10 years down the road we were still doing the same things as in 2002, we’d say we were stuck.” n Editor’s Note: ASAP will make an online version of the 4th State of Alliance Management Study available to its members exclusively on a complimentary basis. A bound version will be published for purchase by members ($59.99) and nonmembers ($199). For more info rmation on availability and how to order, check the ASAP website for updates (www.strategic-alliances.org) or contact Pam Goodell at pgoodell@strategic-alliances.org or +1 781-562-1630 ext. 202. Strategic Alliance Magazine
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How Understanding Personality Traits Can HelpYou Effectively Mitigate and Manage Alliance Conflict By John R. Hayes, M.D., David S. Thompson, CA-AM, and Steven E. Twait, CSAP
We all know that different personalities react to conflict in different ways. Facing perceived danger, one person might shy away, another might freeze in his tracks, and another might jump in with both feet. But what if we conducted a deeper investigation into the source of the situation and examined which personality types or traits might be likely to cause significant conflict in the first place? Taking this question one step further is especially important in the context of alliance management: once we recognize the traits we’re dealing with—in ourselves and others—what actions do we take to ensure that our alliances stay professional and productive?
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In a previous article on managing conflict in alliances (“Managing Alliance Conflict,” Strategic Alliance Magazine, Quarter 1, 2012), we noted that understanding “perceptual filters” was critical to reframing and resolving discord. Personality plays a key role in defining those filters and the perceptions that come from them. On one side of an interaction, personality informs and affects what we say and do. On the other side, as we take in and process the actions of someone else, personality typically governs much of our reaction to those perceptions. Given the pervasive role of personality in human relationships, those who have a solid understanding of personalities have the ability to make a significant, positive difference when managing alliance conflict.
Personality Primer To begin, let’s talk about the word “personality,” which we use often in a descriptive context. “That guy has personality!” conveys a sense of social appeal, for example, while “He has no personality” conveys the opposite. As a working definition, let’s use the Bing Dictionary’s definition of personality: “the totality of someone’s attitudes, interests, behavioral patterns, emotional responses, social roles, and other individual traits that endure over long periods of time.” Over time, behavioral scientists have grouped character traits into several widely accepted personality types. Each of us has a personality with some collection of characteristic behaviors and responses. Our friends or family could describe us as being a certain kind of person. However, most people have some flexibility, and when their usual style doesn’t work or causes problems, they tend to try out other styles. When personality traits are so rigid that they create barriers to relationships and success, they become an obstacle in an alliance that needs to be managed. A psychologist might say that someone with a single, rigid style of coping and interaction has not just a personality, but a personality disorder.
Know What to Look For People with two kinds of personalities seem to have more trouble in alliances than other types—and when these character traits rise to the level of a personality disorder, it usually spells trouble in an alliance. The first is the obsessive-compulsive personality. Such a person is deeply interested in all the details and risks of an alliance and often takes an annoyingly long time to make a decision. This need to collect data and know everything can be attributed to their neurotic need to minimize the risk of 40
mistakes entirely and maintain full and complete control of the situation—two impossible goals in the world of alliance management. The second type is the narcissistic personality. These are people who need to be right all the time, to win in every situation, and who cannot tolerate the perception that they have “lost face” in a conflict. Narcissists are very easily offended and become angry quickly when someone disagrees with them. As noted, most successful people will have elements of each of these personality extremes. But when these traits get in the way of having a normal, joyful, and productive life, it pushes a personality into the disorder category. While it would be impossible to offer comprehensive psychology training in the short space of this article, we do hope that the set of tools we provide will help you manage—or proactively minimize—conflict that is heavily influenced by an individual’s personality.
Be Proactive Organizing and facilitating governance meetings is a common activity for alliance managers. Obsessive-compulsive and narcissistic personalities can be managed using a combination of tools and techniques before, during, and after alliance meetings. The techniques detailed below are designed to help you avoid needlessly triggering a negative reaction and to assist you in dealing with one, should it occur despite your best efforts. 1. Eliminate as much uncertainty as possible prior to a governance meeting or other interaction. First, make certain that the food and shelter components are taken care of and communicated. The obsessive-compulsive person, for instance, cannot focus on the big picture in a meeting if he or she is uncomfortable about items everyone else might consider minor details. Alliance managers can help such people avoid conflict and be productive by working diligently to get those details taken care of early and by avoiding change whenever possible. For some people, if they don’t know where they are going to sleep, when they are going to eat, where the restroom is, exactly when things will happen, and who is in charge of what, they cannot talk about other issues! 2. If you do have to make a change in a meeting, communicate it early. Produce an agenda prior to convening any meeting, and make sure all key individuals have the chance to provide
Special Editorial Supplement to Strategic Alliance Magazine sponsored by Eli Lilly and Company
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Diagnostic Criteria for Narcissistic Personality Disorder Include: Grandiose sense of self-importance Believes that he or she is “special” Requires excessive admiration Interpersonally exploitative Lacks empathy Shows arrogant, haughty behaviors or attitudes
Diagnostic Criteria for Obsessive-Compulsive Personality Disorder Include: Preoccupied with details, rules, lists, order, organization, or schedules Shows perfectionism that interferes with task completion Excessively devoted to work and productivity to the exclusion of leisure activities and friendships Reluctant to delegate tasks or to work with others unless they submit to exactly his/her way of doing things Shows rigidity or stubbornness Source: Diagnostic and Statistical Manual of Mental Disorders, 4th Edition, American Psychiatric Association, 2000.
