Small Business Alliances

Alliance Governance; Embrace the Diversity

2010-04-15T07:52:00.000-07:00

I like to call alliance success, Partnering for Profits. Unfortunately, a frequent alliance success pitfall is attempting to make your partner in your image—do things the way you do, think the way you think, and follow the same methodology. While it may appear in the short-term, to ease the rocky road of alliance governance, what it really does is minimize the value your partner delivers in the alliance relationship. What it was that attracted you to your alliance partner in the first place were their core competencies and the belief that together, value added synergies would be created and deliver benefit to both; and now you want them to change? How much sense does that make?

First the Process of Working Together

When you set up your alliance expectations in your alliance agreement, the first success should be successful organizational alliance integration—a strategy to collaborate in developing a cooperative process with which both organizations can successfully implement and integrate into their current processes and methodology. First you have to successfully cooperate and collaborate before you can implement the actual stated alliance function.

Cultural, Strategic, and Operational Fit

For any alliance to be successful there is the need for a reasonable cultural, strategic, and operational fit. However, there is not a need for exact cultural, strategic, and operational duplication. The cultural fit is about how compatible the management teams and corporate cultures overlap. The important question is can they successfully work together? The strategic fit is determining how well aligned are the objectives of the participating partners. Opposing corporate strategies can greatly handicap, even a well implemented alliance. Operational fit is the tricky one. How complementary are the business models, processes, and methodology? Notice I stated aligned, and not, the same? With alignment there can be differences, yet cooperation and collaboration.

Partner Due Diligence

I truly believe that due diligence is the Achilles heal for most organizations in the alliance development process. During this very important alliance development step, you really do need to be honest with yourself and your potential partner(s) as to your partnering expectations, your own capabilities, and the partner capabilities you seek. For years I have been saying, “People do not change after marriage.” What I mean by this in the partnering arena is the, all too frequent, misguided belief that one’s partner will get better after the alliance is implemented. How wrong can a person, committee, or organization be? Pick the correct alliance partner from the beginning. Trying to change them after is a fool’s errand.

New Alliance Tools for Smaller Organizations

When I first started writing about alliance development, many of the tools were financially only available to the larger corporations. However, with the preponderance of today’s social networking capabilities, many savvy smaller companies are using Facebook and Linkedin for alliance success, especially in the areas of governance and implementation capabilities. As the social networking sites are now allowing greater control over privacy, they become even better alliance tools for smaller business alliance success. You will find that with a small amount of creativity, social networking sites can truly be a boon to alliance governance, implementation, and success.

Should I Start a Strategic Alliance or Joint Venture?

2010-03-12T08:21:00.000-08:00

You are looking to gain that competitive edge over your competition. Many smart business leaders look to collaboration for expedient advantages. Might a mutually-beneficial relationship with another organization be in your future? If you answered in the affirmative, your next question will be, “Should I start a strategic alliance or a joint venture? This is a question that I’m frequently asked and the answer could be complicated?

More than Just Words

Actually, there is a huge difference between a strategic alliances and joint ventures; culturally, operationally, strategically, and legally. A little bit of strategy and pre-planning can, and will, make a dramatic difference for your organization as your new collaboration is developed and implemented. Let’s get it right from the beginning.

Strategic Alliance

Your reason for developing a strategic alliance relationship with one or more other companies is to take strategic advantage of their core strengths; proprietary processes, intellectual capital, research, market penetration, manufacturing and/or distribution capabilities, and a number of other reasons. You will share your core strengths with them too. You will have an open door relationship with another entity. You will mostly retain control. The length of agreement could have a sunset date or could be open-ended with regular performance reviews. However, you simply want to work with the other organizations on a contractual basis, and not as a legal partnership.

Joint Venture

Your reason for creating a joint venture is to take advantage of a fitting or convenient connection or overlap. A joint venture is a legal partnership between two or more entities. With a joint venture you will have something more than simple governance; you’ll have a completely new entity with a board, officers, and an executive team. Effectively a joint venture is a completely new organization, but owned by the founding participants. The board of directors generally is constructed with representatives of the founding organizations. This new company will “do business” with the founding entities—usually as suppliers.

Important Differences

1. Your strategic alliance is a contractual or handshake agreement while the joint venture is a legal partnership, LLC, or corporation.

2. Your strategic alliance summons the core strengths and differences of another organization to deliver value to your organization while the joint venture becomes a blending of cultures and creates a new organizational culture and path.

3. Your strategic alliance requires continued relationship maintenance while the joint venture has its own leadership team.

