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  • 1. Transforming tÉÇåÉëÇ~ó=cÉÄêì~êó=UI=OMNOAlliances QWMM=mj=J RWPM=mj=djq NOWMM=mj=J NWPM=mj=rp=bq NNWMM=^j=J NOWPM=mj=rp=`q NMWMM=^j=J NNWPM=^j=rp=jqk VWMM=^j=J NMWPM=^j=rp=mq Brighton Landing West 10 Guest Street Boston, MA USA 02135 www.vantagepartners.com This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, or in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission. Copyright © 2012 by Vantage Partners, LLC. All rights reserved.
  • 2. mêÉëÉåíÉÇ=ÄóWoÉåÉÉ=g~åëÉåI=pÉåáçê=`çåëìäí~åí m~íêáÅâ=mÉíáííáI=`çåëìäí~åí s~åí~ÖÉ=m~êíåÉêë s~åí~ÖÉ=m~êíåÉêëCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 1
  • 3. About Vantage Partners Expertise in building organizational negotiation and relationship management capability Over twenty-five years of experience training and consulting to Global 500 companies Recognized thought leaders √ Three-year study on Alliance Management √ Cross industry study of SRM best practices √ Instructors at Harvard, Tuck and West Point √ Authors of Getting to YES: Negotiating Agreement Without Giving In & Difficult Conversations: How to Discuss What Matters Most (New York Times bestsellers) √ Authors of articles in the Harvard Business Review and Sloan Management Review Leaders in international dispute resolution through CMG Conflict Management Group √ New Constitution in South Africa √ Arias Peace Accords in Central AmericaCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 2
  • 4. Today’s webinar Discuss together what transformation is, what triggers it, and what Alliance Management’s role is Share some case studies illustrating best practices with respect to alliance transformationCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 3
  • 5. Poll When you hear the term “Transformation” what do you think of? (click all that apply) Putting in place new operating protocols on an alliance Re-structuring and / or re-staffing the governance structure Terminating an alliance The film Transformers – Robots in DisguiseCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 4
  • 6. Correct answer?! All of the above!Copyright © 2012 by Vantage Partners, LLC. All rights reserved. 5
  • 7. What is transformation? Transformation: creating a new strategic and operational context for an alliance May include: Changes to governance structure or membership New strategic direction for the alliance New or revising sets of operating protocols Alliance termination Effective transformations are efficient and collaborative, with a focus on preserving the working relationshipCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 6
  • 8. Why transform? Transition in the lifecycle of the alliance, e.g. from development activities to commercialization Significant changes in personnel at either company A merger or acquisition impacts the structure and resourcing of one partner Technical failure The business case is impacted by changes in the marketplace or legal or regulatory rulings Alliance dysfunction sub-optimizes performance Poor health check results indicate a need for changeCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 7
  • 9. Alliance Management’s role Anticipate or identify jointly with the alliance partner when transformation might be necessary Facilitate discussion and a decision on how the alliance might change Drive creation of an implementation plan that will adapt the alliance appropriately Drive execution of that plan Check in on the status of the alliance post-transformation as appropriateCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 8
  • 10. PollFor those anticipating some type of transformation on theiralliance, what do you think will cause the need to transform? Transition in the lifecycle of the alliance, e.g. from development activities to commercialization Significant changes in personnel at either company A merger or acquisition will impact the structure and resourcing of one partner Technical failure The business case will be impacted by changes in the marketplace or legal or regulatory rulings Alliance dysfunction will sub-optimize performance / a recent health check suggests a need for changeCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 9
  • 11. Managing Transformation: Case Studies
  • 12. Case Study 1: Case Case Study 1 Study 2Reviving an alliance post-litigation Case Study 3 Case Study 4 After settling a highly contentious litigation, the alliance was left battered and with a new product to include going forward There was a deep lack of trust on the alliance at every level of the governance structure Inclusion of a new product in the alliance created open strategic issues as well as a need to develop and operationalize new information-sharing agreementsCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 11