input or feedback. Once the agenda is agreed upon, stick to it as closely as possible. Get to the meeting early and make sure that everything is set up and works the way it is supp osed to. If something isn’t going according to plan, decide how you are going to remedy the situation before everyone else shows up. Handling the details proactively will help the obsessive-compulsive person focus on the main issues instead of bogging everyone down in the details. For the narcissistic person, consider communicating any issues on a one-to-one basis. Singling them out before the meeting will make them feel special, so they will be able to contribute immediately rather than be disruptive by having to establish their own importance. 3. Make sure that you have a well-understood set of ground rules for your meeting. Ground rules should include who is in charge of the meeting, how minutes will be taken and approved, and how topics will be introduced. Avoid “walk-in” items unless absolutely necessary. If you must have a walk-in item, use the time to set up the problem and, if possible, set a later date to make a decision. Quarter 2, 2012
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4. If you believe that a compromise will be necessary, make sure that all parties have a face-saving way to come to that agreement. Be gracious. Point out the areas that you can agree with in the other person’s argument. Choose your words carefully, making sure you don’t use loaded language (words that carry strong positive or negative implications, beyond their literal meaning) that may trigger an explosive, nonproductive reaction. 5. Know in advance what your boundaries are. How much are you willing to give on a particular topic? How hard are you willing to fight? How much nonproductive behavior are you willing to tolerate before you take some type of action? Ponder these things and decide prior to the meeting what your limits will be. Make sure that you choose appropriate boundaries and then follow through. If these things are done in advance, then the detail-ridden person will be reassured that things are under control and the self-important person will be pleased that their input has been heard and incorporated.
Plan Your Own Reactions While the person with an obsessive-compulsive personality will be more productive in meetings if you help them by managing the details and keeping things under control, the narcissistic person will be a better contributor if you work to minimize confrontation and mitigate the risk they will feel their status is being threatened. If during the meeting something goes awry, these techniques can help you get things back on track: 1. If you have contributed to the problem in any way, stop and apologize for your part in it. Apologizing for your part in an unpleasant exchange does not mean that you agree with everything the other party says. It does, however, demonstrate that you are willing to own your part of the conflict. 2. Suggest a path that will get the group back on track and acknowledge the positive contributions that each side is making. If the issue has too much emotion to intervene immediately, take a break and allow people time to regroup. During this time, be polite and make sure that the other party has a place to meet privately and talk, have a cup of coffee, or be able to engage in other self-soothing activities.
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In partnership, there is strength
Since 1999, Lilly’s Integrated Alliance Management professionals have helped companies maximize the value of partnered assets. With strong roots in governance and relationship management, we excel at problem solving and value-chain integration at all stages of discovery, development, and commercialization.
AnOffice Officeof ofEli Eli Lilly Lilly and Company Company An
As an organization and as individuals, we are committed to the success of every partnership we manage. By staying true to mutual goals—and by doing everything necessary to achieve them—we help partners realize the value inherent in every strategic alliance.
E-mail stwait@lilly.com for more information.
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3. Try to let everyone know how important they are to the process, and then get the group back together and discuss the next steps forward. If the topic is still too hot, agree to take it up after some agreed-upon period of time, and then focus on other topics that need to be addressed. 4. If the conflict somehow manifests itself in writing, move to have a face-to-face or phone/video conversation. If you find that the dialogue can only be conducted in writing, make sure that you are removing any loaded words. Have a trusted colleague read the document before you send it, and if the subject has legal implications, by all means have a company attorney review the letter before it goes out. 5. Consider changing the environment if you know someone’s personality will make progress impossible. Sometimes, the self-important personality type who absolutely has to win simply cannot successfully participate in an alliance. For such people, the whole concept of an “alliance” is foreign, because their personalities dictate that they should always come out on top. When it becomes apparent that someone in your alliance group has such a personality, the best course is to find a way to help them bypass alliance meetings, but that often requires that you help them save face in the process. If an alliance leader with narcissistic or obsessiveJohn R. Hayes, M.D., is a psychiatrist who has been a medical school professor, a clinician, president of a large health system, and vice president of Lilly research Laboratories, where he led several major corporate alliances. Dr. Hayes is currently the executive director of the National Network of Depression Centers, an alliance of 21 comprehensive academic depression centers committed to improving care for persons with depression and bipolar disorder through research, education, reduction of stigma, and informed public policy. John can be reached at jrhayesmd@gmail.com David S. Thompson, CA-AM, is chief alliance officer at Eli Lilly and Company and is a member of the ASAP board of directors. At Lilly, Thompson is responsible for establishing and maintaining all major development, commercial, and partnership activities and oversees the integration of Quarter 2, 2012
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compulsive tendencies asks to join in a particularly challenging or tense interaction, for example, you can provide an alternative and offer him or her a face-saving way out: — “You’ll be able to stay visible to keep the team motivated if you stay back at corporate.” — “None of their senior management will be attending the meeting.” — “We plan to get down in the weeds in this session.” The techniques we describe above to manage personality-related conflicts during meetings can be used in other common situations for alliance managers as well. For example, alliance managers should thoughtfully consider who should participate at the negotiating table during contract or amendment negotiations. Or, when developing contingency plans to mitigate potential alliance risks, the alliance manager should consider solutions that meet the needs of the alliance leader with narcissistic or obsessive-compulsive personality traits.
Know Thyself The more you know about personality, the better you will become at managing conflict. However, the key to being good at helping people whose personalities make them inflexible is to be flexible yourself—to mold your own behaviors and responses to the needs of the moment. You have to know well the people with whom you work, but perhaps one of the best adages is, “Alliance professional, know thyself!”
companies brought into Lilly via mergers and acquisitions. In the field of alliance management, Thompson is recognized for his pioneering use of decision sciences and as an expert in managing alliance conflict. He also has developed a suite of innovative training materials for executives whose role includes the management and implementation of strategic partnerships. A graduate of the University of Arizona, Thompson earned degrees in chemistry and Spanish literature as well as an MBA at the Eller School of Business. He can be reached at Thompson_David_S@Lilly.com, +1- 317-277-8003. Steven E. Twait, CSAP, is senior director of alliance management and M&A integration at Eli Lilly and Company. twait leads teams focused on maximizing the value of partnered assets at each stage of the development cycle of development, commercial,
and manufacturing alliances. A founding member of Lilly’s Office of Alliance Management, twait has played an integral role in some of the largest development and commercial alliances in the company’s history, including worldwide partnerships with Bristol-Myers Squibb, Boehringer Ingelheim, and Daiichi Sankyo. He served on ASAP’s BioPharma Council as well as the advisory committee for the ASAP Certification and Standards Project. twait earned a bachelor of science degree in electrical engineering at Valparaiso University and an MBA at Indiana University’s Kelley School of Business. He can be reached at stwait@lilly.com, +1-317-276-5494.
