Unlike many other partnerships found in life, business alliances are not the most natural thing to create. Human beings come together as friends, romantic partners, and co-workers, but businesses are often thought of as adversaries. Despite this general perspective, studies show business alliances often raise profits and generate other benefits for both partners. The only problem is many of these alliances fail.
The Facts About Alliance Failure
Entrepreneurs may be alarmed to learn about the high failure rate of business alliances. Harvard Business Review spelled out the findings of studies on the matter like this,
“Studies show that the number of corporate alliances increases by some 25% a year and that those alliances account for nearly a third of many companies’ revenue and value—yet the failure rate for alliances hovers between 60% and 70%. And despite an abundance of advice on how to make alliances work, that dismal record hasn’t improved in the past decade.”
With a consistent majority of business alliances failing, it is easy to see why many would be discouraged from even attempting them. However, in this case the benefits of such an arrangement outweigh the costs.
Avoid Failure and Achieve Success
In order to avoid becoming a part of the failure rate statistic, alliance partners must work to retain their partnership and promote what is best about it. This can happen by doing a few simple things.
A lot of companies believe that they must eliminate the differences between themselves and their partners to find success. This is not the case. Eliminating the differences doesn’t help the alliance. What helps is to identify those differences and find the strengths in them.
In some cases, the differences between companies provide more reasons to form an alliance than not. If one company has strong brand recognition and another has a great record of customer service, why not combine the two? These are the kind of strengths that build a strong alliance.
Track Progress and Growth
It is easy to lose sight of what is going on in a business alliance. Partners may start to wonder why they are working together after some period of time. This is a good reason to keep goals and track the progress of those goals in any alliance. Doing this helps to strengthen the bonds between companies and promote continued and sustainable growth. Track long term as well as short term objectives that each side wants to achieve with the alliances.
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