4. Your strategic alliance allows you to remain in control of your own company but the joint venture chooses its own direction; with the guidance of its board.

5. You can retain control of your proprietary creations while involved in a strategic alliance but in a joint venture, these creations are the property of the joint venture. If the joint venture fails, dividing the spoils can be a challenge.

Which Is Right for You?

There are numerous reasons, benefits, and pitfalls available to you whichever path you select. The key is to have an understanding of both your and your partner’s long-term desires. You can jump into and out of a strategic alliance quickly but the joint venture takes much more time to start and could be difficult to end. The joint venture takes less necessary attention form stakeholders once launched because of its own leadership team. If you are not willing to devote your time and resources to the health and maintenance of your strategic alliance, perhaps the joint venture is the better path for you? If control is important to you, the strategic alliance would be the better course of action.

Loyalty Alliance Style

2010-02-27T07:24:00.000-08:00

You want loyalty from your customers, employees, and suppliers. Every imaginable supplier, B2B and B2C, is desperately looking for customer loyalty too. But what about those that want the last ounce of advantage on both the sell side and also the buy side? Do you know who I talking about?

See It with Your Own Eyes

I’ll never forget an experience I had while visiting an ice manufacturing plant in Southern California. I was visiting the plant in preparation for a multi-day marketing workshop I was to conduct at that industry’s annual convention. I wanted to get a feel for the industry first hand.

I set up an appointment to visit the plant but the owner was out. So, his second in command gave me a factory tour. Over the course of the tour, and to my amazement, my guide was bemoaning what he considered poor loyalty from their customers—stating that many would buy from another company if his drivers were late with deliveries. I listened intently and empathetically to him. Toward the end of the tour he was showing me the ice bagging machinery so I asked my guide about his company’s bag supplier. Holy cow! This guy’s facial expression turned sheepish. He then told me, “We like to play one supplier against another for the best possible price.” Excuse me!

What’s In Your DNA?

Apparently supplier loyalty was not in the DNA of this particular ice manufacturer. However, they expected loyalty from their customers. Is it just me? Or, can you see the cosmic humor in this situation? This organization wanted it both ways. It’s kind of like the folks that regularly shop at Wal-Mart and then complain that all the American jobs are being sent overseas. Duh!

Looking at a 180 degree difference in business philosophy is Universal Electrical Contractors in Flint, Michigan. President, Gene Dennis, successfully shifted his buying from several electrical distributors to giving Graybar an exclusive agreement. A decade later the alliance is still going strong and highly profitable for both.

What’s a Business Leader to Do?

1. If you want loyalty from your customers, practice the concept of loyalty in your dealings with suppliers.

2. If you discover that adversary relationships are in your organizational DNA, put new policies into place to mitigate the situation.

3. If you want collaborative DNA at the core of your organization, review how your key people are being compensated.

4. Reward the behavior you want repeated—meaning, do not reward the procurement department only for squeezing an additional dime out of your suppliers. Rather, build strategic sourcing relationships.

Now the Getting Gets Good

After you do a major overhaul in the area of supplier alliance development, you can use your newly found strategic sourcing understanding to develop better relationships with your customers. This is also a great time to review your employee partnering policies. Trust me on this; you do want your employees to have an emotional ownership in the success of your business. In difficult economic times—sure, everyone is looking for a deal. But, when you and I have a vested interest in our relationship, we’ll bend over backwards to help one another. That is the basis for real customer, and seller, loyalty. It’s never too late to start building the new era of loyal relationships.

Conflict Management in Alliance Development

2010-02-23T06:23:00.000-08:00

There will always be conflict in strategic alliance development--it is inevitable. During this time of conflict you can take one of two positions. The first and frequently employed position is that of having your heels dug in. You believe you are right and that's it! The second position, and more difficult to employ, is where you care enough about your partner and the success of the alliance to understand what is motivating their behavior. Needless to say, my recommendation is the second.

Think Back

Just to make a point, I’d like you to think back to the last argument you had with your spouse, parent, child, a friend or in a business situation. Do you see yourself in the argument? Now, I ask you which position did you take?“ The first,” you say? I thought so. If you had taken the position of trying to understand the other’s position, there most likely would not have been an argument. We humans are not perfect. As such, we sometimes we fall into our stuff. At these times we are not the best people we could be. But, it is the person who recognizes that they are in their stuff and makes a new behavior decision that makes a good partner.