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What Legal NeedsYou To Know
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How to Negotiate a Contract That Lays a Foundation of Success for Licensing Deals By Elana Bertram
Alliance managers are often involved in the negotiation of new deals, and when you get the chance to influence the details from the outset, you set yourself up for success. Many strategic alliances include bilateral license agreements, where each party gives a product or service and takes a license or benefit from the other. By understanding the rights and responsibilities of each counter part, the alliance manager gets the tools to manage the relationship for the best possible outcome. It’s im portant to close the deal, but it is just as crucial that the alliance manager understands what “the deal” is. Fortunately, tremendous insight from current and former inhouse counsels representing a variety of industries exists to guide alliance managers on how to maximize success when negotiating or renegotiating a deal. The resounding cry from the experts is that the negotiators—whether lawyers or not—often rush too quickly to close the deal without considering how the contract binds either party in case of a disagreement. For alliance managers, the key is to focus on knowing your product and your client, knowing the ongoing obligations and triggers of each license, and treating each part of the contract as vital to your success.
Know Your Product The alliance manager gains a great advantage by having a thorough understanding of his/her company’s product. Don Ghostlaw, curr ently in private practice and former general counsel of several software companies including OutlookSoft Corporation (now a part of SAP) and Caminus Corporation, urges alliance managers to understand what your company is offering, why a license is the right way to market it, and how the license is supposed to work. These questions have very different answers if you are licensing trademarks, patents, or other proprietary information. Depending on your role and the range of products, this could include a lot of homework for a new alliance manager, even if you have years of experience at a different company. Take the time to ask questions of your management and legal team so that you are prepared to interact openly with your counterparts. When you know your products with authority, it frees you to use more creativity. As in-house counsel for the Multiple Myeloma Research Consortium, Inc. (“MMRC”), Karen Dietz, JD, MBA, acts as the lead negotiator on multiparty clinical trial agreements between several academic medical centers and pharmaceutical companies. Some of these clinical trials involve multiple drugs, which means multiple stakeholders. This could have created a confusing situation as to which company controls the resulting intellectual property, but Dietz Quarter 2, 2012
led the MMRC to create a novel solution: a coexclusive license should the clinical trial result in any new intellectual property. A coexclusive license is an agreement in which multiple parties legally own resulting intellectual property and are permitted to use it in-house for their own purposes, but cannot license it outside the partnering organizations without the consent of all the colicensees. “While having either a nonexclusive license or an exclusive license is the most common,” Dietz explained, “a hybrid of using a coexclusive license is a great compromise solution where there is more than one major stakeholder.” These types of compromises might bring complications, so alliance managers must be confident that they understand every facet of the invention before rearranging an agreement that is working well.
Take the time to ask questions of your management and legal team so you’re prepared to interact with your counterparts. After learning what they need to know about their product, Ghostlaw urged alliance managers to “get deep on basic intellectual property principles.” Understanding the goals of an agreement helps you bring the partners onto the same page. “Depth is key to successful negotiations,” Ghostlaw continued.
Know Your Company and Business Partners Now that you understand what your company can offer and why counterpart companies want access to it, keep an eye out for the details. There is no one-size-fits-all template. Even a simple renewal of a previously successful deal for the same product between the same two companies is different the second time around because the marketplace has changed. Because technology develops so fast, a large amount of damage 45
strategic alliance magazine | special focus | legal ease resulting from a breach can compound very rapidly. Ideally, the alliance manager will smooth out misunderstandings through strong relationships and attentive, specific feedback as the relationship progresses. However, when the license agreement includes clear benchmarks for determining when a party is in breach
Lawyers know it’s their job to anticipate the “divorce” when arranging the “marriage.” Alliance managers may need to “get a thicker skin.” of the contract and provides a way to address that underperformance, it gives you more tools to repair the relationship and avoid litigation. What is considered “boilerplate” contract language—in other words, the boring stuff—is there to help you manage the relationship. Indemnification and its complement, insurance, are vital factors in protecting your company. Unfortunately, it’s not as simple as implementing a company-wide policy to insist on indemnity. Ted Weitz, partner at Halket Weitz LLP, warns that “indemnification is only as useful as the resources of the indemnifying company.” For example, if your counterpart company is an untested start-up, its indemnity is valueless if it goes out of business; in that situation, separate insurance is a much safer bet. Likewise, if the product is a one-use custom software build, the vendor has less incentive to protect underlying IP because it has no ongoing value. In contrast, a vendor of a more standard product will want to assume its defense to ensure the best chance to continue to sell that product. Weitz emphasized appreciating the size and corporate culture of both your company and your counterparts. For example, structured escalation clauses can be particularly helpful if one or both of the companies is a large organization with many layers of authority. Weitz explained that the hope is, in a time of misunderstanding, that “cooler heads will prevail and there will be fewer personal issues that block agreements.” In a smaller organization, however, these benefits are lost. In the same vein, Weitz discourages multiple layers of mediation and arbitration built into an agreement. “By the time you’re done, it ends up being costly, you have disclosed a lot of information about your company, and you aren’t guaranteed a good outcome.” Alliance managers must balance the health of the on going relationship with the competitive interests of their corporation. Sometimes, the fine print can expose im46
portant details. Lee Grosskreuz Hechtel, deputy general counsel of nutraceutical maker NBTY, Inc., stressed diff erentiating between royalty and nonroyalty licenses, because they trigger different levels of financial disclosure to partners. She contrasted a raw materials purchase where the quantity is finite (for example, selling a supplement containing Acme Brand açaí berries) with a royalty-based license (selling a supplement marked with the image of a fitness guru) where the licensee must disclose how many units have sold and pay a royalty per unit. A royaltybased license will typically allow the licensor to audit the confidential financial statements or sales records of the licensee. This level of disclosure is not to be treated lightly, especially if there is no volume-based royalty.
