Adventures in alliances land #12 operating model

I was in two conversations in the last week about operating model: that combination of organisational design, capability, process and systems that determines how work gets done.? Both times I thought I’d captured some thinking in the book about where a capability should live, and what the priority processes were, but when I went back to the ‘business components’ section in page 187 I felt like it needed some additions.? With another three years of thinking and doing behind me since I wrote it, I’ve done a quick update.? Drawing a bit of inspiration from the TM Forum’s eTOM business process architecture, I’ve defined a few more of the critical processes that should form the capability required for an alliance.

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

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The original ‘business components’ in the book were the same eight functional areas as below and I felt like they were the right ones.? The updates are the lists of process and capabilities within each box.? In the original version there were three per box, as you can see from the below there are now between 5 – 9 in each function making 49 in total.

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I read a fascinating book published in 1989 called The Trillion Dollar Enterprise which forecast the rise of very large ecosystems in the days before smart phones, commercially available AI and platform businesses.? That book suggested there were 100 processes for alliances, so I’m sure I’ve missed a few, but the ones above are the ones in my experience are essential.? The text below is the original from the book as it still captures the essence of the capability in each area.

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Pg 187 6.3 Business components of an alliance. The second of the metamodels in the Blueprint is what we’ve called the ‘business components’. The idea here is simply that if the life cycle gives a timeline of activities, then the business components suggest a way resources are organised to deliver those activities in a coherent manner across the life cycle. These eight components have proved to be common across most of the alliances we’ve reviewed. Some of the big alliances have large teams allocated to each of the eight boxes. Alliances in start-up mode might have just two or three people operating across all eight components. What is important here is to have a shared language between the partners about what needs to be done to be successful to justify adding people to the team. Focusing energy on the technical training in client delivery and capability development in parallel to investing in the three market making components of offer management and market management will give the best chances of creating opportunities quickly (Figure 6.2). These business components have been suggested based on first-hand experience of the various ways the authors have seen both PS and software firms configure their alliances. Given the tendency of the PS firms to lead in making functional solutions from the technology products, there tends to be an emphasis on the PS firm providing most of the resources and leadership for the business components. This makes a lot of sense; however, it’s also worth saying that in the alliances we’ve seen that have not been successful, the technology firm has input less resources into the joint team. The least constructive expression of their approach has been something like ‘we built the product, now you go sell it’. We don’t think we’ve enough data points to say definitively that without a joint technology/PS team, the alliance will fail, but it is certainly true that without a genuine joint team, the best the technology firm can hope for is for the PS firm simply to act as a channel for their existing product. Without technology innovators from presales or product engineering alongside them, the PS firm is less well equipped to feed back on market interest in the roadmap or recommend feature changes in response to customers because there is no clear channel to do that. There will be less opportunity to react quickly to demand for commercial changes to product pricing structures if the technology firm has not fielded a pricing team to gaze towards the horizon, and the PS firm is left to escalate short-term pricing requests under the pressure of a client Request for Proposal (RFP). When there are wins the technology firm has to effectively promote the value proposition of the PS firms solution to their account and marketing teams. If the alliance does not have leadership support or its a lightweight team they will have a very long journey to cover the ground needed to educate their colleagues and originate more opportunities. The highest revenue-generating strategic alliances we’ve seen have been staffed like a joint business, in a similar way to Wollan et al.’s description. Having the constructive challenge of joint teams fusing their two different cultures and approaches sitting together working through the value proposition, proposal and delivery cycles with clients creates the differentiated value-add that clients need to elevate the solution above all the other competing options in the market. First, we’ll go through each of the eight business components describing them, and then we’ll explore how they link to each of the steps in the life cycle:

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? Solution management: Given our view that winning an anchor client to scale from is the highest priority task, this is a key area in the early part of the life cycle. Bringing research and development (R&D) thinking from both parties to the table, formulating a compelling value proposition and building client collateral and demos to quickly illustrate the value are all part of this component’s capability.

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? Demand generation: This is the combination of internal and external marketing and communication capability to broadcast the offering to appropriate sectors and via suitable channels. This component is tightly linked to the ‘market management’ area.

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? Market management: This is also a key capability in the early stages of the life cycle – the proposition needs to be tested quickly with suitable prospects, and this is where the client mapping activities between the account teams identify companies, they know who will see the highest value from the offering.

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? Client delivery: This is obviously critical once there is an interested customer. They won’t become a reference or case study if the project crashes and burns. At the initial stage of winning an anchor client, the alliance should not expect normal profitability from the engagement. The PS team will be learning how the product operates and integrates in a real client environment. It’s not unusual for the first one to be a loss-making project which might kill the alliance if that comes as a surprise. The team will need to be able to learn and extrapolate how they will find economic value from future engagements with an experienced team after all the wrinkles have been ironed out.

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? Operations: This becomes increasingly important as the offering scales. This is the capability that forecasts and manages resources for offers, BD and delivery based on the size of the pipeline.

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? Capability development: This means constantly upping the game for both sales and delivery resources. This component is identifying the right client facing teams to brief on the offering and then delivering business training. It’s also running the business case for hiring and training staff, managing the talent pipeline and ensuring the right experience and qualifications are growing.

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? Governance: This also grows in importance as the alliance scales. By the time the offering is generating revenue via a number of clients and is available across multiple countries, a structured approach to measuring and steering progress will be required.

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? Last and certainly not least is managing the relationship between the parties: In the early stages of the alliance, it’s likely that the alliance managers will be leading most or all the business components. As the teams grows and beds down and find their rhythm, the alliance is touching hundreds of people across both organisations and needs the same deft care and attention as managing a large customer or medium sized enterprise. At this point, the alliance manager’s role is less of an entrepreneur and becomes more akin to the business leader of an established company.?

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The contribution of the people in each of these business components will vary over the life cycle. In the early stages of validate market, for example, the emphasis will be heavily on offer management and market management to find an anchor client. However, all eight components have a role of some kind in each of the life-cycle stages, so our advice here is task someone to be thinking about each of the components from day one.

What do you see as essential capabilities in the alliances operating model?

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Links and resources

https://www.accenture.com/gb-en/insights/strategy/tech-powered-operating-model

https://kpmg.com/xx/en/home/insights/2020/08/kpmg-target-operating-model.html

https://www.infotech.com/sem/lp2/design-your-it-organization-for-the-future?utm_source=google&utm_medium=cpc&_bt=591847227279&_bk=operating%20model%20template&_bm=b&_bn=g&_bg=106243912798*&gad_source=1&gclid=CjwKCAjwnqK1BhBvEiwAi7o0XwyslknJm_C0g9_0J9mtAy3eyLczYPsrgvLItnYoYALy60rfYSS_exoCfAcQAvD_BwE

https://www.mckinsey.com/~/media/mckinsey/business%20functions/mckinsey%20digital/our%20insights/introducing%20the%20next-generation%20operating%20model/introducing-the-next-gen-operating-model.pdf

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https://www.tmforum.org/oda/business/process-framework-etom/