You might be thinking, “Thanks for the info, Ed, but why do I have to always be the person who makes the change, the person who makes it works? Why can’t it be the other guy once in a while?” My answer to you is simply that you are the one who figured it out first. Get out of your stuff and, as Nike says, JUST DO IT^®.Listed below are some additional tactics to help you resolve conflict.

Evaluate your, and your partner’s, conflict management styles. Understanding each other is a great start.
Identify and plan strategies to deal with non-productive behaviors before they crop up.
Give positive feedback as often as possible so the relationship does not take on a negative tone through only fire fighting interactions.
Confront problem situations at once rather than waiting for the situation to escalate.
Invite comments from all stakeholders early in every project, especially your alliance partners.
Consider using humor and maybe even humility in certain situations.
Encourage dissent at a time and place that serves all involved.
Review the value of the alliance relationship. Determine how much your circles of interest overlap. Ask if winning this battle will get you closer to an OSR, or further away from it.
When you hear something you don’t like, repeat it back in an informational way. See if the message you received was the same as it was intended. Misunderstanding is the root of much conflict.
Know your buttons and don’t allow them to be pushed. You have control in this area.
Completely listen to what the other guy has to say before you open your mouth. Remember the adage, Listen twice before speaking once. That’s why God gave you two ears and only one mouth.
Remember the principle of saving face. In some societies, it is a matter of life or death. Fortunately, or unfortunately, depending on how you look at it, this is not usually the situation in North America.
Keep your ego in check. Be clear on the difference between high self-esteem and high ego. One serves and one does not. Need I say more?
Appoint a devil’s advocate and allow them to be involved in projects from the start, all the way through completion. Their job is to be a pain in the neck. It’s not that they are just picking on a certain person or position. This keeps people from taking a dissenting opinion personally.
Keep the consequences of your decisions in mind.
Value the opinion of others. Focus on the clarity of the water, not the spring from which it flows.

I understand that building Outrageously Successful Relationships can be difficult at times. My best advise for you: Know the value of your relationships. Know where you want the relationships to go and stay on course. Accept that quality Partnering just takes time and effort. Accept that there isn’t any magic--just dedicated implementation.

Acquisitions vs Alliances: the Basics

2010-01-09T08:16:00.000-08:00

In your effort to decide between acquisitions vs alliances there are several important considerations. While the benefits to your organization might greatly differ between the two, so goes for the cost of failure. To help you succeed, first defining the terms might prove extremely helpful to you in your decision process.

Acquisitions

Acquisitions and mergers are effectively the same thing. Most mergers are really one company acquiring the other. In this acquisition process, the acquiring company receives the good and bad, the positive and the negative resources, liabilities, and reputation. The acquiring organization receives all assets and liabilities of the acquired organization.

Alliances

Alliances, generally strategic to an organization’s short or long-term plans, are contractual relationships wherein both organizations remain independent while collaborating to develop a mutually-beneficial result within a specific scope outlined in the contractual agreement. A very simple example would be the cross promotion efforts that are regularly employed by Hollywood’s movie producers and various companies that sell their products or services directly to consumers.

Value in Acquisition

Value can come to an acquiring company through: intellectual capital, real estate, equipment, resources, market share and an extensive list of other considerations. However, the reverse is also possible (think Daimler-Benz & Chrysler). One of the insidious pitfalls of acquisitions is when the company being acquired successfully, and deceptively, hides liabilities from their suitor. Generally the strategy of acquiring organizations is to somewhat dismantle an acquired organization, keeping the targeted valuable components and assimilating them into the acquiring organization while disposing of the unwanted, underperforming, or potentially damaging elements. If the acquiring company has a bad reputation (think Cingular) as an example, and the company they acquired has a good one (think AT&T), then value is delivered.

Value in Alliances

Value can come from alliances in a myriad of ways: immediate market penetration, immediate distribution of a product or service, cost sharing, new product development and the list continues. The down side might be: loss of complete control, divulging of proprietary information, ownership conflict of mutually developed products or services, time and resource distraction, and underperforming partners—just to mention a few possible negative elements.

Alliance Benefit

The important alliance benefit in the area of determining acquisitions vs alliances is the ability that alliance first provides in looking before leaping. While there are countless stories of failed alliances, there are more of failed mergers and acquisitions. The price of a failed acquisition is almost always multiplied many times as compared to the price of a failed alliance. An alliance first, gives you the opportunity to “closely study your prey before the actual hunt is under way.”