“Get a Thicker Skin” Most alliance managers thrive in the detail-oriented, client-centered environment described above and may be disinclined to approach partners with defense in mind. Basam Nabulsi, formerly IP counsel at US Surgical and now a partner at McCarter & English LLP, shared that sometimes nonlawyer negotiators misread the critical eye cast on contract terms by the other party’s attorney. “Lawyers know it’s their job to anticipate the ‘divorce’ when arranging the ‘marriage.’ Simply contemplating the ‘divorce’ is not a threat to the success of the relationship, and sometimes nonlawyers will take it too personally that it’s an expression of lack of confidence or mistrust.” Nabulsi continued by expressing confidence that this is an easy hurdle for nonlawyers to overcome; they simply need to “get a thicker skin.” It’s understandable that client-facing businesspeople are reluctant to “talk like lawyers,” but that’s not an excuse to be loose-lipped. Nabulsi described the dance between parties as “like an art form, so long as it stops short of making statements you’ll regret later.” Be mindful of making off-the-cuff statements that could be relied upon by the other party. Nabulsi recounted an experience where a single smoking-gun e-mail was blown up postersize during a heated renegotiation because it clearly stated that one party knew there was an infringement of rights. You don’t have to “talk like a lawyer” to walk the fine line between overselling and closing a deal.
Common Pitfalls
Carolyn Blankenship, currently vice president of Intellectual Property at Thomson Reuters (an ASAP Corporate Member), shared that the biggest fights her companies had been embroiled in dealt with the indemnities clause. Because allegations of infringement are unavoidable in today’s marketplace, it is essential to put Strategic Alliance Magazine
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the risk of litigation costs on the party in the best posit ion to prevent those costs. The party that has the ability to ensure to the best of its knowledge (for example, the patent applicant or inventor) that the IP is established should indemnify its licensee. Understand, however, that if the licensor indemnifies the licensee, the licensee will probably not have the option of selecting counsel or deciding whether to settle a suit. These details should be discussed with your in-house legal team before being brought up in counterpart negotiations. Hechtel reminded us of something that might fall through the cracks in the haste to close a “sweet” deal: check the expiration date on all patents. Watch out for the “opportunity” to pay for five years of use when there are only three years remaining on a patent. Further, include in the license a clause where trademark and patent owners are obligated to renew rights. Patents and trademarks require maintenance payments and specific renewal filings, and if these dates are missed, the IP rights vanish. Hechtel also encouraged alliance managers to lock down a renewal option at a prenegotiated price. Much of this article has been a caveat for situations where the deal may go badly. Conversely, if the deal goes extremely well, it behooves a licensee to have the option to renew at a preferential price. It is vital to keep channels of communication open during the course of the license. Nabulsi and Hechtel both recounted experiences where exclusivity was expressly granted in the license agreement, yet the licensor permitted another licensee to use the product in the same territory. While this is not an automatic trigger for harsh words or a lawsuit, it is critical to clarify the rights your company has paid for as early as possible to minimize damages. Even so, don’t think of your litigation attorneys as police; think of them as Special Forces soldiers called in only for extreme extraction. Quarter 2, 2012
Your Legal Team: A Resource, Not an Enemy
Organizations such as the Licensing Executives Society and the Practising Law Institute offer educational opportunities that are appropriate for lawyers and nonlawyers alike. Whether the relationship grows and flourishes or ends in “divorce,” time spent on the front end understanding why your products are valuable or what your comp any gains from its counterparts will lead you to establish thorough and realistic licensing agreements that reflect a reasonable allocation of rights and responsibilities. The legal community generally agrees that touching base with your legal department is never a sign of weakness or an annoyance. In fact, it’s a great “out” of a meeting where you may feel outgunned: if the other side shows up bristling with attorneys, adjourn the meeting until you can bring in your own counsel. You don’t need to wear both the negot iator and the lawyer hats. Alliance managers have a broad scope of responsibility in negotiating and maintaining dynamic licenses, so don’t hesitate to bring in legal experts when the going gets rough or very technical. As much as an agreement makes two companies “teammates,” remember that your in-house legal team is on your side as well. n Attorney Elana Bertram is lic ensed to practice law in Connecticut and before the United States Patent & Trademark Office. Her law firm, Hawley Legal Resources, LLC, turns big ideas into small businesses by establishing robust intellectual property protection for inventors, then shepherds these products through the stages of funding, licensing, and sale. She graduated magna cum laude from Quinnipiac University School of Law and earned her B.A. in biological sciences from Mount Holyoke College. Elana is an ASAP Member. 47
Get Me Legal! What Alliance Managers Need Legal Counsel to Know—and How They Can Work Together By Michael Burke
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s t r at egic alliance magazine | special focus | legal ease What is the appropriate role of legal counsel for the alliance professional? Guru and sage? Pain in the neck? Resource? Crutch? Fire brigade, complete with firehose from which ambiguous legalese spews forth? All of the above? Ask some alliance people, you get a few different answers. “I pretend I’m a lawyer from nine to five, then I run it by the real lawyer,” said Brooke Paige, principal of the Boston-based consultancy 7ContinentsCollaboration, LLC. She’s only half-joking. Paige, whose experience encompasses a broad swath of the biopharma world, with various roles both in the United States and abroad with Ipsen, Boehringer Ingelheim, and Merck, among others, emphasized that both legal counsel and alliance managers have their own responsibilities and specific roles to play, and despite differences in worldview and language, they need to work together effectively for their alliances to succeed. “We [alliance managers] need to be on the pulse of the specific business, and there are legal underpinnings to that,” she said. “We have to be aware of ways to create specific value, and that can lead down a legal route as well. You’re going to want to be know ledgeable about these things, have a clear
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perspective about these issues, but at the end of the day you’re not the lawyer.” Lawyers they may not be, pretend or otherwise, but Paige and others stressed that alliance managers must be familiar with legal issues, legal language, and legal documents. Understanding the legal aspects of alliance negotiation, modification, and termination will help alliance profess ionals to work more efficiently with their legal teams and not overstep their bounds.