  • 13. Alliance was plagued by deeply held Case Case Study 1 Study 2partisan perceptions Case Study 3 Case Study 4 Some at ACME believe MetCo… Some at MetCo believe ACME… Is greedy and risky Is too bureaucratic and conservative Is unduly critical, without the expertise Over-inflates its own internal expertise, and experience to back up their and is unwilling to listen to viewpoints assertions from MetCo Over-inflated the value of certain Doesn’t appropriately prioritize the markets alliance within its portfolio Received a disproportionate amount of Deliberately hides information and puts value in the settlement (i.e., that MetCo up hurdles to activities and decisions “won” and ACME “lost”) that they do not support Acts out of financial motivations and Wasn’t truthful about the development not with the consumer’s best interests of [Product] in mind Lacks integrity Lacks integrityCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 12
  • 14. Solution: Case Case Study 1 Study 2Re-launch alliance over a six month period Case Study 3 Case Study 4 Key Short-Term Activities Core Re-Launch Activities Monitor and Optimize Jan. - June July – Dec Operationalize governance Within and Across Internal and MetCo and ACME are structure Joint Committees and Teams well-equipped to: Kick off the partnership and Vision and Goals Resolve complex conduct contract briefing issues Re-form governance committees; conduct initial Find efficiencies Governance / Decision-Making meetings Continue enhancing Kick off data exchange relationships and working group Joint Planning & Scorecarding operations Relationship diagnostic Final Assess progress and Conduct broad and deep Report course-correct Working Together Protocols and Incentives Out interviews of individuals in End of both ACME and MetCo June Define relationship needs Internal Alignment and identify key challenges Develop recommendations Relationship Issue Resolution /Skill Development Develop overarching re-launch plan Electronic Collaboration SpaceCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 13
  • 15. Case Case Study 1 Study 2Key takeaways Case Case Study 3 Study 4 It isn’t just about the people! Re-staffing the governance structure was a critical first step, but not sufficient by itself. Essential to re-operationalizing the alliance: Re-chartering committees Aligning on committee and team goals Implementing operating norms, was essential as well Alliances need leadership. Empowering governance committees to act as true leaders on the alliance, and ensuring they provide clear expectations, while even using informal incentives to inspire collaborative behavior, was effective A re-launch isn’t just a meeting. The full re-launch needed to be viewed as a process, with a defined period of time, a set of deliverables and activities, and a group of people responsible for overseeing and owning the effortCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 14
  • 16. Case Study 2: Case Case Study 1 Study 2Refreshing an alliance Case Study 3 Case Study 4 An alliance between a European-based pharmaceutical company and a US- based biotech was approaching commercialization, but there was a sense of malaise and some underlying frustrations. The Alliance Managers didn’t feel a full-blown re-launch was necessary or warranted, but wanted to understand why there was a lack of enthusiasm and a general sense of frustration To better understand the lack of enthusiasm the team conducted a health check. Results confirmed the feelings of detachment and, in addition, brought to light additional challenges that had been creating frustration The health check survey results, combined with follow-up conversations with key stakeholders, also allowed the Alliance Managers to develop a set of specific recommendations going forward. These were presented at a “Refresh Meeting”Copyright © 2012 by Vantage Partners, LLC. All rights reserved. 15
  • 17. Case Case Study 1 Study 2Health check results and quotes Case Case Study 3 Study 4 Total Committee Working Group Averages Averages Averages Category ACME BigPharma ACME BigPharma ACME BigPharma1. Strategic Value 4.87 3.93 4.67 4.15 5.06 4.212. Value Enhancement 4.34 4.04 4.22 4.25 4.12 3.353. Relationship Quality 4.32 3.88 4.50 4.30 4.14 3.224. Operational Effectiveness 4.18 3.88 4.11 3.86 4.17 3.18 “Decisions seem to have been slow in coming “The committees seem to make decisions forward. This may be due to differences in without all the right information – it’s the internal governance and structure. ” working group members that are the experts!” “It isn’t clear how we’re making decisions, “We need to build an understanding of the partner’s and sometimes it isn’t even clear what the organization structure and how all the parts fit together.” decision is!”Copyright © 2012 by Vantage Partners, LLC. All rights reserved. 16