My Advice

From my two decades of helping companies to develop mutually beneficial collaborative relationships, I would advise any organization or groups of organizations that are considering acquisition or merger to first develop a strategic alliance, or a few alliances, with one another to better understand the core strengths, weakness, capabilities, and cultures of all organizations involved. This process will assist in developing a working knowledge of the other, the process will help in identifying under which rocks company secrets are buried, and will expand the vision of possibilities. Remember, you deserve the partner you select; synergistic or antagonistic.

In Bed With the Enemy--How to Successfully Partner With Your Competition

2009-12-30T06:22:00.000-08:00

Today, strategic alliances are commonplace among large corporations, so why shouldn't small business also get into the action? The advantages allow these companies to successfully compete in the global marketplace. Powerful synergies are the outcropping of these alliances. Smaller companies can derive the same advantages through alliance relationships. In this article, I will focus on what I call Synergistic Partnering Alliances where competitors can realize great value by building relationships of integrity with one another.

To begin, you must search for the perfect mate. How do you find competitors with whom who can successfully become a synergistic alliance partner? First, talk to your suppliers. They already have a great deal of experience with your competitors. They also have a good handle on the integrity or lack there of. Also, your trade associations can be quite helpful. The board members and staffers are usually knowledgeable about the players in your industry. Other possibilities are your local chambers of commerce and the better business bureau.

The key is to find a partner with the same core values as you. This will make life together better. Ask IBM and Apple why their alliance did not work out. If you can find anyone that will tell the truth, they will most likely blame the fact that the cultures of the two companies were too different. A significant point in selecting a partner is to keep in mind that your alliance will only be as strong as its weakest link. What I mean to say is that you want a winner, not a looser on your team. Do not build an alliance with a needy person or organization, especially if they/it that cannot make it on their own. Trust me—you will regret it if you do.

Next, you must court your future alliance partner to start building a relationship. Assisting your future synergistic alliance partner to have an emotional ownership in the partnering paradigm will be your primary mission at this point. Intellectually, your partner can see and realize the benefits of a synergistic relationship but the fear of losing control might block their emotional ownership to a commitment. Without their emotional ownership, not buy-in, any commitment made will have been done on a shaky foundation.

Now, they might be experiencing the getting married jitters. You must successfully deal with the fears and issues in synergistic alliance partnering with competitors. Sensitivity and understanding of your potential partner's situation are crucial at this juncture. Talk about the up side and the down sides to your intended alliance. Talk about how you might deal with the relationship if things do not work out. Plan an exit strategy. Getting fears and issues out on the table rather than hiding them in the dark will serve all involved extremely well.

Where are you going to live? The question is about your individual and combined marketing areas. Also, talk about new buying habits and information recovery systems. You will need to track new information to detect the value gained in the alliance. Selecting the alliance marketing area, geographically and service/product mix is no easy task. You will need to pay close attention to the small and large details alike. Might you share warehousing or delivery facilities or possibly even employees to overcome personnel challenges?

Who's Going to Do the Chores? Alliance partner responsibilities and activities make the relationship a success or failure. Too often this is the area where unrealistic expectations of one another rear themselves. Be clear, commit it to writing, who will be doing what. The palest ink is better than the most powerful memory. It is too easy to forget your commitments in six months, a year or a decade later. Regular value updates on the alliance relationship will be very helpful. Too often we keep issues to ourselves and the issues fester like a splinter. This is not the way to build a successful relationship. The relationship value updates should consist of expectations (met and missed) and profitability targets. This information will assist you in determining to upgrade, downgrade or maintain the relationship as is.

Time to tie the knot. The synergistic alliance partnering agreement should be in writing. It should contain detailed explanations of activities, expectations and responsibilities of each partner. This document will be your guiding light or road map for your successful alliance relationship. When in question, you will refer to the "Partnering Charter." Now that you are in a relationship, it will be necessary to make regular relationship bank deposits of physical and emotional energy. Always meet your partner more than half way. By giving more than half, a robust synergy follows and so much more is possible by working in concert than singularly.

Surviving under the sheets? Yes! Being in an alliance relationship is much like being married. Once the synergistic partnering alliance is in place it becomes essential to learn how to become successful cohabitants. While each of you is responsible for your own success, you now must consider how your actions will affect your partner's business. Be aware of the things you do and how your actions might create a need for your partner to change their strategic plan. Confer before you act. After all, you are in bed together. To get space, you must give it first.