Understanding the Business Context
Murray Bookman, director of software licensing and OEM, Global Services & Solutions, at Cisco Systems, Inc., an ASAP Global Member, noted that while each needs to know something about the other’s job, each side, alliance management and legal counsel, also has its own responsibilities and areas where it must take the lead, and the relationship works best when those lines of demarcation are clear. In the software licensing realm, Bookman explained that there are several types of common contracts, and alliance managers should be
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strategic alliance magazine | special focus | legal ease familiar with them. These include nondisclosure agreements (NDAs), evaluation agreements, teaming agreements and/or letters of intent (also called memoranda of understanding or MOUs), OEM agreements, software license agreements, and hosting agreements. “Alliance managers should know these and be familiar with them, be able to read them cover to cover and understand them, like knowing a balance sheet or other financial documents,” Bookman said. “On 75 percent of the contract, alliance managers should provide direct input, if not content. The other 25 percent is for the lawyers,” he continued. That input should reflect the overall business context of the alliance—including, in software terms, the “use case” for the product—what type
“We need legal to always keep in mind the ‘what’s in it for us, what’s in it for them’ aspects. It should be top of mind all the time.” of software, how it will be used, and who is the end user or customer, for example. If legal counsel doesn’t know these things, or alliance managers don’t clearly convey them, then legal teams can’t effectively help guide the drafting and refinement of alliance terms. “I see problems when alliance managers throw contracts over to legal without sufficient context,” Bookman acknowledged. “Then the redlining by both companies grows exponentially and salient points are missed.” Paige agreed. “I have very strong feelings about this,” she admitted. “The key thing that alliance managers wish legal would know is that it’s our role to provide the business context to whatever legal issue they are looking after. Practically speaking, if something comes up or we think about a potential risk to the business or an opportunity to create value, it should be the alliance manager’s role to draft a legal view on that and even propose legal language—then ask for formal legal review and endorsement.”
It Goes Both Ways But it’s a two-way street as well. “[It’s important] for legal not to be shy in reaching out to alliance leaders themselves, whoever might have responsibility, and literally partner with them about what this means,” said Paige. “In some cases the alliance leaders will not be privy to the greater context of the overall portfolio, so it will be legal’s responsibility to be able to look out for how these collaborations really impact one another. The other side 50
of that is for attorneys to remain involved in understanding the overall business context of the deal once the contract is drafted—to attend internal prep meetings if possible, a quick monthly update, or a corporation’s ann ual reviews of their deals. Legal should absolutely be a key partner there.” And what do alliance managers need from the legal team? “We need legal to always keep in mind the ‘what’s in it for us, what’s in it for them’ aspects,” Paige said. “It should be top of mind all the time: what our organization is trying to get from the deal, what our partner is trying to get from the deal. We need [legal] to stay aware of the commercial implications of what they are negotiating for. Oftentimes legal folks tend to try to do everything alone, and it’s great when they try to reach out to the folks who are managing these aspects.”
The Role of Legal Counsel in the Alliance Life Cycle
For Harry Atkins, CSAP, senior director of corporate development for the Indian biopharma company Dr. Reddy’s Laboratories, Inc., the life of an alliance plays out in phases—from negotiation, signing of the contract, and ongoing execution through modification and/ or termination—and at each stage the legal team has a specific and important role to play, in concert with alliance management, to try to ensure that the alliance stays on track and derives the expected value for all parties. “During the negotiation phase, the primary insight the attorneys can provide is laying out the alliance from the other company’s perspective, in terms of what the partner sees as important,” he explained. “It’s great to have an alliance manager involved in the negotiation, so that he or she can shape how the long-term operational relat ionship will actually work, and keeping the end result rather than the wording of the contract in mind. But the alliance manager should also pay attention to the attorneys, who are often good at advising on the ‘gives’ and ‘takes’ within the moves and the pacing of the negotiation. Winding up moving too quickly at the beginning will place your company at one end of the spectrum, having given away issues that may seem unimportant to your own team, but shouldn’t be given away until you have gauged their importance and value to the partner. “Once the contract has been signed, the negotiators often move on to the next deal and take legal with them. Before they turn their attention elsewhere, one of the key items that absolutely needs the cooperation of the legal team is to debrief everyone in your company who has an alliance-facing role. Often this is a very different group Strategic Alliance Magazine
strategic alliance magazine | special focus | legal ease from the small team of negotiators that worked on the contract, and the group carrying the alliance forward will have its best chance of success if it knows where the minefields are. The briefing should be an exhaustive list of the most hotly contested issues. “Although these points may have been won or lost by your own company or the partner, and they may or may not have wound up in the pages of the contract, it is just human nature for the partner or even your own coll eagues to try to unofficially claw those points back over time. The attorneys who worked on the contract from the very first meeting with the partner hold this ‘institutional knowledge,’ and know what was agreed to during all of those discussions. Alliance managers can avoid later problems if they can make sure that this critical insight is transferred to the operational managers before the very first handshake happens at the alliance kickoff meeting with the partner.”
Relationship Management 101 A big part of alliance management is relationship management—and this is true of alliance professionals’ relationships with their legal teams as well. These relationships can be critical, and have important imp lications throughout the alliance life cycle. “Even though most alliance managers consider relationship planning to be essential, they rarely engage in it, or they do it in very different ways from one alliance to another depending on the pressure on the team or the personalities involved,” Atkins noted. “In order to execute on alliances, alliance managers should get the buy-in of the attorneys, and ensure attendance of the legal team together with the partner to jointly establish ground rules and a planning process up front. This can carry through from the end of the negotiation, during the kickoff and launch of the alliance, [and] during the implementation of the contract and operationalization of the alliance. During the negotiation period, it helps if the alliance managers, negotiators, and attorneys have made an early and strong effort to better understand the partner’s organization, policies, and culture, and jointly plan governance or other ways of achieving all iance goals while recognizing, but working with, organizational differences. The basic functions of the contract that the legal team will put into words all fall out of jointly developing ground rules around how the company and its partner solve problems, escalate conflict, make decisions, communicate, and manage the differences between them.”
The Firehose Effect Sometimes, at any phase in the process, the alliance management–legal counsel relationship can be hinQuarter 2, 2012
dered by different—perhaps at times mutually unintelligible—modes of communication. In particular, the legal mindset and its attendant language may lend itself to obfuscation—or at the very least, to an excess of verbiage which the alliance manager may be hard pressed to make sense of. But even here, the alliance professional has a role.
