Beyond Partnerships: The Strategic Imperatives of Alliances

Synergies of Alliances: Internal / Exclusive -> External / Disruptive -> X-Ecosystems / Compounding

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Economies of scale, cross-functional collaboration, breaking the silos, public-private partnerships, 1+1>2s are now conventional concepts, not new on their face value. They are more like “oxygen is good” type of arguments to many of us.

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However, what is new and will always stay new is where you look for these “oxygens” in an overly interconnected technology-driven business landscape where the value attributes of consumers/shoppers/customers are ever-changing.

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What makes it strategic, is about being aware of the limitations of the entity and looking for ways of alliances starting internally from the organization towards x-ecosystems to drive synergies of strengths, finding win-win sweet spots and creating unique value propositions through them by putting collaboration ahead of competition.

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How it should be? An alliance synergy (conventional) is always a growth driver but could be exponential if it has mutually beneficial exclusivity, disruptive technology/business model, and a compounding trajectory.

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Mutually beneficial exclusivity means the way you describe your alliance cannot or will not be replicated with your competitors. This also needs to make sense with the other side of the alliance.

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If it has a disruptive technology or a business model coming from the other side of the alliance it will be more likely to start a new and bigger sigmoid growth curve on top of your current one. And this is more likely to be found in an unconventional adjacency than your competition will look or will require a bigger risk/investment than they could/would make.

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You do not need to develop a disruptive innovation, a viral communication campaign, a revolutionary G2M idea, or an unconventional cost optimization project daily.

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Actually, you cannot do this in ideation or execution; it is impossible. As (another believer of compounding like me) Warren Buffet says you need a few good investment decisions to be rich if they are to be compounding ones.

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Definition and level of compounding in an alliance is driven by the convergence of their everyday missions on the synergy created, destined for a (symbiotic) compounding growth for both. The best example coming to my mind these days having all above elements is the one between OpenAI and 微软 .

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It is mutually exclusive; it is bringing a disruptive technology for the use of a B2B2C company, nurturing the other side to bring more, and creating a compounding growth trajectory for both.

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Microsoft Mission: to empower every person and every organization on the planet to achieve more.

OpenAI Mission: to ensure that artificial general intelligence benefits all of humanity.

This has occurred in the tenure of Satya Nadella , of course, by a collaborator CEO looking for ways to position its company in the games that it can win vs Steve Ballmer, a very competitive CEO who tried to compete in lost battles like smartphones and search engines burning billions that Satya had to write-off later.

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All you need is to have 1-2 mutually exclusive, disruptive, and compounding alliances in your career to achieve exponential growth for yourself and your company.

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These are all the reasons why I put the synergy of alliances in the Re-purposed differentiation argument of the S-curve strategy. And like everything else in this framework it has levels that is suitable for any entity in its sigmoid journey from internal to x-ecosystem and from exclusive to compounding.

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It is another powerful differentiator to create value in the S-curve strategy philosophy. ?

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The traditional approach to competition and winning (being a hammer and seeing everything as nails) is increasingly becoming less effective (a salute to Simon Sinek ) than collaboration as the key driver of success, especially when it comes to tackling complex problems involving multiple stakeholders with a shared objective of catering to their respective audiences (See climate crisis, income inequality, terrorism and global collaboration platforms like COP, World Economic Forum , etc.)

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The collaborative approach enables stakeholders to pool their knowledge, expertise, and resources, and work together towards a common goal, resulting in enhanced efficiency, innovation, and creativity. This approach also fosters better communication and relationship-building, providing longer-term benefits for all parties involved.

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Internally, fostering synergies across functions can help businesses break down silos and enable cross-functional collaboration, which can lead to improved performance and faster decision-making.

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To stay ahead of the curve, companies must be agile, innovative, and collaborative (to stay competitive). One way to achieve this is by forging external partnerships with start-ups, academic institutions, and players from adjacent industries (definition of adjacency is a tricky key to unlock unimagined possibilities). These partnerships can bring diverse expertise, fresh perspectives, and disruptive technologies to the table, enabling companies to explore new opportunities and accelerate growth.

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Start-ups, for instance (knowing first hand as a founder of one in famous 90%), are often characterized by their agility, creativity, and entrepreneurial spirit. They can offer a wealth of innovative ideas, cutting-edge technologies, and flexible business models that can help established companies to break free from conventional thinking and explore new markets. By partnering with start-ups, companies can tap into the expertise, networks, and resources of the start-up ecosystem, and leverage their strengths to drive innovation and growth.

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Similarly, academic institutions can provide a rich source of intellectual capital, research capabilities, and access to emerging knowledge domains. By collaborating with academics, companies can stay abreast of the latest trends and insights in their field, and tap into the collective wisdom of experts from diverse disciplines. This can help companies to develop new products, services, and business models, and stay ahead of the competition.

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Finally, cross-industry collaborations enable companies to leverage complementary strengths, resources, and capabilities to address complex challenges more effectively. By teaming up with players from other industries, companies can combine their expertise and insights to develop innovative solutions that can benefit multiple stakeholders. This can lead to new business models, products, and services that can create value for customers, shareholders, and society as a whole.

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The differentiation between companies with robust alliances and those lacking such partnerships is stark. Studies have consistently demonstrated that firms with strong collaborative networks outperform their peers across various metrics, including innovation, profitability, and market share.

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A study published in the 麦肯锡 Quarterly in April 2019 revealed that companies with robust collaborative networks reported profit margins approximately 24% higher than the industry average. This indicates a clear correlation between the strength of strategic alliances and financial performance.

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According to a study published in the Harvard Business Review , companies with a strong focus on building and nurturing collaborative relationships are 50% more likely to attain market leadership positions within their respective industries. This highlights the strategic significance of alliances in driving market dominance and sustaining long-term success.