When your partner takes all the covers it is not much fun. To Successfully deal with the regular and normal issues and challenges of the relationship, you must get past the "Denial Syndrome." Denial is an insidious situation that generally results in personal destruction. The expression, putting your head in the sand like an ostrich is applicable to denial. The problem with putting your head in the sand is that you leave your posterior undefended. Too often in conflict, one finds it easier to ignore than confront. A confrontation does not have to be a knock down drag out affair, especially if you selected your partner well. Open communication is the key element in dealing with missing covers, or anything else. Remember, if you steal your partner's sheets today, they might take yours when you are cold and in need.

We must go to the marriage counselor. When relationship roadblocks occur, it may be necessary to seek third party counsel for mediation. In this situation, authenticity and openness are meaningful. Since you took the time to choose well, it is usually worth the time, energy and expense necessary to rebuild the partnering bridge. Mediation is becoming a popular method for resolving conflict and it will be easier than you might think to find a qualified mediator. In this process of reconciliation, focus on the reasons for selecting your partner and the benefits you hoped to receive rather than the anger, rage or hurt feelings.

Oh no, divorce! You truly tried but it did not work out. For a myriad of reasons, this sometimes happens. No reason to feel like a failure or declare that you'll never again be in a relationship. In dealing with separation issues, be the bigger person and again meet your partner more than half way. Otherwise the rage and anger will fester and you will become immobilized. If there is "community property" dispose of it fairly or offer to buy out your partner. Either work it out, or take court ordered pennies on the dollar. Only outsiders win in this situation.

We did it, and look at the profits. Yes, success is my hope for you and your partner. Enjoying the journey with your alliance partner and looking for additional opportunities is what make all the work worth the energy. Maybe your alliance will simply be a buying consortium. Perhaps it will be an alliance to serve a large multi-regional customer. It could be to share a pool of employees or an advertising coop. What ever you select, have fun in your partnering journey. Enjoy the process and the rewards. And I assure you, build your alliance correctly, and there will be the rewards you seek.

Making Your Small Business Alliances Profitable

2009-11-06T09:01:00.000-08:00

The most important question you will ask when looking at collaborative business relationships, Is the synergy worth the energy?

The reason I ask this question is because, developing successful and profitable alliances is rarely easy. If it were, everyone would be doing it successfully. Many alliance consultants, and myself included, have determined that about 50% of the alliances created in the United States fail for one reason or another.

The reasons that you may select to enter into alliance relationships are varied, and generally based on need and competencies. The need side is usually represented in areas where we may consider ourselves or our organization to be lacking or weak. The competency side is the opposite, the strengths that we have to share. An ideal alliance situation is with a person or organization that exhibits competency in our weaker areas and weakness or need in our personal and/or organization’s areas of competency. This is where our circles of interest strongly overlap—where we have the greatest chance to be of service to one another.

Building Competent Collaborations

To be successful in building competent collaborations, at least a sprinkling of the following six personal qualities should be encompassed within you and your alliance partners: Curious, Vision, Communication, Leadership, Organize, and Compassion. Let’s look at these individually.

Curious. While you’ve undoubtedly heard is said many times, “Curiosity killed the cat.” We’re not cats. We’re business people searching for leading-edge methods for which we desire to improve our capabilities and hopefully our profits. Curious means you are open to new, and frequently, unsuspected opportunities. You must be curious to alliance possibility in order to simply get started.

Vision. Where is it, which you want your alliance to help you reach? What synergistic goals do you visualize being possible? Simply developing an alliance because it appears the trendy thing to do is hardly a reason to put forth the effort. Additionally in the area of vision, you must be able to see into the future and not become dependent upon your alliance partner—doing this will make you weak. On the other side, if you become too independent, you will no longer be desirable ac an alliance partner to others. Your vision needs to be to work toward that proverbial, and many times elusive, sweet spot where you become interdependent and develop time effective synergies.

Communication. Through my research, I have discovered that the leading reason for alliance failure is communication. While communication does cover a number of issues and situations, this is the key area for which I’d suggest you focus greatly.

A great example of the need for quality communication is the fact that Eli Lilly, the pharmaceutical giant, writes into many of their alliance agreements a mandatory quarterly face-to-face meeting of the principals from each company in the alliance. While the Lilly executives sometimes complain they do not have the time for these meetings, the meetings are contractually mandatory. Generally there is a social dinner the evening before the meeting where many of the current issues and problems get brought out in the open in a non-threatening manner.

Following the 911 attacks and resulting travel challenges, some of the Lilly alliance executives tried fulfilling these contractual obligations via videoconferencing. It seemed to work well and continued substituting videoconferencing for the mandatory face-to-face meetings. It did not take long for alliance problems to start magnifying. As soon as they went back to the live face-to-face meetings, they started again solving challenges before they ever became alliance relationship problems.

