Creating and Managing Strategic Alliances

1. Creating and Managing Strategic Alliances Gene Slowinski, Ph.D. Director, Strategic Alliance Research Rutgers University& Alliance Management Group, Inc. www.strategicalliance.com (908) 234-2344

2. Creating and ManagingStrategic Alliances • The strategic use of alliances • Best practices for building successful alliances • Alliance Framework – planning and structuring • Alliance Implementation Program - implementing

3. The Strategic Use of Alliances The Traditional Model HP/Compaq IBM

4. The Strategic Use of Alliances The Network Model IBM HP/Compaq

5. The Strategic Use of Alliances A Strategic Approach to the Erythropoetin Market:Chugai Corporation Chugai Genetics Institute R&D Manufacturing Pharmacia Name Recognition Distribution

6. Unit of Analysis Company A Business Unit Brand or Therapeutic Area Technology Platform

7. Competitive PositioningHow Wall Street will value a firm’s portfolio of alliancesUnit of Analysis = Diabetes Care Global Channel Partners E-commerce Bioinformatics Biotech Merck Pfizer Eli Lilly GlaxoSmithKline

8. Creating and ManagingStrategic Alliances • The strategic use of alliances • Best practices for building successful alliances • Alliance Framework – planning and structuring • Alliance Implementation Program - implementing

9. Alliance Framework® • A rigorous process for planning and negotiating an alliance. • Goal is to develop a high quality deal quickly or, to understand that a deal is not possible ... quickly. • Requires internal commitment from all key internal stakeholders (anyone with a budgetable resource). • Accelerates implementation because implementers are part of the Alliance Framework team. • Works best when both firms use the process.

10. Why Alliances go bad ! Company A Company B

11. Alliance Framework Elements Typical Elements: • Business plan summary • Objectives (ours, theirs) • Roles (ours, theirs) • Overall resources • Boundaries • Market model • Exclusivity • Intersections • Detailed objectives and detailed resources • Financial pie-split • Intellectual property • Working process and governance • Term and termination

13. Creating and ManagingStrategic Alliances • The strategic use of alliances • Best practices for building successful alliances • Alliance Framework – planning and structuring • Alliance Implementation Program – implementing • Joint negotiators presentation • Decision making analysis • Conflict resolution

14. Business Development Presentation • Team member – Company A

15. Business Development Presentation • Team member – Company B

16. Creating and ManagingStrategic Alliances • The strategic use of alliances • Best practices for building successful alliances • Alliance Framework – planning and structuring • Alliance Implementation Program – implementing • Joint negotiators presentation • Decision making analysis • Conflict resolution

17. Decision Making Analysis How are decisions made in your company?

18. Creating and ManagingStrategic Alliances • The strategic use of alliances • Best practices for building successful alliances • Alliance Framework – planning and structuring • Alliance Implementation Program – implementing • Joint negotiators presentation • Decision making analysis • Conflict resolution

19. Anatomy of an Alliance The Early Days Company A Company B X Functional team X Functional team

20. Anatomy of an Alliance Mature alliance Company A Company B X Functional team X Functional team Alliances are a cascade of covenants between people. These covenants are dynamic and complex.

21. Expectation Mapping Worksheet What tasks am I expected to perform? A B C D E With what priority? Which tasks will be done cooperatively with me?

22. Expectation Mapping Worksheet What tasks will my counterpart perform? A B C D E With what priority? Which tasks will be done cooperatively with me?

23. Thank You !