How to measure the success of strategic alliances with examples

Strategic alliances have become a vital tool for companies seeking growth, innovation, and competitive advantage. But how can we determine if these alliances are truly successful? In this article, we explore the key metrics and approaches to measuring the success of strategic alliances, backed by real-life examples. Let's delve into the world of strategic partnerships and uncover the different ways to effective evaluation.

1. Revenue Growth: Strategic alliances can help organizations increase their revenue by expanding their customer base or entering new markets.

For example, in 2018, Amazon and Best Buy formed a strategic alliance to sell smart TVs in the United States. As a result of this alliance, Best Buy's revenue increased by 4.7% in the fourth quarter of 2018, and Amazon was able to reach a new audience through Best Buy's physical retail stores.

2. Sales Growth: Measure the impact of the strategic alliance on overall sales growth.

For example: When Nike and Apple formed a strategic alliance to create the Nike+ iPod Sport Kit, they measured success by evaluating the increase in sales of both products as a result of the partnership.The Nike+ iPod Sport Kit collaboration had a positive impact on sales for Nike and Apple. It offered customers an integrated fitness and music experience, leading to increased sales of Nike shoes and Apple iPods. Additionally, the partnership enhanced brand visibility, customer engagement, and perception for both companies.

3. Cost Savings: Measure the impact of the strategic alliance on cost savings and operational efficiency.

For example: When UPS and Fast Radius formed a strategic alliance to create on-demand 3D printing services, they measured success by evaluating the reduction in transportation costs and the efficiency gains achieved through localized production.

4. Market Share: Strategic alliances can help organizations increase their market share by partnering with other companies that have complementary products or services.

For example, in 2019, Mastercard and Zoho formed a strategic alliance to provide small and medium-sized businesses with access to financial services. As a result of this alliance, Mastercard was able to expand its presence in the small business market, while Zoho was able to offer its customers access to Mastercard's payment network.

5. Innovation: Strategic alliances can help organizations develop new products or services by pooling their resources and expertise.

For example, in 2019, Walmart and Google formed a strategic alliance to develop a voice-enabled grocery shopping experience. As a result of this alliance, Walmart was able to leverage Google's artificial intelligence and machine learning capabilities, while Google was able to gain insights into the retail industry.

6. Technological Advancement: Assess the impact of the strategic alliance on technological advancements or capabilities.

For example, when Tesla and Panasonic formed a strategic alliance to build Gigafactories for battery production, they measured success by evaluating the increase in battery production capacity and the ability to meet growing demand for electric vehicles.

7. Customer Satisfaction: Strategic alliances can help organizations improve customer satisfaction by providing a better customer experience.

For example, in 2019, Delta Air Lines and Wheels Up formed a strategic alliance to offer private jet travel to Delta's high-value customers. As a result of this alliance, Delta was able to provide its customers with a more seamless travel experience, while Wheels Up was able to access Delta's customer base.

8. Return on Investment (ROI): Strategic alliances can help organizations achieve a positive return on investment by generating revenue or reducing costs.

For example, in 2018, Intel and Micron formed a strategic alliance to develop 3D XPoint memory technology. As a result of this alliance, Intel was able to reduce its research and development costs, while Micron was able to access Intel's manufacturing capabilities. The alliance generated more than $1 billion in revenue for both companies.

9. Brand Reputation: Strategic alliances can help organizations improve their brand reputation by partnering with other companies that share similar values or have a strong brand image.

For example, in 2018, Adidas and Parley for the Oceans formed a strategic alliance to develop shoes made from recycled plastic waste. As a result of this alliance, Adidas was able to improve its brand reputation by demonstrating its commitment to sustainability, while Parley was able to increase awareness of the issue of ocean pollution.

10. Social Impact: Assess the impact of the strategic alliance on social impact and corporate social responsibility.

For example, when Unilever and the World Wildlife Fund formed a strategic alliance to reduce environmental impact across the supply chain, they measured success by evaluating progress against environmental targets and the impact of the partnership on local communities and ecosystems.

Measuring the success of strategic alliances is no easy feat, but with the right metrics and examples, it becomes a manageable task. By examining factors such as revenue growth, cost savings, market share, and customer satisfaction, we can paint a comprehensive picture of alliance effectiveness. From the ground-breaking partnership of Amazon and Best Buy to the tech-driven collaboration between Nike and Apple, real-world examples highlight the tangible benefits of strategic alliances. So, whether you're considering forming an alliance or currently managing one, understanding how to measure success is crucial for achieving long-term prosperity. Unlock the potential of your partnerships and pave the way for strategic triumph!

Shahid has managed various Alliances and Partnership roles at Apple, Intel, Microsoft and EMC.