Choose Wisely:
Increasing Alliance Value
through Collaborative
Decision-Making
By Michael Berglund, CA-AM, and David Thompson, CA-AM
Every day we make choices. Some choices are simple and typically
have few consequences, like deciding what to have for lunch. Other
choices are more complicated and can have major, long-term impact,
like deciding together with a partner firm whether to invest $300 million
in a new project to develop a potential alliance product.
Michael Berglund, CA-AM, is a director of alliance
management at Eli Lilly and Company and has
responsibility for the Lilly Bio-Medicines Business
Unit alliances.
David Thompson, CA-AM, is chief alliance officer
at Eli Lilly and Company and is a member of the
ASAP board of directors.
EDITORIAL SUPPLEMENT
In many ways, making important alliance deci-
sions is similar to the process by which a sculptor creates
with clay. In the early stages, artists can easily mold the
clay, adding or removing material as needed. As the clay
begins to harden, it becomes increasingly difficult to
shape, eventually becoming hard as stone. To keep the
clay workable, sculptors employ a variety of techniques
that seem to have one thing in common: they provide
the time needed for the artist to render a finished product that embodies his or her original vision.
In alliance management, as we look at how we make
important decisions that have the potential to greatly affect the partnership’s ultimate goals, we often see
that many team members become involved in a complex,
drawn-out process. Given the
number of “artists” participating, we have observed a
wide range of approaches to
forming the end product, and
we’ve seen that many alliance
decisions are not made using
a process that looks anything
like molding clay. In fact, we
have facilitated governance
and team meetings in which
it was clear that one side had
already reached its own conclusions prior to the meeting.
In effect, the clay had already hardened, and no real
collaboration was taking place. When this happens, a
decision-making process intended to be a collaboration
ends up looking a lot more like an arm’s length negotiation.
Given the number, frequency, and wide range of decisions that must be made, an alliance must systematically
incorporate the very best knowledge from each party involved in the collaboration. The alternative is not pretty:
a poorly organized decision-making process leads to
increased business risk (in the form of substandard performance) and the potential for legal uncertainties and
human risk. (See “Measuring Alliance Management:
Quantify Your Value by Showing How You Mitigate
Risk and Solve Problems” Strategic
Alliance Magazine, Q3 2011.)
By effectively harnessing the expertise from
each company to help shape the process
and outcome, alliance groups can define
and monitor budgets, development timelines,
and other business-critical inflection points
more accurately than is often the case
with single-company products.
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When the decision-making process
is well implemented, however, we’ve
observed significant benefits. By effectively harnessing the expertise
from each company to help shape
the process and outcome, alliance
groups can define and monitor budgets, development timelines, and
other business-critical inflection
points more accurately than is often
the case with single-company products. While the perceived cost of
this accuracy might be inefficiencies
EDITORIAL SUPPLEMENT
Effort/Resources to Induce Change
Conviction
Belief
Attitude
Degree of Certainty
of time and process, experience has shown that on the
whole, a well-managed, collaborative decision making
process leads to better outcomes and greater value for
the partnership.
Conviction Curve
We have found that certain tools that have been developed for other disciplines can be repurposed for
facilitating collaborative alliance decision-making.
One such example is the oft-cited Hierarchy of Effects
(Lavidge, R.J. & Steiner, G.A. (1961), “A Model for Predictive Measurements of Advertising Effectiveness,
Journal of Marketing 25(6), 59-62). This hierarchy
attempts to explain how individuals make buying decisions as their opinions “harden” over time.
We have adapted a principle of this model for alliance
decision-making, creating what we call the Conviction
Curve. In the graph below, attitude can be defined as
“a manner, disposition, feeling, or position with regard
to a person or thing; tendency or orientation, especially of the mind.” The ability to influence someone
becomes more difficult when that person has a specific belief, or “a feeling of being sure that something is
true,” – and persuasion becomes even more difficult
and resource-intensive when that belief evolves into a
conviction, with the individual firmly believing a choice
is right.
The Conviction Curve is a simple tool that alliance professionals can use to time the introduction of important
decisions and to estimate how long it will take for the alliance to come to a joint decision. Simply put, the more
“hardened” or “convicted” a person is about a particular topic, the more time and energy will be required to
change that person’s perception.
As an important aside, a wide gulf exists between collaboration and negotiation. Collaboration is about jointly
creating value, while negotiation is about winning for
your side. It is vital that alliance managers understand
whether they are fostering collaboration or negotiation
within their alliances.
To provide some context regarding the Conviction
Curve and how it can be used effectively, we’ve put together three mini-case studies. As you read them, look
for ways in which alliance managers
might be fostering collaboration versus
negotiation, or vice versa.
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CASE
Studies
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CASE STUDY 1
The Governance Meeting
SITUATION: A senior governance meeting will be held in two weeks
between Company A and Company B.
TASK: On the agenda is a discussion to consider sanctioning a key project
within the alliance.
ACTIONS: In advance of the governance meeting, Company A’s alliance
manager gathers the leadership team to discuss the project and the proposal
that Company A has been working on for weeks. Company A decides that it
will approve funding and will be ready to move forward after the governance
meeting. Company B’s alliance manager also convenes a pre-meeting, during
which team leaders decide that the project poses too much risk for the brand
and that they will not support the associated costs.
QUESTION: When this agenda topic is discussed, how much collaboration do
you think will occur?
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CASE STUDY 2
The Walk-In
SITUATION: Two companies are attending a quarterly governance
meeting. As the representatives are transitioning between topics, Company B
politely informs the group that it has a “walk-in” proposal to discuss.