”Lawyers should be leveraged, rather than being in every meeting. Otherwise, without background and context, they may negotiate and redline things that are relatively meaningless from a business perspective.” At times in the past, recalled Paige, “I felt whenever I asked for legal input on something, I would get absolutely everything—a robust dossier on a specific issue. Alliance managers have to let legal know the priorities— because there are so many things happening at once. “Legal people are great and can be helpful, but I don’t need to walk into a courtroom the next day. The ‘firehose effect’ is so thorough and so detailed, but you want to keep the guidance high-level and [avoid] tying up our legal folks as a resource. In some cases this might be overkill, but there are instances where I speak to legal counsel on a daily basis just to let them know, ‘today this is what I intend to do…’ [and] use them as a strategic partner. It’s very rare that I actually bring them into a meeting with a collaboration partner, but I just make sure in pivotal alliance milestones that they are aware of exactly what I’m doing.” Bookman also argued for alliance managers to intelligently—and strategically—use their legal teams. “Lawyers should be leveraged, rather than being in every meeting,” he noted. “Otherwise, without background and context, they may negotiate and redline things that are relatively meaningless from a business perspective.”
Alliance Diagnostics, Legal Style Perhaps appropriately given his biopharma experience, Atkins presented the relationship using a health care analogy. “Alliance managers should think of the best lawyers in medical terms, with a great lawyer being something like a companion diagnostic that can identify important issues,” he explained. “A key legal adviser should be very, very good at identifying for the alliance manager a particular 51
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strategic alliance magazine | special focus | legal ease issue that may be unusual but is a distraction, as opposed to identifying an issue that stands out because it really is important. Often what alliance managers need help with is perspective on what is unusual and [what is] important. Every contract and alliance deal is different, and every deal has to be built from the ground up, so there will be some unusual and novel aspects in every alliance. Managers will know from partnering and business experience what is important to their own alliance outcomes in business terms, but can easily become reduced to passive shoulder-shrugging when it comes to sorting out what is important in legal terms. “This talent to focus on key terms and advise on the ess ential questions to pursue during alliance negotiations can really become critical when outside legal counsel is being used. The meter is running when outside counsel is retained, so the result of too much back-and-forth on questions that are not critical can be so expensive that not managing it well will make a negative impression on your own senior management that will be hard to turn around.”
When the End Is Near The cooperative partnership between alliance managers and their legal teams becomes especially critical when it comes time to modify the terms of the alliance—or to terminate it completely. Atkins recalls an example of the latter from his own experience: when the company he was with at the time decided for strategic reasons to end an alliance with its partner, after some changes in its own upper management and a history of poor communication between the parties. “This was going to be a huge blow to the partner,” Atkins recalled. “As the internal momentum built to pull the plug officially within our company, alliance management was asked to look into the exact language in the contract, to lead the way through the process of termination. The ans wer from the contract was that it was a simple legal letter of notice. The CEO pronounced the equivalent of ‘make it so.’ I truly believe that had there not been managers at the company who were trained in the competencies and behaviors of alliance management, the simple legal lett er would have been prepared and sent with the same emotionless efficiency as an SEC filing. “Fortunately, there were alliance managers to think about the relationship aspect and what was to be gained by our own company in doing this right; in the end, alliance termination was changed from an overnight letter to a well-considered process, in which we were able to conv ince our own corporate legal team that a little flexibility and creativity could go a long way toward making both sides look good. Over the course of two months our Quarter 2, 2012
company gave the partner signals that our strategy had shifted through no fault of theirs, and that they needed to make contingency plans so they could prepare in advance for a potential termination. “The communications were excellent between the comp anies this time, and on the very day of the termination announcement, the partner company was able to ann ounce that they already had a new partner and would not skip a beat in their development of the program. They emerged from the process knowing all of the decision points, having transparency and a very good impression of our company at the end. The true hallmark of a succ essful parting is whether the partner returns to offer your company another collaboration after termination, and less than a year later that is exactly what they did.”
Partners in Partnering: Your Legal Team And while legal language may at times be difficult to understand—or appear unduly ambiguous or cold and emotionless, à la Atkins’s example—Paige noted that it’s important for alliance managers to understand where the lawyers are coming from, and that there are reasons for what might appear to be ambiguity or a choose-yourown-adventure exercise in their responses. “[It’s not so much] that you don’t understand [what legal is saying], but that legal will push the business decision back on you,” she explained. “You could do X, and its likely legal impact is Y. They won’t tell you to go do X, but if you’re going to move forward with plan X, this is what the implication will be, or these are the risks. It’s still in the hands of whoever owns that collaboration. It’s going to be a business decision at the end of the day.” Clearly, the alliance management–legal relationship should be beneficial for both parties, and by joining forces in a strategic way, the two teams should be able, all other things being equal, to drive an alliance over the goal line to ultimate succ ess. Some, like Paige, are grateful for all they have learned from working with their legal counsel, and for the fruitful cooperation between lawyers and alliance managers. “I’ve actually told lawyers I’ve worked with in the past that I cannot get through my day [without them],” she said. “I need them to do my job. They’re incredible, they provide leadership for deals we’re working on—they’re critical, underappreciated partners. No one beats an internal lawyer for politely challenging your view on any given busin ess situation. They’re great from that perspective.” n 53
Collaborative Buzz Continued from page 14
Quintiles Partners with American Diabetes Association
ASAP Global Member Quintiles and the American Diabetes Association announced in April a strategic agreement in which Quintiles’ Digital Patient Unit will provide the Association’s millions of Web site users access to Quintiles’ medication monitoring service. The Association’s constituents who opt in for the service will receive free safety checks of their medications to identify potential interactions and other risk factors, which are already provided to the 2.5 million registered users of Quintiles’ www.MediGuard.org. Registrants will also be eligible to participate in select direct-topatient programs to benefit their medical conditions and advance global diabetes patient care. The Association’s constituents may opt in to this service Alliance Awards Continued from page 33 In less than a year, strategic alliance consultancy Coherence orchestrated an alliance between Scotiabank, Canada’s thirdlargest bank, and Digicel, a major telecommunications operator in the Caribbean and Central America, that brought to market the Tcho Tcho Mobile e-wallet, a product that is now enabling thousands of banked and unbanked Haitian citizens to safely and securely store, access, and spend their money electronically through their mobile phones. For its role in facilitating this partnership, Coherence earned Corporate Social Responsibility honors in 2012. To produce this new offering in such a short amount of time, the players in the alliance had to work out a wide variety of cultural issues. First, Scotiabank and Digicel were used to completely different industry speeds. Where the banking industry generally prefers to delay a product launch until a product is completely integrated, telcos like Digicel were accustomed to getting products to market in rapid succession. Moreover, with years of experience conducting large-scale business in the region, Digicel knew how to serve this market segment, which included decent-sized portions of the population that live on as little as $5 per day. Conversely, Scotiabank was more comfortable working with developed international markets and thus had to rethink its risk profiles. To overcome these challenges, Coherence had to take its client Scotiabank through several basic tenets of alliance management. Although Scotiabank was less experienced in utilizing strategic alliances to achieve core business objectives, Coherence found its client very willing to learn. 54
from the Association’s Web site www.Diabetes.org. All registrant data will reside on Quintiles’ privacy-safe, Digital Patient Platform. Quintiles’ Digital Patient Unit will manage the patient relationships from this platform, continuously providing up-to-date medication safety information and introducing members to direct-to-patient clinical research, observational studies, and disease management opportunities.