Leadership. In order for your alliances to be successful, you must exhibit at least a modicum of leadership qualities. I did not say dictatorship! Here, more than in any other area, your willingness to focus on getting things done, rather than to obsess on being right will determine alliance success. In a corporate environment, the paradigm of partnering must start at the top. The executive must drive the philosophy through both word and deed. Even if you are a single person practice, you must be an alliance champion throughout all the areas of your business.

Organize. Your ability to organize, in the form of alliance structure, procedure and process will have a huge impact on the ultimate implementation and longevity of your alliance relationships. Continuing with Lilly, their alliance implementation process is so sophisticated that they measure (Lilly Web) the perceptions of all of the key players in their alliances—Lilly players and those of their alliance partners. The perceptions that they measure are basically what everybody thinks about one another. This allows Lilly to course correct when they discover that Lilly’s, and their alliance partners’ perceptions of the performance of one another is distorted or out of balance.

Compassion. As you meander through the process of alliance development and implementation, you need to have compassion, and even tolerance, for the foibles of others. This quality will allow you to maintain your sanity in what can sometimes seem like alliance insanity. As you develop alliance relationships, sometimes your alliance partner might, in your opinion, let you down. Since not everybody happens to be as bright as you are; an alliance success secret is to give your alliance partner a break once in a while—especially if your expectations are a bit unrealistic.

Relationship Value Update. For years, I have told my alliance clients, that if they would just complete a Relationship Value Update (RVU) for one another as little as twice yearly, they could head off a number of relationship killer situations. Some have, and succeed but unfortunately many have not and have failed. While using this tool does not guarantee success, but it sure makes alliance success more likely.

There is the long form in my book, Developing Strategic Alliances, (to access this and other helpful additional information from Ed Rigsbee at no charge, please visit www.rigsbee.com/downloadaccess.htm). Here, I’ll share with you my short form. I believe this RVU if used diligently, will make a lasting difference for you as you go through your alliance implementation process.

Below, you will find the three key questions for both you and your alliance partner to answer IN WRITING about the value of your alliance with one another. Then mail your answers to the other. Then each of you can review the information in the privacy of your own office—it’s much better this way. Doing this is far less threatening than is a face-to-face value meeting—that can be done later. Now each of you can quietly read the RVU and hopefully better understand the others’ perspective on the success of the alliance and the value it does, or does not, deliver. This tactic is your best help for avoiding perception challenge issues and dealing with small issues before they get out of hand.

• The value I’m getting from the relationship.

• The Value I think you are receiving.

• Your suggested improvement strategies

Contracts. Written agreements, whatever you call them, are crucial in the success of an alliance. No matter how trusting and loyal each alliance partner operates toward the other—in time people forget their promises. Sometimes they even come to believe they promised something other than they actually did. You have heard it said by any number of professional speakers, “The palest ink is far better than the most retentive memory.” I have found this platitude to be quite accurate. By putting to paper your expectations of one another, along with promises and listing who is responsible for what, you both will have a living document to use as an alliance relationship guide. This guide, contract or agreement, whatever the name, can naturally be adjusted at any time based on new information, market conditions and/or changed alliance partner commitment levels.

In the final analysis, I can honestly tell you that alliance relationships, for a myriad of reasons, can be extremely profitable for all involved. The key is to determine if the synergy is worth the energy. If it were not, why in the world would you want to proceed? But, if you believe the synergy is worth your energy, you can open the door to a new world of business possibilities. With partners that share their complementary core competencies, things can be done that you may never have imagined possible in your career. A truth that I have discovered in my years of alliance consulting, most people are in such a big hurry to build their alliance that they over look the most important alliance issue—pick your partners well. Skip the necessary due diligence, and you’ll be crying about conflict resolution and exit agreements rather than focusing on the opportunities and possibilities.

My Alliance Partner Quiz will help you to get a fighting start in selecting your alliance partners. You may also access this at no charge, please visit www.rigsbee.com/downloadaccess.htm.

Good luck in building your synergistic alliances.

Community Partnering for Small Business Success

2009-11-05T09:31:00.000-08:00

Walking to my car, I heard loud music. This was not exactly what I expected in Grants Pass, Oregon on a warm Saturday July evening. I had just returned from an exhilarating jet boat excursion to Hellgate Canyon and enjoyed a ranch style dinner on the Rogue River.