TASK: The chairs allow the proposal to be heard.
ACTIONS: During the presentation, Company B puts forward its belief that the
companies should launch a new version of the alliance product. Company B
outlines initial supporting research but indicates that it is too early to estimate
the costs and timeline for the initiative. Because this is the first time Company A
has seen any of this information, Company A is unable to commit.
QUESTION: What could be done to improve the speed and effectiveness of
the alliance’s decision regarding Company B’s proposal?
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CASE STUDY 3
Key Results Released
SITUATION: Companies A and B are jointly developing a product
for commercialization. Company A is leading the development effort, with
Company B having joint decision-making rights. The alliance is about to learn
whether its development program was a success. Given the release date, the
alliance managers facilitate a joint meeting in which both teams will learn the
results and decide how to disseminate the information.
TASK: Before the meeting ends, the teams create a joint message to be used
by both companies to communicate the findings and recommendations to both
companies’ leaders.
ACTIONS: In this meeting, both companies collectively assess the results, align
on the implications, and determine whether the project should move forward.
QUESTION: What were some of the factors that led this alliance to reach a joint
decision?
Consider the Consequences
In Case Study 1, both companies have clear convictions regarding their decisions. Company A actually has
internal approval to proceed, even without a discussion
with the partner. With most likely the best of intentions, the alliance managers may have unintentionally
fostered the group’s inability to reach agreement. Given
the circumstances, the tone of the discussion during the
governance meeting would have sounded more like a
negotiation session than a true collaboration.
While pre-meetings are commonly used to reach internal alignment prior to a governance meeting, it is
important that alliance leaders understand how far each
agenda topic is “hardened” and how this will affect the
outcome of the agenda topic. Alliance managers can
help guide these discussions during pre-meetings by
working to reset a company’s norms to a more collaborative approach.
In Case Study 2, alliance managers could have set
expectations at the outset of the partnership to limit walk-in agenda topics in governance committee
meetings. Even though Company B didn’t present a
“convicted” position, Company A was unable to advance the discussion, resulting in alliance inefficiencies.
We would recommend that walk-in items be a rare
event, and when they do happen that they be limited in
scope and time prior to opening the discussion.
If the parties are unable to reach a decision during the appointed time, a
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EDITORIAL SUPPLEMENT
future date should be set to reopen the walk-in item,
and a path should be clearly articulated regarding how
the parties could bridge any information or idea gaps
that may exist in the meantime. If the parties are unable to bridge those gaps, the teams should be required
to present to the governance body each side of the argument in a clear and concise manner. The alliance
manager would then return to the regularly scheduled
alliance agenda.
Please note that we are not recommending that the
team return with a jointly accepted proposal. We are
recommending that if they cannot reach a measured
agreement, they return with a presentation that concisely outlines their disagreement. Setting the expectation
that the parties will return with an aligned presentation,
regardless of whether they agree on a particular decision, fosters collaboration. In other words, while it is
acceptable to see things differently, you should be able
to understand and articulate your partner’s perspective.
In Case Study 3, Companies A and B are op-
erating within a collaborative norm, with alliance
managers setting effective fundamentals that foster
authentic teamwork. Both organizations collectively
assessed the situation and then collaborated on next
steps based on the data they’d received. The process
was concluded when the alliance jointly communicated results and recommendations to each organization.
In the event the two companies had had differing views
on the results, those differences could easily have been
captured in a joint submission for escalation (similar to
the situation in Case Study 2).
To put the positive outcome of Case Study 3 into perspective, consider an alternative scenario in which the
two companies might have received the results at different times in different locations. Each company would
have begun assessing the results independently and
would have reached a conclusion on next steps, which
in turn would have been communicated to top leadership. After that process occurred in both organizations,
the respective alliance managers would have attempted
to facilitate a governance meeting in which Company
A and Company B would have been much more likely
to negotiate than to collaborate. This disjointed process
would have set the two teams at odds, creating inefficiencies and increasing human and business risk as well.
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Prepare to Make Better Decisions
These case studies illustrate how alliance teams demonstrate certain decision-making behaviors based on
where they sit on the Conviction Curve. Alliance managers can play a critical role in fostering more effective
collaboration by setting norms in new partnerships or
by adjusting norms in already established alliances. As
you look at your own company’s approach, here are
several key points to keep in mind to ensure that your
alliance doesn’t become caught in a “conviction trap”:
1. Establish an alliance norm where the
content for governance proposals is aligned.
(Differing views and rationale should be
presented jointly, with a clear understanding
of the vital differences between the parties’
perspectives.)
2. Eliminate the opportunity for walk-in
agenda topics at governance meetings; if a
walk-in becomes absolutely necessary, enforce
stringent time limits.
3. Use individual company pre-meetings to
under stand your own team’s level of conviction
(and to the extent possible, that of your partner)
on any particular topic, and use that information
to design an effective governance meeting.
When seeking individual internal governance
approvals, use content and materials that were
created jointly by the alliance partners.
4. Create a culture where communications to
each company’s executives are jointly created
and aligned. This ensures that both organizations
are receiving the same content and messages.
5. Evangelize these norms of collaboration
within your working teams, not just within
governance committee meetings.
By working together to foster early collaboration,
alliance professionals can effectively mold and shape
the decision-making process for the alliances they
manage. With appropriate awareness and leadership
around the importance of the decision-making process,
collaborative partners can avoid the trap of endless
negotiations and focus instead on leveraging the expertise and experience of each team to create true value
through the alliance. n