Adventures in alliances land #11 – permanent conversations; joint solutions g_funding

I’ve been in a lot of debates in the last few weeks about designing and building joint solutions/propositions/offerings /services/etc - which is another example of a ‘permanent conversation’.? Whatever the choice of the name of the thing we’d like to sell, agreeing its definition and building it has been a permanent conversation in my 20 odd years of strategic alliances.? A ‘permanent conversation’ is something that has been true forever and despite learning it well needs continual effort to align for successful partnerships.? They are points of debate, iteration and friction that are enduring and therefore need continual attention, adjustment and intervention from professional strategic alliances practitioners.?

I’ve been thinking, writing and doing strategic alliances for more than 20 years.? When something in the alliances space catches my attention that I can share, I will – so if ecosystems, partnerships and alliances are your gig and your passion too I hope you’ll find these scribblings useful.? If you enjoy this article please follow me, subscribe, like, comment and repost.? My book on strategic alliances is here if you’d like to read more adventures in alliances land.? https://www.amazon.co.uk/Strategic-Alliances-Fieldbook-Art-Agile/dp/103212900X/ref=sr_1_1?keywords=strategic+alliances+fieldbook&qid=1691319592&sr=8-1

One of the key principles of the agile alliance is to land an anchor client quickly for one of the propositions. This gives rise to a couple of questions. First, how do you decide which proposition to focus on amongst the options available? Second, how do you allocate resources to getting the proposition fit to discuss with a client? These are important because we’ve lived with the wheel spinning that happens when the two alliances have not got much further than ‘you are big, we are big, we must be able to sell something together’ and the client value proposition is no more than ‘we can install technology x for you’. Historically, alliances would have probably come about as a combination of two approaches. The most likely one would have been the ‘grassroots’ version where a consulting team in the PS firm landed a first-of-a-kind project and realised there was enough demand from other clients to scale it. The second approach typically follows the first, when the PS firm realises the potential of repeating the idea and mobilises an initiative to support it. We’ve not seen an instance where a ‘top-down’ alliance has been formed without an anchor client that the PS firm has committed to and scaled with any material success, which is why we say the grassroots approach makes the top-down possible.

So, if you follow the sequence above, the success path to create a strategic alliance or build a new solution area between a tech and a PS firm is when a grassroots team win a project, get the top-down funding to build it and after two or three years, it will have grown into a strategic alliance. This slow one-track success path has no chance of keeping pace with the increasingly rapid changes in technology and customer preferences, and to react to fast-moving structural global macroeconomic changes. This is where agile alliances comes in. There is no changing the need for market-based evidence to support an investment decision, so we are stuck with the sequence of ‘win the first one, invest to scale’. The challenge then is to accelerate the sequence. There is a ream of things that we’ll assume have happened to get us to the start line. Both firms must be doing horizon scanning to make an assessment on who should be on its radar. There must be proactive alliances functions, building relationships between the firms to gather insight to help feed into prioritisation decisions about who to talk to. Assuming both companies get to this point and say, ‘in principle, clients will find it valuable if we combine our capabilities in a joint solution, so there is a big potential mutual opportunity here’, what do they do next? Over the last few years, we’ve seen an increasing use of the concept used by venture capitalists (VCs) applied to alliances. This cross-pollination of ideas is appropriate, given the involvement of VCs in tech start-ups. As with VC investments, there are typically stages with success criteria associated with moving to the next step. For example, the first investment of ‘seed funding’ will have a low threshold to access because the sums involved will be small. Series A will be a slightly higher amount and designed to win an anchor client. Series B will only follow winning the first client and be designed to scale the GTM. Figure 6.6 on page 196 illustrates how this concept might be applied to turbocharge the alliance. There are predictable steps to move through with ‘gate criteria’ for entry. There is also an expectation on the actions and assets the investment will be spent on for each step. This approach provides a structured and low-risk way to think about the portfolio of alliances and offerings being incubated. It solves the problem of lots of ‘noise’ from competing alliances that are all vying for funding, without any structured investment criteria that makes it impossible to quickly identify potential winners and get them on the fast track to success. It also provides a predictable runway for ideas to taxi down and take-off from, and this means that the energy of a team can be channelled effectively into an approach that works. When applied, we’ve seen this kind of funding approach reduce by about half the elapsed time taken from idea to scalable proposition. It encourages active participation from teams who are close to content and clients by giving a predictable process for securing funding, and as discussed earlier, stimulating this ‘grassroots’ approach is critical. The approach gives the leadership teams a common language and way to track progress, so they move from vague discussions about a heap of partially defined experiments to managing a pipeline of ideas with clear boundaries and decisions to be made to stop or allocate additional funding.

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One of the perceived downsides we’ve heard expressed about this process is that it makes the cost of the portfolio of ideas very explicit. For example, if series A was a $25,000 investment, series B was $50,000 and there are six and four ideas at each stage respectively that is clearly $350,000 invested. The cost of failure is now explicit and therefore considered potentially dangerous for people’s careers. Whilst we are sympathetic to this risk, our view is that the confidence to make these decisions and manage them consistently is a core competency for professionally managing a portfolio of solutions. Without it, how would anyone know if one idea deserved more focus and support than another one?

Is funding for joint solutions a ‘permanent conversation’ for you?

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