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Alliance in haste - repent at leisure?

Q5 recently hosted a Business Leaders Breakfast on Alliancing and Strategic Partnerships at our Westminster offices. We were joined by business leaders with decades of experience in collaboration and partnering. Iain Coucher (Chief Executive of AWE); Nirmal Kotecha (Director of Capital Programmes and Procurement at UK Power Networks); and Peter Shipley (Programme Director of Tideway/CH2M) got the conversation started... here we share some highlights and insights.

Alliancing is a word - and possibly a mechanism - that is over-used and under-estimated. Alliances are a popular vehicle for sharing risk and investment for large-scale capital projects. Not unlike marriage though, setting up and running an alliance is an art rather than a science and requires commitment, tolerance and understanding!

So, when is alliancing the right move?

Alliances cannot be considered the panacea to major project delivery because these partnerships require significant compromise to work. It is not always appropriate to deliver a project or outcome through an alliance. An alliance should only be sought where the required outcome (or project) is too complex or large to be delivered through a traditional contract or joint venture.

If it is thought that a traditional contractual relationship could provide the same result, then there is no benefit in delivering through an alliance; which adds complexity and therefore additional risk to the project. Alliances are best used when there are significant inefficiencies to be unlocked or uncertainty which needs to be overcome.

The longer the relationship lasts, the more likely each party will develop a deep understanding of the other(s) and how to work best alongside them. A lengthy commitment also allows, indeed encourages, shared practice development and also potentially unlocks long-term investment in the relationship – such as new technology or product development. The effort required for a successful alliance is most likely to be rewarded if its sustained over very long-term or repeated programmes of work. Where projects are one-offs (however large scale) – or if a project is of much greater significance to one party than to another – stakes may not be high enough, or of equal importance, to the parties involved for a mutually dependent alliance to develop.

The strategic partnership model is likely to continue to iterate over time. In the near future, at least in the UK, it is likely that foreign direct investment, with its diversity of players and cultures, will further influence how significant infrastructure projects are procured, managed and delivered.

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So if alliancing is the answer, how should organisations invest for  success?

In many alliances today the organisational structures, systems and cultures of each partner remain largely unchallenged and strongly dominant in the behaviours of their employees. This manifests itself in a relatively short, low-investment preparatory phase which is focused on finding partners rather than investing in internal adjustments or self-diagnosis. Significant money is spent on one-off ‘set-pieces’ such as assessment centres.

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So, what might an improved future alliancing model involve? Our discussion suggests that more time should be spent by the parent organisation/lead partner in preparing for the partnership, analysing what strengths they bring and seek in others, and identifying the likely risks, changes and challenges.

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 What are some of the keys to success?

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 Our Conclusions

Alliances are a powerful form of strategic partnering to use for complex and significant projects which cannot be delivered through a traditional contract or joint venture. They are best used when there are significant inefficiencies to be unlocked or uncertainty which needs to be overcome.

As with marriage, it is wise not to enter into long term strategic partnerships lightly. Both the client and the parties need to be prepared and able to work together for the long term for their mutual interests. The purpose of the union must be clear and there must be strong leadership and emotional commitment to make the relationship work.

Recent developments such as the ‘gaming’ of behavioural assessments add nothing to the selection of strategic partners and may be better replaced by a longer term investment in ensuring all employees understand and can play by the ‘new’ commercial and behavioural rules of the game.

If you would like to speak with us about alliancing or organisational development in general, please contact ​jen.gramolt@q5partners.com