Trust and alliances in business has fascinated me for as long as I can remember.  Since I have spent the majority of my life in Northern Canada, I have a special interest in Aboriginal and Inuit perspectives on joint ventures (JVs).  I also focused part of my education on the history of joint ventures, and understanding the critical success factors (CSFs).  S3 Consulting works with clients to explore opportunities for collaboration, and assess viability of the ‘quid pro quo’ – exchange for mutual benefit.

I came across the following quote in my research:

It’s a remarkable paradox: Studies show that the number of corporate alliances increases by some 25% a year and that those alliances account for nearly a third of many companies’ revenue and value—yet the failure rate for alliances hovers between 60% and 70%. And despite an abundance of advice on how to make alliances work, that dismal record hasn’t improved in the past decade.”[1]

Over the past couple of years, I have conducted numerous interviews relating to the application of JVs in Northern Canada, the roles of Aboriginal and Inuit business and the benefits derived by them.  For those familiar with business practices in Northern Canada, you will know that it is a common approach for companies to enter the marketplace in the form of a strategic alliance.  Further, joint venturing with Aboriginal and Inuit businesses can lead to significant market access advantages over Southern competitors due to land claim settlements, self-governance and local business policies which provide benefits for local buying and hiring.  With increasing capital control and resources many Aboriginal and Inuit groups are gaining the capacity to enter into JVs.

It seems widely accepted that alliances demand a high degree of interdependence between companies, especially among those that may continue to compete against each other in the marketplace.  However, I would argue the needs of Aboriginal and Inuit groups are not understood by companies seeking to enter the North and gain market access.  Effective alliances should allow partners to actively leverage significant differences between partner strengths and operating styles.  Further, it is critical that partners do not make misleading assumptions about alliance management, causing them to ignore other potentially more important drivers of success.[2]

Nonetheless, advice from the experts on alliance best practices is quite consistent.  Below is a top ten list of recommendations:

1.      Alliance has its own structure based on members’ needs and objectives.

2.      Alliance is member-driven in terms of participation and decision-making.

3.      Alliance aims to achieve early success.

4.      Trust and openness are primary commitments.

5.      Alliance has clearly defined goals and objectives.

6.      Member businesses have agreed to contribute sufficient resources to the alliance.

7.      Accountability and responsibility for tasks and goals are clearly set out.

8.      Alliance has an effective information system.

9.      Members monitor their progress with regular reporting and feedback.

10.   Appropriate levels of management represent members.

[1] Bamford, James, David Ernst, and David G. Fubini. Launching a World-Class Joint Venture. Harvard Business Review, February 2004.

[2] Hughes, Jonathan and Jeff Weiss. Simple Rules for Making Alliances Work. Harvard Business Review, October 2007.