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There is empirical evidence provided by studies and publications like the ones above that underscore the critical role of strategic alliances in driving competitive advantage and superior performance. Companies that prioritize building and nurturing collaborative networks stand to reap substantial benefits in terms of profitability, innovation, and market leadership.

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I researched (using GenAI responsibly of course) and tried to find good examples from my domain of companies in construction and consumer, where I am more knowledgeable to comment. I ranked them based on the criteria of exclusivity, disruptiveness, and whether they were compounding or not. The selection was totally AI driven also reflecting what is more visible on digital world about these companies and their alliances. No offense.

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Holcim: Driving Sustainable and Circular Products by partnering with Academia

拉法基 has worked closely with academic institutions like the 美国麻省理工学院 (MIT) to drive research and innovation in sustainable construction practices. Their collaboration with MIT has focused on developing new building materials and construction methods (like PixelFrame) that minimize waste and reduce carbon emissions.

(Exclusive: No evidence, Disruptive: Yes, Compounding: Yes).

Someone from 拉法基 or Miljan Gutovic can also comment.

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联合利华 : Driving Sustainability of Commercial Products Through Strategic Partnerships

Unilever's partnership with the World Wildlife Fund (WWF) resulted in the development of the Sustainable Palm Oil Sourcing Policy. By 2020, Unilever achieved 100% certified sustainable palm oil sourcing for its products, demonstrating its commitment to environmental stewardship. [Reference: Unilever Sustainable Living Report 2020]

(Exclusive: No, Disruptive: No, Compounding: To some extent)

Someone from 联合利华 or Hein Schumacher can comment.

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PepsiCo: Innovating Through Collaboration with Start-Ups?

PepsiCo's partnership with The Hatchery Chicago, a food and beverage incubator, facilitated developing and launching new products (a line of fruit, nut, and veggie snack bars under the brand Naked, bite-sized vegan brownies under Breaker Snacks) tailored to emerging consumer trends (healthy snacking). This collaboration enabled PepsiCo to tap into the entrepreneurial ecosystem and accelerate innovation cycles with incubating and later M&A. [Reference: PepsiCo Press Release - The Hatchery Chicago Partnership]

(Exclusive: No evidence, Disruptive: Not yet but promising, Compounding: Yes)

Someone from 百事 or Ramon Laguarta can comment.

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Nestle: Investing in Research and Development Partnerships with Academia

Nestle's collaboration with the Swiss Federal Institute of Technology in Zurich (ETH Zurich) resulted in the development of novel food processing technologies and nutritional innovations. I could not find any specific outcome of this alliance, but it seems it is around “novel proteins for food and feed, as well as trend-based, tasty, nutritious, and sustainable food and beverage products”

(Exclusive: Yes, Disruptive: Not yet but promising, Compounding: Not yet but promising)

Someone from 雀巢 or Mark Schneider can comment.

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Kraft Heinz: Enhancing Supply Chain Resilience Through Strategic Alliances

Kraft Heinz's partnership with leading logistics companies, such as DHL and UPS, has enabled the company to enhance distribution efficiency and reduce transportation costs. This collaboration has strengthened Kraft Heinz's supply chain resilience and enabled timely delivery of products to retailers and consumers. [Reference: Kraft Heinz Supply Chain Partnerships - Industry Reports]

?(Exclusive: No, Disruptive: No, Compounding: May be in its domain but not for company)

Someone from 亨氏 or Carlos Abrams-Rivera can comment.

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Procter & Gamble: Leveraging Digital Innovation for Market Expansion

Procter & Gamble's collaboration with Google for digital advertising campaigns resulted in a significant increase in online brand visibility and consumer engagement. By leveraging Google's advertising platform and analytics tools, P&G achieved measurable improvements in brand awareness and customer acquisition. [Reference: Procter & Gamble - Google Partnership Case Study]

(Exclusive: No, Disruptive: No, Compounding: No)

?Someone from 宝洁 or Jon R. Moller can comment (very unlikely as he seems not to be on Linkedin :) ).

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Mondelez: Investing in Collaborative Research for Product Differentiation

?Mondelez's collaboration with leading culinary schools and flavor research institutes has resulted in the creation of unique snack offerings tailored to regional preferences (like The Oreo frozen cheesecakes in China). This collaborative approach to product development has enabled Mondelez to maintain market leadership and sustain growth in a dynamic market environment. [Reference: Mondelez Research Collaborations - Industry Reports]

(Exclusive: No, Disruptive: No evidence but very promising, Compounding: Yes)

Someone from 亿滋食品 or Dirk Van de Put can comment.

These specific examples demonstrate how each company has leveraged strategic alliances to drive innovation, sustainability, and market leadership within the consumer goods sector.

Conclusion: Embracing the Synergies of Strategic Alliances

In conclusion, the synergies of alliances across internal functions, industries, and ecosystems have emerged as a potent catalyst for driving growth (hopefully exponential) and competitive advantage. By fostering a culture of collaboration and seeking mutually beneficial partnerships, companies can confidently navigate the complexities of today's business landscape. The success stories from the construction and consumer goods industries underscore the transformative power of strategic alliances in unlocking new possibilities and creating value for all stakeholders. As organizations embark on their journey of growth and innovation, embracing the ethos of cooperation and collective success will undoubtedly propel them to new heights on the sigmoid curve of progress.

In the next article we will move to a new strategic pillar “Value Driven Competencies”.

May the force (of collaboration) be with you ...

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Cheers,

C.Firat Caliskan?

References:

- McKinsey & Company. "The Power of Collaboration: Transforming Industries and Unlocking Value." McKinsey Quarterly, April 2019.

- Harvard Business Review. Various articles on strategic alliances, collaborative networks, and market leadership.