Adventures in alliances land #2 - how big is BIG?
Picking up the ‘how big is BIG theme’ from the last article where we debated on how to measure the size of an alliance, I dove into a few examples of recent strategic partnership announcements to see how the press releases described them.? Sticking to my home turf of consulting and technology partners the two most striking I found was the announcement that a telco and a consulting firm would create a joint venture with the consulting firm taking a minority stake for a $150M investment.? Another was between a telco and a technology firm for a 10 year agreement to invest $1.5B to provide services to 300 million customers.?
I’ve been thinking, doing and writing about 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 hear 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
These press releases stood out because they were specific on the investment dimensions of timelines and money.? They also described the benefits although were not explicit that revenue would increase by xx% or market share would change by yy%.? There were two announcements that gave numbers for the benefit side of the equation; a consulting and technology firm with a goal to “deliver US$800M of value to clients”, and a consulting and technology firm estimating it would “drive $5B in business”.? There were many more announcements that were much less specific on both the investment dimension and the anticipated return.? One described a quadrupling of investment without saying how much the baseline was.? A significant number described use cases using generative AI that would be worked on together without mentioning much on investment (maybe the numbers of people to be trained) or return dimension.? Scanning around 20 of these press releases the theme that struck me was the majority had very high level dimensions on investment and no numbers for return.? Broadening my search to other industries I found a similar theme.? Two energy companies investing $1B in electric vehicle charging points.? There is a social good return for this in terms of reduced carbon emissions by encouraging the use of EVs instead of combustion engines, although there was no estimate of how much carbon it might reduce.? There is also presumably a revenue dimension as the companies will operate the infrastructure, charging users and therefore generating income, although that was not made explicit how much the income might be.? An auto manufacturer announced an alliance where 17,000 employees would use a software companies product for digital twins.? There were some innovation benefits anticipated without mentioning possible return dimensions that would follow - I was thinking perhaps increased revenue from customers who found the vehicles more attractive, or maybe higher margins from more cost effective designs.? Really widening the aperture, I also found a strategic partnership announcement between a film star and a studio and numerous ones between various governments and NGOs for initiatives raging from making films to increasing national biosecurity.? Although these are in a completely different realm to technology and consulting partnerships they exhibited the same format of varying degrees of specificity on investment dimensions and high level anticipation of benefits with limited or no explicit numbers estimating the return dimension. ?The highly scientific study I did last week (a vote on linkedin! Thanks to those of you who hit the button) indicated the answer to ‘how big is BIG’ was broken down as; 40% revenue >$100M, 12% revenue $0.5B, 32% >3% company revenue and 16% >1% market share.? These are all specific return dimensions, which only two of the 20 or so press releases I read contained.?
Having written a few press releases on strategic alliances myself over the years I know part of the reason they don’t include estimates of the return. Whilst there is almost certainly a business case behind all of the press releases, the firms don’t want to give their competitors too much insight into the way they are evaluating investments in case they pile into the same market.? There will also be a risk view that exposing estimates on return publicly might lead to setting expectations that affects share prices or market share that regulators will have an interest in.? This is not so much the case for governments though where an assessment might be that a health initiative could reduce mortality by 10-20% say, or increase high value jobs in genetic research by 250 scientists.? This little research exercise left me wondering what your view is of why press releases about strategic alliances generally don’t reveal the business case numbers?
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