The music was getting louder and louder as I approached the parking lot. It was coming from across the street. It was an automobile dealership, Mock's Ford, and it was alive with action. There was a band playing, with folks of all ages dancing to the music, a barbecue filling the area with its popular aroma, and yes, people were buying cars. The excitement and activity drew me like a magnet to metal.

In front of the sales office, a local radio station, Cruisin'-FM, was conducting a live-remote broadcast allowing all in attendance to be involved. I located the dealership president, Don Carr, and during our chat he told me that they had sold almost as many cars so far that weekend as they usually sell in a month. To top it off he said, "We're not giving these cars away." Carr created a weekend partnering alliance with his community and won big.

How would you like to sell your products at that rate and still make a profit? You might be saying, "That's great for selling cars, but what about me?” The answer is to get involved with your community in a way that serves people and created high-level exposure for your business. You'll need to be creative and develop some fun, helpful, exciting community activities. Remember, being unique is not an absolute necessity, but it’s very helpful.

Creativity has always been, and will always be, the retailer's call to battle. Creativity is also one of the key ingredients necessary to create value in the eyes of your customers. The way the national big box category busters (i.e., Wal-Mart, Circuit City, and Office Depot) develop perceived value is through selection and low price, not necessarily service. If you are an independent retailer and you’re trying to do battle in their arena, they will clean your clock. But, creativity is not necessarily a word that big boxes, at the local level, understand.

For years, Baby boomers have been the pig in the python in our economy. They were heavy-duty consumers in the 1980s, buying their first houses and filling them up, buying luxury cars and all the outward trappings of success. In the 1990s they traveled and purchased RVs. Now, with most of the Boomers having grandchildren, they will buy almost anything if they perceive it’s a good value. Also, determine what they perceive as value-added in how you run your business and give it to them—they'll reward you with profits through their loyalty. Don’t forget about the X and Y Generations. While many were part of the dot com bust, they still seem to spend freely.

Create a unique position for your business in the minds of your customers and your competition in the marketplace is greatly diminished. Remember though, unique means one of a kind, (not just a bit different) and that's what you must be if you plan to survive and prosper throughout this decade and beyond.

Earl Nightingale, co-founder of Nightingale-Conant Corp., the worlds largest producer and distributor of audio and video learning systems continually offered this suggestion for creativity: take a yellow pad each morning and spend a quiet hour thinking about the major challenges for the day. He would go to work listing all ideas he could think of—no matter how crazy, impossible, wacky or boring the idea might appear. "Some ideas you'll use and many you'll toss out," he would say. The important thing is to capture the ideas and take action on the ones you believe will assist you in achieving your goals.

So, how does all this creativity and uniqueness talk help you to partner with your community? You can't just copy what others have done and make it work for you. You can, copy the process used but not the results. Your community is uniquely different, your neighbors have special needs, and you must use your creativity to find a winning combination.

Here's how to get started. Head for your chamber of commerce, if you're not a member yet, and join! Ask for their list of clubs and organizations. Do any interest you? I know you don't have time for that kind of stuff. Trust me, you do! It's all in how you choose to participate. There are more ways to participate than just showing-up to their meetings and events, be creative.

Volunteer to chair a fundraiser, one that you can have at your location—yearly! The event can be in your store, in your mall or center, on the sidewalk in front of your store or in your parking lot.

Flea market or rummage sales are about the easiest to put on and quite profitable, find an interesting twist though. You can arrange to have leftovers picked up by a local charity.
Community holiday theme party such as a Halloween costume party. Do this after hours, charge for attendance and give the profit to your organization. During the day offer a discount for those who shop in a costume.
If you are on a busy street try a Saturday barbecue, possibilities are endless.

You might be wondering why you need to have these activities in conjunction with a community organization—for PUBLICITY! In the example I mentioned at the beginning of this article, Carr paid for all the advertising. When you work in conjunction with a local group you get public service announcements (PSA) free of charge and you ALWAYS mention the location (yours) in the news releases.

If you want more help in doing news releases or publicity, head for the public library and go to the non-fiction # 659 section. While you are at the library, stop by the reference desk and ask to look at the Gale Directory of Print & Broadcast Media, you'll find the address and phone number of all the media in your area. They are whom you notify for your up-coming event.

Another idea might be to head a local organization that you care about from your place of business. Be sure it's a high profile organization; this can bring you closer to your community. It will give many potential customers another reason to visit you.

