The Human Side of Partnerships

Successfully managing strategic alliances means putting people first.
Oct 01, 2004

Most pharma-biotech alliances don't succeed. Though some breakdowns are to be expected—the science at the core of each deal will not work out in every case—many are entirely preventable. A deep look reveals that these full or partial failures are frequently a result of factors that can be controlled: timely decision making, effective communication, and goal alignment. Given the importance of such alliances for industry R&D, this article highlights what pharma and biotech companies can do to salvage faltering partnerships, or, better yet, design them to be successful from the start.

Head-on Collisions First, pharma and biotech partners must acknowledge that their significant differences make working together difficult. Transactional alliances—licensing agreements with arms-length relationships—used to be the rule. Today, strategic alliances are more collaborative, calling for integrated decision making and problem solving with multiple interactions among employees from each side. Many people from both partners jointly decide, plan, and exchange data, working side by side or in constant touch day after day.

To do this with people working within different organizational structures, following different strategies, using different processes, and guided by different implicit and explicit cultural norms is far more difficult than many realize. Consider a group asked to make a seemingly simple alliance investment decision. Matters are swiftly complicated because they all don't possess the same willingness to share strategic information. Their tolerance for risk is dissimilar. They work with mismatched budgeting cycles and use incompatible decision tools. The potential for frustration, time wasting, and bad feelings is enormous. That some successful decisions are actually made under these circumstances is something of a miracle.

These challenges, when poorly understood and handled, regularly lead to suboptimal alliances and, if left to fester, create full-blown fiascoes. Negative perceptions, misunderstood motives, feelings of disrespect, resentment, mistrust, or coercion contribute to the partners' inability to effectively work together. They lead directly to project delays, missed milestones, lack of innovation, mutual dissatisfaction, unresponsiveness to market changes, and ultimately, failure.

Keys to Effective Alliance Implementation
Melding Minds Challenges of this magnitude do not take care of themselves. Alliance partners must make collaborative behaviors flourish. Companies that are consistently successful at forming and managing alliances not only understand the kinds of behaviors people need to overcome organizational divides, they take pains to embed those behaviors in the processes that constitute their alliances. There are many such behaviors—too many to survey. But the three that follow serve to illustrate the potential usefulness of all:

Interests versus positions. Interests are defined as a party's needs, desires, fears, and concerns. In contrast, its positions are its demands—the things it wants the other party to do to meet its interests. The distinction is crucial. Imagine two sisters arguing over the last orange in the house. They each angrily demand to have the fruit. Finally, their mother makes a Solomonic decision, cuts the orange, and gives each girl half. One sister peels her portion and eats the fruit inside. The other peels her half, tosses the fruit away, and grates the rind into a cake she's preparing to bake.

The moral of the story? Each could have gotten all of what she wanted, not part—if she had discussed her interests instead of just making her demands loudly known.

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