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A View From INSEAD
Examples of Strategic Alliance
Yves L. Doz
Programme Director of the Managing Partnerships and Strategic Alliances
Partnerships and alliances are becoming increasingly common in business. But they are still notoriously difficult to pull off. As a leading business school with an international focus, INSEAD has always taken a strong interest in alliances – which typically cross borders and cultures. In the following interview, our leading researcher and teacher in the field, Professor Yves Doz, gives his views on how to make strategic alliances work…
How did your interest in strategic alliances begin?
It goes back to my first job (some might say my only real job!), which was with Sud Aviation (now Eurocopter), a helicopter manufacturer based not far from where I grew up – in the South of France. They had a far reaching collaboration with a British manufacturer, Westland. As I was working at a very low level, I had plenty of time to think about the bigger issues of partnerships that I could see around me! I kept on thinking about them through my doctorate, even though it was on something entirely different. And then, in the mid-to-late 80s, when I was working on multinational companies, I had the opportunity to return to alliances, this time as a researcher and teacher. I’ve been working on them ever since, with my research and teaching becoming increasingly intertwined.
How have the issues changed over that time?
If you go back 20 years, little was known about alliances… or even strategy for that matter! So today, alliances are more strategically sophisticated and robust. They’re much better designed, with detailed contracts and plans in place. But that has created new issues. People think that a good plan will simply fulfil itself, whereas in reality an alliance needs constant coordination, mutual guidance, commitment and trust. A partnership isn’t a “fire and forget” missile: you can’t just set it to go and forget about it. You have to keep working on it everyday.
More like a marriage than a missile then?!
It’s not an analogy I really like… but it does work insofar as companies call on people like me when things go wrong – just like couples call on marriage counsellors when they’re already talking to the divorce lawyers! In fact, modern alliances are increasingly complex, with multiple partners rather than bilateral agreements. They’re more like ecosystems than marriages.
Can you give an example of a multilateral partnership?
I’m currently working on a case study about the GAVI Alliance (Global Alliance for Vaccines and Immunization), a public-private global health partnership based in Geneva. It brings together developing-country and donor governments; national healthcare delivery systems; the World Health Organization; the World Bank; UNICEF; the worldwide pharmaceutical industry; research agencies; NGOs, such as Médecins sans Frontières and Oxfam, and private philanthropists, such as the Bill & Melinda Gates Foundation; and many others. They all have different agendas, but a common purpose, to eradicate several deadly child diseases, which is a major world problem in desperate need of solution. And it works! The fact is, no huge problems will ever be solved without effective collaboration.
Is this true of business problems too?
Increasingly, yes, especially as technology gets more and more complex. For example, I’m studying the recent Microsoft–Nokia agreement at the moment. Will it help Nokia regain its former position of market leadership? Will it help Microsoft crack the mobile market? Maybe. But, by definition, it won’t be easy, because there’s a distinct mindset to partnering. On the one hand, you have to retain your self-interest in order to achieve your strategic objectives. On the other hand, your success depends on others, so you have to be very open with them. That’s a kind of cognitive dissonance, which is difficult to reconcile.
How can companies overcome this hurdle?
The INSEAD programme that I direct on Strategic Alliances, is designed to help. Over the years, it’s evolved to focus much more on human than technical issues. We find that most managers are trained to be competitive. Even within their own company, they compete for resources and promotion. So we first show participants that keeping cards too close to your chest can have a high cost. And then we retrain them to become more aware, more sensitive to others, especially those from other cultures – and to lower their guard while still protecting their interests. Of course, we give them technical toolkits and in-depth understanding too. But effective partnerships are less about strategising and intellectualising than gaining a whole new mindset.
To find out more about Yves Doz’s research click here. And to gain a new, collaborative mindset yourself, consider enrolling on the five-day Managing Partnerships and Strategic Alliances programme, which runs three times a year on INSEAD’s Europe Campus in Fontainebleau, France.