For you die-hard's who want exposure to the community but refuse to join a local organization, here are some ideas. Hold a parking lot aerobics class (in warm weather) three days a week at no charge; allow everybody to participate. The ones who enjoy the benefits will love you and who knows how many hundreds of people will take notice as they drive by.

Try working with the local city government and have a bus stop in front of your store or better yet, as one ski shop in Camarillo, California did, organize a city sponsored bus service to the beach in the summer (the pick-up was at the shop). Be creative and have a winter service too.

Work with your school district; offer incentives to students who achieve high grades, as does a surf shop in San Diego, California. Many schools and cities have work programs for youth; get signed up with these kinds of programs. Go to the source, ask local school principles how you might assist, let them know that you want some exposure in trade. Many of the franchise chains have jumped all over that idea. Also, don't forget about sponsoring youth sport teams.

Take notice as to what your community does already. Ask yourself, "How can I add to the activities currently in place?" Take time every morning to view and list your options in solving your challenges and things will appear simpler and solutions will become known. Be sure to understand the value your customers are looking for in that which you offer and find your uniqueness. Achieve these things and you will get a greater piece of your area's retail pie.

Six Additional Ideas To Partnering With Your Community:

Show the community that you care by words as well as deeds.
Write articles that will be of interest and assistance to your community in your business area of expertise. Then offer the articles to the print media.
Get on a local radio or TV show and talk about the state of the swimwear industry or how the different styles flatter different shapes.
Use the Public Access equipment that the federal government requires cable TV businesses to provide and produce a video for broadcast. The cable companies will teach you how to use their equipment. Remember the production needs to be "informational."
Contact your state highway department and join their "adopt the road" program. Your store cleans a mile-section quarterly and you get your name on a sign on the highway for all who drive by to see.
Hold pasta feeds for sports teams. Consider local high school or college teams, and remember to tell the media.

Three Activities for Small Business Alliance Success

2009-11-04T17:11:00.000-08:00

While I realize you might think these ideas too simplistic, understand that a number of people spend their entire careers working on the fine details of alliance development and implementation

Finding others with whom you can create mutually beneficial value.
Too many business owners never get past this first activity. In searching for another business with which to develop a strategic alliance there must be complementary core competencies. This means that their circles of interest must overlap, as should their core capabilities. Inherent in the search for a compatible partner is the fear of having to give up a modicum of control. Giving up control is a huge hurdle for many small business owners.

Delivering that value to one another.
This would seem straightforward but the challenge is in understanding what your partner considers valuable. Too frequently, one partner delivers value to another that the second partner did not consider to be of value. Guess what? The perception from the second partner's point of view is that no value has been delivered in this situation.

Communicating to your partner the value you delivered.
Through my work in the area of alliance development and implementation, I have discovered that about fifty percent of the alliances created are not successful. The primary reason for the lack of success in most cases was ineffective communication. There are a number of possibilities from basic to complex. Many of the successful communication methods are electronic centric.

Ya gotta measure the results; many of the follow up and feedback methods use the 360-team evaluation style of response mechanism. This allows perceptions of alliance performance in both the macro and micro to be known by all. Once challenges are discovered, repair strategies and tactics can be put into place.

Sell More, Spend Less

2009-10-31T07:07:00.000-07:00

The primary reasons that most small business owners will delve into the world of alliance relationships are to sell more and spend less:

For other alliance reasons and benefits, you may access that chapter in my book, Developing Strategic Alliances at no charge: http://www.rigsbee.com/dsa1.htm

Sell More
The key here is to identify other businesses that currently have a good number of the consumers that you want. If you too, have a good number of customers that this other business owner wants--you have a great match for cross promotions and possible co-branding. At the least, this will give you double the exposure for every advertising dollar you spend. Your biggest challenge will be to select another business owner that is willing to first cooperate, then collaborate.

It matters not if you are attempting to build local marketshare or national marketshare the above still holds true. Another frequent technique to sell more is through co-representation/distribution where you actually sell each others' products--this takes a bit more planning and contractual work.

Spend Less
The above example clearly demonstrates the idea of spending less to get more. And, there are other areas where you can spend less such as developing a buying group, sharing part-time employees, equipment sharing, and the list goes on and on.

I have frequently seen regional players, particularly retailers and distributors, successfully build small buying groups to better level the playing field with larger competitors. It is not that hard to do. In the Chicago area, a collective of patio furniture retailers built a group called "Chicagaoland Leisure Group" to make special purchases that would be used as lost leaders, share shipping costs (buy entire truck loads together), and advertising costs (advertised as a collective group in the local newspapers). You too can do this...