Saba Goes Back to School
ASAP Corporate Member Saba, a leading provider of people-centric enterprise solutions, announced that Stanford University’s Education Program for Gifted Youth (EPGY) is leveraging Saba’s Real-time Collaboration Suite, including Saba Meeting and Saba Classroom, to create a rich, highly interactive online community for precollegiate students. In addition, Saba Classroom facilitates seminar-style classes that have served more than 60,000 EPGY students since 1996. n “Scotiabank recognized early that partnerships represent the new frontiers of success and that leveraging new technologies will play a significant role in the emergence of new financial services,” wrote Martin Echavarria, managing partner at Coherence, in the company’s nomination form for the Tcho Tcho Mobile initiative. “For the bank, this was the first alliance in which the development and management of the financial product was so intertwined with another company.” Early in the project, Coherence set up workshops to help Scotiabank and Digicel illuminate and overcome the aforementioned differences in corporate and regional culture. Representatives from the two allied companies were put through several exercises designed to illustrate what each wanted from the partnership, including one in which they mapped out the infrastructure using Legos building blocks. Coherence helped the companies institute the resulting governance structure and rules of engagement—sans the actual plastic children’s toys— that would define and organize how the two companies would work together moving forward. Only a mere six months separated Scotiabank and Digicel’s first meeting and Tcho Tcho Mobile e-wallet’s commercial launch, earning the product a $2.5 million “first-to-market” award from the Bill and Melinda Gates Foundation. Today, more than 400,000 Tcho Tcho Mobile e-wallets are carrying out millions of transactions enabling Haitians to receive direct payments from employers and purchase goods and services directly from a variety of retail businesses. n Strategic Alliance Magazine
Heading for the Exit Continued from page 21 In the technology space, keeping emotions in check is a big part of transitioning away from a strategic alliance. As such, it is one of Thomas’s core philosophical principles in guiding a wind-down. “The emotions should not dictate the actions,” he said. Russ Buchanan, CSAP, ASAP chairman of the board, and vice president of worldwide alliances at Xerox, an ASAP Global Member, echoed this sentiment. A few years ago, Xerox saw the “setting of the sun” on one of the company’s most lucrative partnerships when its chief competitor HP acquired its partner EDS. “You have to keep the bigger business purpose in mind and not let the emotion of the moment get in the way of your judgment,” he said.
Harnessing Incentives Fortunately for alliance managers, there are carrots and precautionary motivations that can incentivize acting civilly. In IT, the conclusion of an alliance is not the true “end” because there are still specific areas of opportunity for partnership, even if it is now in the context of a more limited tactical alliance. Thus, alliance managers and salespeople have a good reason to play nice with their counterparts at their former strategic partner: there’s still money on the table. This brings us to the next cardinal rule of a wind-down: never negatively impact the customer or end user. Xerox continued to work with HP to service joint customers after the EDS acquisition for several years. According to Buchanan, maintaining professionalism on behalf of those clients is “paramount” to exiting a strategic alliance. “You can’t let the customer be negatively impacted by the dissolution of an alliance because if you do, you are going to damage both companies’ relationships, brands, and reputations. Damage of that nature is very expensive to repair,” he said. “The joint customers we developed over the years preceding the acquisition continue to experience high customer satisfaction.” Thomas also placed a high degree of importance on making the customer’s interests top priority, and many loyal and satisfied joint customers will insist that you continue to work closely with them to deliver solid collaborative solutions well after the partnership has been scaled back. “Where there was value to the companies, we wanted to rationalize and keep value intact for the good of the customer and the good of both companies,” he said. This principle can also be applied to commercial alliances in the pharmaceutical space. “You certainly don’t want whatever has happened between two organizations to impact a patient or customer that’s in need of whatever service or product you’re offering,” said McAuley. Quarter 2, 2012
Even without financial enticements, employees’ personal reputations are still on the line. Thus, it is still critical to be courteous and maintain professionalism. “There’s no reason to throw a grenade over the fence and run in the other direction,” said Bylancik, adding that anyone who did something drastic to intentionally damage a soon-to-be-former partner would be stuck with serious shrapnel blowback. “I think there would be other career fallout that would be damaging to any individual who did that,” she said. Emotion can also be a positive force in the wind-down. Sometimes, both parties still want the best for the asset they have spent years working so hard on even after it is no longer company property. If a trial fails, the shared sadness on both sides can serve as a unifying force during the closeout period. Or, workers may simply be relieved that a stressful alliance is nearing its end.