  • 18. Some key challenges and Case Case Study 1 Study 2recommendations identified Case Study 3 Case Study 4 Challenge Recommendation Lack of clarity around how decisions are Clarify and determine decision-making roles for all made on the alliance key decisions, and publicize the roles of different committees and teams on the alliance SharePoint site Perception that BigPharma’s internal Provide an overview of each organization’s organization is overly complex and governance structure, and clarify the extent to which slows down work on the alliance internal consultation needs to occur on alliance decisions so that the time needed to do so can be taken into account and planned for Sense that committees make decisions Provide a presentation on each organizations subject without fully leveraging subject matter matter expertise and develop a process for review of experts on the working teams all key deliverables and decisions so that expertise is fully leveragedCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 17
  • 19. Case Case Study 1 Study 2Key takeaways Case Case Study 3 Study 4 Yearly check-ups keep you healthy! Even though there were no apparent, serious problems on the alliance, a health check helped identify underlying issues that, if not addressed, may have impacted execution going forward Don’t fix what isn’t broken. A full re-launch isn’t the only way to help an underperforming alliance. In this case, identifying a few acute issues and addressing them was all it took to make an impact Simply getting the alliance team together, with the alliance leadership, and having leadership emphasize the importance of the work was enough to re-build excitementCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 18
  • 20. Case Study 3: Case Case Study 1 Study 2Living in a terminal alliance Case Study 3 Case Study 4 Following regulatory action, the strategic focus of a co-marketing alliance changed to exclude one key product, leaving a product for which the patent was to expire in 18 months The quality of the alliance relationship felt less critical (and alliance had become significantly less valuable for one partner). At the same time, there was still significant value to be extracted from the relationship prior to termination A small task force was convened to review the latest health check and make some moderate, easily implementable steps Scorecard with key operational goals Relationship protocolsCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 19
  • 21. Cross the finish line together!Copyright © 2012 by Vantage Partners, LLC. All rights reserved. 20
  • 22. Case Case Study 1 Study 2Key takeaways Case Case Study 3 Study 4 Give your partner something good to remember you by! Partners were motivated to terminate on good terms out of interest in possible future partnering opportunities Even when an alliance is at the end of its life, resources devoted to enhancing the collaboration can make an impact — the partners took a critical look at what was implementable given limited resources, and this made a difference Don’t ignore your alliance when it’s most in need! Termination activities themselves can create a need for close alignment and joint conflict management approachesCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 21
  • 23. Case Study 4: Case Case Study 1 Study 2Building the capability to transform alliances Case Study 3 Case Study 4 A large pharmaceutical company with over 90 alliances, both development and commercial, regularly reviewed and reprioritized its portfolio of alliances, often resulting in a need to terminate some alliances. The company had no systematic way of actually transforming those alliances, leading to drained resources and wasted time There was no consistent approach to making the determination to transform and implementing the transformation Dimension Alliance Z scorecard Category Metric Sub-metric Metric Value Target Trend Status Alliance Y scorecard Strategic Value Joint and Individual strategy / objectives Dimension Category Metric Sub-metric Metric Value Target Trend Status Innovation Alliance X scorecard Strategic Value Strategic fit Joint and Individual Partner survey: strategy / objectives Strategic value Dimension Category Metric Sub-metric Metric Value Target Trend Status Alliance Acme scorecard Financial Value Innovation