Phoenix Pheathers

Managing Communities and Ecosystems with Social Media

Findings from a Survey Conducted by Phoenix Consulting Group, June 2009

Social media is gaining presence within partner ecosystems. These are natural communities and naturally lend themselves to these media.  There has been a trend for some time by large vendor companies to position themselves as the hub in a vendor-centric partner ecosystem. Most have built partner directories on their websites so that customers may search and find partners that meet geographic and technical needs. Some have invested heavily to enable partners to find each other, to collaborate and to build more integrated solutions. Social media facilitates this trend. Where vendor companies once invested in proprietary software to create communities, companies may now leverage open social media networks. Public networks are still quite new to facilitating these activities, but there are an emerging host of enterprise social networking platforms that incorporate many aspects of the public networks or integrate with them.

 

Spontaneous communities are a good indicator of this natural affinity. There are, for example, several Microsoft partner groups on LinkedIn; these are not owned or sponsored by Microsoft.  They arose through the initiative of partners who wanted a place to exchange information and insights on how to work effectively with Microsoft.  Example: http://www.linkedin.com/groups?home=&gid=82575&trk=anet_ug_hml

“Breadcrumbing” was mentioned as a technique to tie these spontaneous and independent communities together. This technique entails leaving a trail of links or breadcrumbs back to the company site. Company employees might address a question or complaint and lead back to the company website by posting links where questions or concerns could be addressed in more detail.  Monitoring posts to these sites and proactively responding can be an effective means of fostering loyalty and keeping a pulse on partner sentiment.  While there are use cases for this activity among the consumer brands, only a few of the interviewees offered that they were proactively monitoring partner or public sentiment this consistently.

Partnerpedia  www.partnerpedia.com is a free social networking forum intended for partner recruitment, connection and collaboration.  It provides a mechanism to find new partners and to contact them for potential  collaboration.  Partnerpedia offers a private network option for sale that a vendor can adopt  to provide a social networking forum and community management platform  specific to their partner ecosystem.

 

Incorporating customers into the ecosystem is a powerful trend. Citrix pioneered the concept of a Community Verified network which has eclipsed their traditional partner certification program.  Alternatively to rigorous lab testing, products are subjected to the scrutiny of the user community.  Users vote or recommend whether these partner products are compatible. Released in October of 2008, the Community Verified community consists of 1,500 products supported by 9,000 verifications as opposed to 800 traditionally certified products. Furthermore, customers can reference the product reviews and they put more stock in the community verified products.

Citrix is on the leading edge of adoption of social media within their partner community. There is extensive use of public social media and extending to these communities strategic partner portals. For example, there are sub communities for Dell, HP, Intel, Microsoft, NetApp, Oracle and SAP. These strategic partner networks integrate many social networking links, RSS feeds for related product and company blogs, YouTube product demos and video tutorials and Twitter streams as well as featuring the community verified products of these partners.

It is clear that social media is becoming deeply integrated into these natural communities and becoming inseparable with the business processes in communicating and collaborating within these ecosystems. 

Contact the author normaw@phoenixcg.com for the full white paper of the research findings.

Two new, emerging best practices in alliance management

The ASAP 2009 State of Alliance Management Report looked at thirty-six commonly recognized best practices of alliance management and benchmarked them across the community of respondents representing 431 companies. This year the researchers looked a bit deeper into innovation alliances and identified two new emerging best practices. While innovation alliances were found to be more treacherous in terms of likelihood for success than other types of alliance, these two practices yielded up to 15% more sales for those companies that employed them.  How do these practices generate more productive value?

 

First, a practice termed Specialization.   It was found that “companies that have a large variety of alliance functions generate more sales from products that are both new to the market and new to the firm than companies that do not have such a variety.” In Specialization, it was assumed that by bringing together different functional perspectives, a broader set of skills were brought to focus on bringing innovation to market.

 

The second, called Hierarchy referred to a practice that “centralized decision making power with regard to alliances.” These companies also “generate more sales from products that are new to the firm than companies that do not centralize decision making.”  This applied to decisions affecting partner portfolios rather than day to day, operational decisions within a partnership.  By looking across a portfolio, alliance executives could make investment decisions that allocated resources to high value partnerships and to disinvest in lower value ones.  It also allowed a look across alliance valuation across multiple functions, business units, or product lines, creating greater synergy in optimizing alliance value.

 

We look forward to hearing more detail on these best practices as research continues.

The full report is available in the member’s library of the Association of Strategic Alliance Professionals. www.strategic-alliances.org

Strategic Alliance Bookshelf

 Have you read a book in the past year that made an impact on you and how you manage alliances and partnerships? Could even be one you've written!! 

Here are some that I read this past year which I found had relevance to the field of alliance management. NOT listed in any order other than how they were stacked by my desk.

1.  The Innovator's Dilemma  - Clayton M. Christensen
An oldie but goodie, copyright 1997, this book focuses on disruptive technology and how it can leave market leaders of mainstream technology in the dust.  Required reading for anyone working with technology alliances and perhaps insightful as we try to navigate a disruptive economy, a prime time for disruptive technologies to take root.
 
2. Coolhunting: Chasing Down the Next Big Thing - Peter Gloor & Scott Cooper Trendspotting.
 Don't we all wish we had crystal balls.  One of the more interesting facets is how to leverage social networking to spot trends.  Who is linking to whom.  What ideas get picked up most by bloggers? The idea has some interesting implications for alliance networks.
 
3. Divide or Conquer: How great teams turn conflict into strength - Diana McLain Smith
I had the fortune of hearing Diana address a local (to me, Silicon Valley) chapter of the Association of Strategic Planners (ASP).  She provides sound and practical advice and frameworks for altering how we interact.  Her approach had very strong appeal to a community of engineers and technology nerds, not known for being touchy/feely, mainly because there was a defined framework for action vs emotions.

