Strategic Alliances Provide Businesses a Competitive Edge
According to David Nour, author of the book “Co-Create: How Your Business Will Profit From Innovative and Strategic Collaboration,” organizations must form strategic alliances to stay competitive. Alliances are not the same as partnerships, Nour explains. These transformational relationships enable opportunities that businesses could not achieve in isolation.
According to Fast Company, Uber and Hilton recently formed a strategic alliance that presents new business value for both companies. Hilton created a new service that promotes its hotels as recommended destinations on the Uber app. By doing so, the company hopes potential customers will be persuaded to stay at a Hilton hotel, using the Uber service to reach the destination. This collaboration creates opportunities for both businesses that would not otherwise be possible.
Effective strategic alliances are also growing from Birchbox, a company that offers customers personalized samples of cosmetics for a monthly subscription. Should the customer wish to purchase a product, they can purchase it from Amazon for the first time at competitive prices. When they’re sure a product is right for them, the service allows them to purchase it directly from the manufacturer. By combining forces, all three companies can reap value.
Managing Business Disruption
According to recent research from PwC, 70 percent of organizations handle business disruption by forming strategic alliances and joint ventures. With 86 percent of CEOs reporting that customers will demand more from their products in the next five years, consumer demand is driving companies to evolve their strategies. PwC reports that the greatest challenge companies will face is selecting the right technology to enable them to better serve, anticipate and retain customers. To succeed, businesses must form strategic relationships that will empower them to co-create new opportunities.
Forming a Strategic Alliance
According to Fast Company, Nour recommends five key steps for businesses to form effective strategic alliances.
- Think Strategically: Develop business plans that cover shorter periods of time. Businesses must consider change in the short term to avoid disruption from competitors moving faster than they are.
- Establish a Visionary Leader: Set someone in place who can make fundamental changes and challenge the status quo of how things have always been done.
- Work Closely With Other Parties: Collaborate with other businesses that share a common mission, vision or enemy to create something different that adds value to all parties involved.
- Ensure Executive Buy-In: Both senior executives and the board must prioritize evolving the business.
- Select Someone to Execute the Project: Establish a leader to take the strategic alliance to market and ensure that it meets its key milestones.
Faced with growing disruptive influences in the market, organizations must think more strategically than they have in the past. It’s critical for forward-thinking organizations to form strategic alliances to hold their ground against disruptive competitors.