Strategic Value Value Strategic fit Joint and Individual strategy / objectives Partner survey: Dimension Category Metric Sub-metric Metric Value Target Trend Status Revenues Strategic value Innovation Strategic Value Financial Costs Value Strategic fit Partner survey: Joint and Individual Alliance Value Financial value strategy / objectives Partner survey: Revenues Strategic value Partnership Capability Innovation Financial Value Costs Governance Strategic fit Partner survey: Value Partner survey: Financial value Partner survey: Partnership Capability Strategic value Revenues Review Meeting Partnership Capability Partner survey: Financial Value Partnering Image Costs Governance Operational Value Effectiveness Partner survey: Partner survey: Financial value Timelines Partnership Capability Revenues Partnership Capability Partner survey: Quality Partnering Image Costs Governance Operational Partner survey: Partner survey: Effectiveness Operational Financial value Partner survey: Effectiveness Partnership Capability Partnership Capability Timelines Partner survey: Partnering Image Quality Governance Operational Partner survey: Effectiveness Partner survey: Operational Effectiveness Partnership Capability Timelines Partner survey: Partnering Image Quality Operational Partner survey: Effectiveness Operational Effectiveness Timelines Quality Partner survey: Operational EffectivenessCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 22
  • 24. Case Case Study 1 Study 2Developing a function-wide approach Case Case Study 3 Study 4Copyright © 2012 by Vantage Partners, LLC. All rights reserved. 23
  • 25. Transform Guide: Case Case Study 1 Study 2Step by step guidance Case Study 3 Case Study 4Copyright © 2012 by Vantage Partners, LLC. All rights reserved. 24
  • 26. Transform Guide example tool: Case Case Study 1 Study 2Guidelines for Terminating an Alliance Case Study 3 Case Study 4 The Guidelines for Terminating an Alliance provides guidance on the key things to keep in mind when terminating an alliance and ensures that the alliance management function across the globe is able to leverage the key lessons learned from past experience The guide has multiple tools like this, and each can be updated over time to truly develop a best- in-practice approachCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 25
  • 27. Case Study 4: Case Study 1 Case Study 2Key takeaways Case Study 3 Case Study 4 Avoid zombies! Approaching alliance transformations in a systematic way allowed for identification of best practices and the ability to perfect the process over time, while ensuring alliances never became the living dead Enhance your brand. It was important for this company to be viewed as a partner of choice, and making an explicit decision to work to preserve the relationship, even when terminating alliances, helped preserve its reputation Actively manage change. Many people are afraid of changes, but putting place a diagnostic process allows you to have those difficult conversations and be proactive about portfolio upkeepCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 26
  • 28. Questions?Copyright © 2012 by Vantage Partners, LLC. All rights reserved. 27
  • 29. The Vantage Partners Alliance Webinar Series Watch webinar presentations from every element of the Vantage Alliance Management Model by clicking on the part of the lifecycle that you’d like to learn more about Learn best practices for alliance management from industry experts Share with your colleagues and alliance counterparts View new presentations every quarter! qç=äÉ~êå=ãçêÉI=îáëáíW= ÜííéWLLïïïKî~åí~ÖÉé~êíåÉêëKÅçãL^ääá~åÅÉ|tÉÄáå~ê|pÉêáÉë|tÉÄé~ÖÉK~ëéñCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 28
  • 30. páÖå=ìé=íç=ÄÉ=~=s~åí~ÖÉ=tÉÄãÉãÄÉê Receive quarterly reports on Alliance Management, Supplier Relationship Management, Outsourcing, Negotiation, and more from the Vantage Online Journal Get updates on Vantage Partners’ Virtual Seminars, conferences and new publications Visit www.vantagepartners.com and follow the “Newsletters” link to become a Vantage Web Member todayCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 29
  • 31. Vantage Partners A spin-off of the Harvard Negotiation Project, Vantage Partners helps companies achieve breakthrough business results by transforming the way they negotiate with, and manage relationships with, their suppliers, customers, and alliance partners. 10 Guest Street Boston, MA 02135 T: +1 617.354.6090 F: +1 617.354.4685 Renee Jansen, rjansen@vantagepartners.com Patrick Petitti, ppetitti@vantagepartners.com www.vantagepartners.comCopyright © 2012 by Vantage Partners, LLC. All rights reserved. 30