4. Fierce Conversations: Achieving Success at Work & in Life, One Conversation at a Time - Susan Scott
 "You get what you tolerate"  That was the fierce nugget that caused me to sit up and pay attention.  Scott provides a recipe for those difficult conversations in a way that elicits cooperation and change. I've tried it, it works, usually.  I haven't gotten my husband to clean the barn, yet.

5. The World is Flat - Thomas L. Friedman
Globalization means more businesses depend upon a network of worldwide alliances.  Alliance management skills have never been needed more. I reread this book this year trying to better understand how we position our profession in the context of a global economy.

6.The Speed of Trust - Steven Covey, Jr.
I am frequently asked "How do you build trust? How do you get it back when it is broken?"  I found many good answers here.  I now recommend this book to everyone who asks me about trust issues.
In fact, I think I loaned my copy out, since I can't find it.  Now who would I trust with that?

7.  Strategic Alliances: Three Ways to Make Them Work - Steve Stienhilber, V.P. Strategic Alliances, Cisco
I put this on my favorites list of books regarding strategic alliances. This is a short but powerful read, chocked full of straight talking advice about what it takes to make alliances succeed. As we know by all the research out there, the success rate is less than 50% and largely because organizations still approach alliances in an ad hoc fashion. Stienhilber addresses the issue to the CEO on how to get it right: the right framework, the right organization, and the right relationships.

What do you have on your list?  Why would you recommend it?

Alliance Strategy in Challenging Times: Rebalancing the Portfolio

Is it time to reevaluate your alliance investment?  Do you have the right partners to weather the economic climate?  Are you retaining the right partners to ensure you have a strategic advantage when the thaw comes?  

 Regular portfolio rebalancing is a best practice even in good times, but especially important now.  How do you know if you are wasting resources on a non-performer?  How do you rank the alliances that represent the best long term strategic bets if you can no longer afford to support all of them?  

 Well don’t go wading in with the loppers until you reassessed your alliance strategy.  In the best of worlds, you do this in concert with your corporate strategy to be sure that you align and that you appropriately invest in partnering.  Once you’ve identified which product lines are the most recession resilient, where the shifts in buyer behavior will occur and which customer problems cannot wait for an economic upturn, then you can align your alliance strategy accordingly. And consequently you will have better understanding what your portfolio should look like. 

 This is also a great opportunity to reopen a strategic discussion with your partners. How are they adapting to the economic situation?  Do they have insight into opportunities you may want to partner on?

 Most organizations have a few ‘zombie’ alliances, those alliances that you keep around because they’ve been a partner for years but no one can really articulate why the alliance continues to be strategic or whether the performance level makes the cut.  Take a hard look at these.  It may be time to put these to rest. On the other hand, if the working relationships are sound, these alliances are potential transformation targets. Rejuvenate them with a new strategic direction.  Given that it can take a new alliance 12-18 months to build the operational linkages and relationships required to deliver performance, these alliances could represent a significant advantage in time to results.  They may be a vehicle that just needs a destination.

 Also rethink what performance metrics will have the most impact on helping you manage through the next few quarters or years.  Don’t rely solely on revenue history. Remember buying behavior will change.  Past performance doesn’t guarantee future results.

 A cross portfolio evaluation will enable you to stack rank alliance performance against strategic importance so that you make clear and informed decisions given the changed dynamics of today’s economy. 

 

Alliance Strategy Realignment: Finding Opportunity in Economic Disruption

Have you rethought your alliance strategy in terms of what new opportunities lie ahead? Are you prepared to find the opportunity in disruption?  We can assume that business as usual is not going to work in today's volatile economic climate because business has become unusual. Yet, disruptive times are times of great opportunity for those who are alert in spotting them.

 

I recently dusted off a white paper written in 2004 which discussed the results of Cisco's alliance strategy during the dot.com implosion. By continuing to invest in alliances and realigning their strategy,  Cisco generated 12% growth in alliance revenue during a time of economic contraction.  In today's environment, they are realigning their alliances around technologies they believe will address shifting buyer behavior.  With businesses restricting travel to control costs, telepresence is a lower cost alternative to business travel and has stronger appeal now than in prosperous times.  

 

A colleague of mine works with partners who specialize in the financial sector. I erroneously assumed that his business cratered with the financial institutions.  I was wrong. Business is booming. Financial institutions are facing mergers, acquisitions, and consolidation. They are addressing compliance and regulatory issues that were overlooked, leading to this crises and looking ahead to new regulations and compliance issues that are likely to be legislated. My colleague is in a unique position to help solve the big problems these businesses are facing.

 

In the last downturn a marketing colleague shifted all marketing spending to co-marketing with partners  resulting in lead generation at half the costs. A bonus of this strategy was that cross marketing on partner house lists yielded much higher quality leads.

 

Follow the shifts in buying behavior. Spending might be reduced in a recession, but it also shifts.  Buying behavior changes.  Smart businesses realign their strategies to take advantage of those shifts.  In the last downturn, there was greater emphasis on cost saving technologies. Webinars replaced seminars. Companies that marketed those technologies, such as WebEx, did well even as many internet companies collapsed.

 

Solve the big problems created by disruption.  The financial sector is not the only industry facing restructure. Auto manufacturers, transportation companies, pharmaceuticals, and retailers are facing industry restructuring.  These are opportunities for those who can address those pain points and provide solutions. How can you realign your alliance strategy to focus on where companies will be compelled to spend to stay viable?

 

Share costs and opportunities.  Leverage partner marketing and combine forces to provide even stronger customer value.

 

Disruption creates opportunity and those who weather the economic climate successfully will be those who can adapt their strategy to take advantage of the changes ahead.