Governance Helps Keep a Wind-Down on Track In most cases, governance procedures help organize everyone’s tasks and keep both companies on track to execute in a timely manner. Technology industry alliances usually have to modify rules of engagement to fit what is a more tactical partnership. Moreover, as product and service portfolios grow over time through acquisition, both companies have to do more work in mapping out how to proceed in instances of competitive overlap. “When we agreed to pursue a large customer together—a large opportunity—we kind of put some fences around it,” said Thomas about the HP-Cisco partnership’s evolution into a tactical collaboration. Pharmaceutical governance structures might see a new transition team or a slight alteration to how committees meet, but the widespread feeling is that governance helps keep a regular pulse on the wind-down activities. “Governance really kept things together. They were our grounding points for the [GSK] wind-down,” said Borton. “People turned to governance more because it’s something they knew and it was a way of communicating.” To be fair, even when you know the end is near, it’s hard to shield alliance teams from shock when one or both parties finally decide to cut the cord. In some ways, getting everyone back on track for the final leg of the journey is what an exit is all about. “Once we know [we have] an end in sight, we have a goal, and we know how we’re going to get that done, people start to feel good,” said McAuley. Fasten your seat belts. This departure has only begun. And there’s a lot of ground still to cover before the journey’s end. n 55
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 sess ions, 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: lgold@strategic-alliances.org or call 781-562-1630 ext. 203.
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Solutions Marketplace
Selected Products and Services for and from Strategic Alliance Professionals PeopleForce Builds and Manages Strategic Relationships in Australia Australia-based PeopleForce is a consultancy that aims to energize the key strategic relationships of companies and networks of organizations by developing trust and instilling knowledge-sharing practices. PeopleForce applies its unique processes and past experiences to generate extraordinary conversations within teams, organizations, networks, and communities about creating successful future possibilities. PeopleForce aims to engender trustful relationships that result in highperformance work environments and build relationships that deliver value; develop agile, responsive, and responsible organizations and networks; and break down organizational silos. PeopleForce’s clients hail from the private, public, and community sectors. The company works with boards, managing directors, CEOs, other senior exec utives, and teams and employees at the levels below these professionals. For more information, call +61 (7) 3856 0470.
Ex-Lilly Veteran Delivers MORE Alliance Services Michael O. Ransom Enterprises, LLC (MORE), is a client-oriented consult ancy that provides strategic collab oration services. MORE assists clients with developing a strategic collaboration strategy and helps them identify, establish, manage, and assess strategic collaborations and business alliances. Quarter 2, 2012
MORE’s specific formal offerings include: – Global strategic collaboration management strategy development – Partnership assessment/due diligence – Acquisition and merger integration – Organizational design and team effectiveness – Governance development and implementation – Conflict resolution – Collaboration operations management support – Organizational change management – Development and implementation of training program(s) in strategic collaboration management – Strategic collaboration leadership mentoring and coaching Michael O. Ransom, the firm’s principal, recently retired from Eli Lilly and Company after a two-decade-plus stint at the biopharmaceutical giant. He last served as the director of operations for the Office of Alliance Management (OAM), overseeing current business activities and expanding capabilities across the enterprise through a period of transition. For more information, please contact +1317-430-5177 or mike@morentllc.com.
Alliance Ventures Handles Variety of Alliance Engagements Alliance Ventures helps companies grow through strategic alliances and partnerships and work with their partner businesses to access complement
PeopleForce’s clients hail from the private, public, and community sectors. The company works with boards, managing directors, CEOs, other senior executives, and teams and employees at the levels below these professionals. ary strengths. The company has the ability to play a variety of roles in its client engagements—from adviser to facilitator to joint venture managing partner. Alliance Ventures can address several areas of an organization, inc luding key customers, sales channels, competitors, suppliers, corporate investors, and service/product providers. The company’s experience covers several diverse industries, companies of all sizes (pre-start-up to $50 billion multinationals), and several geographies and cultures in the United States, Asia, and Europe. For more information, call +1-415-989-1889. To be part of Solutions Marketplace, e-mail mburke@ASAPmedia.org, call +1 781-562-1630, or write to Association of Strategic Alliance Professionals, 960 Turnpike Street, Canton, MA 02021 USA.
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the close
Alliance Serendipity
When Hundreds of Partnership-Minded Folks Encounter Each Other, We’re Enlightened by a Multitude of New Possibilities for Our Alliances By Jon Lavietes and Michael Burke
IN EArLY MArCH, HUNDrEDS OF ALLIANCE PrOFESSIONALS CONVENED at the ASAP Global Alliance Summit at Caesars Palace in Las Vegas to network, obtain alliance management certifications, hear outstanding speakers, take part in interactive sessions, hone the basic individual skills of the discipline, and, no doubt, have a little fun in a city that’s dedicated to just that. But in a positive version of the law of unintended consequences, many of them ultimately came away with significantly more than they bargained for. In a conversation with ASAP Media last fall, ASAP’s vice chairman Jack Pearson , CSAP, told us that one of the most critical tasks of an alliance manager, and by extension of an alliance management practice, is to think about a partnership’s potential well beyond its immediate purpose. “One of the objectives with any type of partnership is to look for additional synergies or other opportunities to enhance the value of both partner organizations,” he said. As with the Summit, we have often seen alliances accomplish more than the goals initially intended. But many times, making this happen is not so easy or obvious. Whether it is a product or process that yields far greater benefits than originally envisioned—think of the molecule that ends up applying to several therapeutic areas—or market dynamics changing in your favor that suddenly make you a partner of choice to a gateway company that will open up new customer segments, you don’t always know when and how a partnership can bring additional value. But more often than not, driving an alliance to go above and beyond takes innovative, out-of-the-box thinking and a collective effort. An
outsider can sometimes see things you couldn’t from your limited perspective. Perhaps that person knows of an individual or company that happens to have a complementary capability or intellectual property you heretofore did not think existed. Maybe a group of people representing a diverse range of industries, cultures, and/or personalities can discover new ways to utilize a product, service, or capability—or adapt it to a different market. It doesn’t always happen, that’s for sure, and as we all know, alliance success is never preordained. But gathering together several—or several hundred—alliance professionals, who are used to thinking three steps ahead and looking out for challenges and opportunities others won’t discern, is a great way to increase the chances of finding a whole new way to derive additional benefits from a strategic alliance, or an alliance portfolio. ASAP likes to categorize its extensive array of services into three broad areas: resources, professional development, and networking. Combine all three, as happened at the Global Alliance Summit, and you get what may constitute a fourth category: the unforeseen, the unexpected, the novel and the innovative. What we might call “alliance serendipity” is often the result. n
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