A New Model for Negotiating Alliances That Last – Part 2

meeting-1020145_1920In the last article, I wrote that when Cheryl Jones, Director Corporate Alliances for Starbucks, addressed the Women’s Business Owner’s luncheon in Seattle, Washington, Cheryl stressed the growing importance of creating alliances as a primary way to increase product to market profitability and vertical marketing capacity for both large and small businesses. In support of her observation, research shows that more than 50% of corporate executives wish to enter into an alliance in the next 5 years.

But, there is a catch: Anywhere from 50% to 70% of alliances fail. Why would so many executives wish to enter into agreements that have a less than a 50% survival rating? There are a number of reasons.

I also explained how alliances are a cheaper, faster and more flexible means of achieving what mergers and acquisitions did in the 80’s and 90’s. and that the new model must incorporate planning, strategy and relationship building from the very beginning. I showed you how planning and strategy building will assist you in your negotiations and in this article I will be going over relationship building.

Relationship Building

Make time for relationship building. This is the single most important thing that you and your company can do to ensure the longevity of the alliance. We all do business (whether you are a Fortune 100 company or a sole practitioner) based upon three simple values: You do business with people you like, respect and trust.

It is easier to create a relationship with one person, and hence know whether you trust, like and respect one person. From the small company’s perspective, establishing a “relationship” with a Fortune 100 company seems more daunting because many people may be a part of the alliance building process. In the end though, the alliance happens because people feel as though they like, trust and respect one another.

Relationship building is more than chatting about the weather, kids and sports. Building a relationship takes time and emotion — that Emotional Intelligence Quotient. Here are some simple questions to consider asking your prospect alliance partner. Your purpose in asking these questions is to create an atmosphere of open, two-way communication. That way, if and when rough seas encroach upon you and your alliance partner, both of you will have established a history of communication that is separate from metrics, due diligence deadlines, or royalty payments.

  • What is your history or your company’s history in creating my type of an alliance? (Ask it even if you think you know the answer. My personal philosophy is: I’d rather look a little stupid asking a “stupid” question than making an assumption that was fatally wrong.)
  • Tell me a little about your internal corporate culture? (For example: How flexible are you or your department about ABC? How long does it take to do XYZ?)
  • What is the single biggest mistake my company could make when dealing with your company?

Finally, realize that there is a lot of personnel change at very large companies. Each personnel change will signal a need on your part to re-initiate a conversation to establish the relationship.