This is a question I am frequently asked and one
for continual debate. As far as I know there is very little published work
on this topic, only fleeting references on the challenge. My opinion:
there is no perfect answer but the best answer relates to what are you trying
optimize?
Functional silos tend to optimize for their
respective functions. If an alliance is formed for a single functional
role, for example, co-development, the development capacity of an alliance is
best managed by developers. If the alliance is formed to streamline
supply chain operations, then the supply side of the business is best equipped
to understand the dynamics and 'gains' of forming this type of alliance. But do these functional managers have the
necessary partner management skills? Are they versed in the best practices of
partner management? Do they understand how to foster a collaborative culture
within their virtual teams?
To complicate matters, what happens when an
alliance bridges functional silos across the value chain as the 'strategic'
ones so often do?
This leads to the very leading question once
posed to me about why alliances should NOT report to sales? Sales
being what it is, is not functionally oriented to managing cross
functionally and truly 'strategic' alliances are rarely successful when
managed in a sales organization. The strategic nature gets sacrificed in
the 'make the quarter' mentality. This becomes problematic in go-to-market or
market facing alliances where the end goal is more sales for both
partners. One might imagine that this kind of alliance could be optimized
in a sales organization but in truth, this is rare, although one should not
underestimate the role sales must play in driving this end
goal. The exception to this rule, at least where I’ve seen, is
with large account sales. These folks tend to build long term relationships
with their customers and manage very complex cross-functional buying decisions,
rather than short-cycle transactional sales. These skills are very transferable to partner management.
Channel alliances, however, should report to
sales. Sales is the best organization to optimize for
sales. There is one caveat here, however. Many sales organizations, setting
on the partnering path, try to manage channels like customers. They are
not. This practice results in selling to the channel
rather than through the channel. This happens so
many times, it is painful. The fundamental premise behind channels is to build
an external sales engine. A sales
organization that is culturally tuned for direct sales will not 'get'
this. This can be likened to the old adage that your best sales person is not
necessisarily your best sales manager; different skills are involved. As
companies try to evolve from direct to indirect, they often assign direct sales
reps to manage channel accounts with abysmal results. Skilled channel managers
understand they are building selling capacity.
With channels, companies depend on the reseller to
add value, to add services or enhancements that differentiate the joint
offer to address a particular customer set. In strategic
alliances, this differentiation is also derived from partner value.
The classic partner equation 1 + 1 > 3 applies. Differentiation is
added upstream through technical integration or development, co-marketing or
co-branding. Again, a cross-functional play and again, not easily managed in a
silo. Marketing tends to a better job, since they are naturally the
bridge between development and sales and are comfortable in that role, Well,
maybe not comfortable, but at least accustomed. They are
also accustomed to sales enablement, the function of preparing and
equipping sales organizations to sell, which is key.
There
is some evidence that cross functional, strategic alliances are best managed
from a Corporate Development function. This is particularly true of large
organizations with multiple business units. Corporate development organizations
often have responsibility for M&A and may have some
responsibility for charting the course for R&D. This approach enables a
balanced view of Build, Buy, or Partner decisions in implementing corporate
strategies. HP employs this model for their four largest and most
strategic alliances notably, Cisco, Intel, Microsoft, and AMD.
Additionally, HP has other other alliance
organizations that are more aligned with business unit needs and with sales. The
largest of these is in the computer technology group which shares alliance
management between marketing and sales. Marketing provides alliance management
from a strategic perspective and provides the systems infrastructure needed to
manage a large partner ecosystem. Sales assigns alliance managers
regionally to manage the co-selling effort. In effect a hybrid model that
tries to address the strategic intent of each aspect of their alliance
ecosystem. This kind of resource commitment is a major statement about the
importance of alliances in driving the HP business model.
Another approach shared by many
companies is the Alliance Center of Excellence. This model is one that
Phillips employs.
Alliance management is distributed to each of the business units, but the center of
excellence is responsible for proliferating best practice and guidance to the
alliance managers within each business unit. There
is great benefit in knowledge sharing across the various alliance
management groups which is for the most part lacking in many firms with
multiple alliance functions.
Where are partnerships
managed in your organization? How is
that working for you?
