Strategic alliances: They're great when used effectively to expand the range
of your product or service offerings; they're not so great when you collect them
like Manolo Blahnik shoes, merely because, well, everyone else has them.
"Strategic alliance" is a chic but vague term people use to refer to a
spectrum of business relationships. At one end, you have referral
relationships--getting and giving client leads. Toward the other end, you have
joint ventures, where two companies form a separate entity for a specific
purpose or discrete project.
And then, in the fuzzy middle, lie strategic alliances that bring two or more
parties together contractually, like in preferred trading partner arrangements.
In this type of strategic alliance, the companies remain financially and
structurally independent but commit to using the other regularly--sometimes
exclusively--for particular kinds of projects or work. A marketing strategy
consultancy might align itself with a graphic design firm. Each can function
happily on its own and isn't a competitor; but in partnership with the other,
each can provide a wider scope of services to a new or larger target market.
Because strategic alliances can be all over the map, literally and
figuratively, it's vital to understand what you're getting into and what you can
expect the alliance to do for you. These 10 questions will help you and your
attorney determine which items you want to include in your written strategic
alliance agreement:
1. Why are you doing this? What do you hope to gain? Access to a
larger client by offering a wider range of products or services? Entry to a new
market? How do you know your alliance partner can come up with "the goods"? Ask
for references.
2. What are you doing? What products or services will you provide?
What will your alliance partner provide? What deadlines can you construct so
you're each accountable?
3. Are you exclusive? If you're the marketing firm working with the
graphic design firm mentioned above, do you have the right to work with other
graphic designers? Do you have to send all graphic design requests to the firm?
Will they do the same for you?
4. What are your expectations? How will you achieve them? Do you have
the same attitude toward customer service? Are your companies in competition at
all? If so, how will that be handled?
5. Who talks to the client? Too many points of contact can confuse a
client. Who'll be the point person on the project? Will it change depending on
who initiated the business?
6. Who collects the money? Because a strategic alliance can involve
two or more independent companies, there's often no central bank account to
which all have access. But the client has to pay someone. Who will it be? If not
you, when will you get paid? What costs and expenses will you share or bear
separately?
7. How will we resolve disagreements? Expect differences of opinion.
But how will you handle them? Who gets the final say? Will you both agree to
back off an issue and choose a different path?
8. What might end the alliance? It seems counterintuitive to think
about the end of the alliance when you're just starting it, but don't ignore
this topic of discussion. Why might you end the alliance? Change of direction?
Not meeting expectations? Intractable arguments? Will the alliance exist only
for a limited period of time?
9. What happens to work in progress? The end of an alliance triggers
many issues. For instance, how will you handle the completion of work in
progress? Or the receipt of post-breakup payments? What should happen with
intellectual property, trade secrets, client lists or other confidential
information that might have been created or exposed during the relationship?
10. How will we duke it out? Especially if your alliance partner isn't
local, you should choose the state (preferably yours) and forum (court or
arbitration) where you'll formally resolve disputes.
Strategic alliances may be the rage, but be sure to look before you leap. Get
the input of your accountant and attorney to make sure that the alliance won't
hobble you, like ill-fitting designer shoes.