5 Important Warning Signs in Alliances and Partnerships

After taking the Labor Day week off, it’s back to writing my regular weekly blog and maybe even catching up sometime by doubling up on my blog one week soon.

In any case, this is a continuation of the theme of 5’s on alliance building and partnerships. This one focused on Alliance Warning Signs. So here are several of my favorite warning signs. I look forward to reading about yours.

I think there are quite a few warning signs that alliance managers have to be aware of. Part of the problem in any relationship, personal or business, is recognizing which ones are most telling and which ones appear to be important but can be dismissed. Some apparently troubling signs initially can actually be double entendres.  Notice how each of these signs can be interpreted differently and produce equally positive or negative results.

Significant Financial Changes: this is easier to read when your alliance partner is a publicly traded company. Earnings reports, stock prices, etc are powerful barometers of business performance. A couple of quarters of negative earnings can spell cutbacks or imply customer defections. On the other hand, perhaps poor earnings were due to an inflated acquisition or writedown. So it’s important to look at the situation thoroughly. Even if it is negative, it might turn out that your partner will turn to their best partnerships and if you’re in that class then indeed this could easily turn out to be a clear win for you – especially if they make a comeback.

Senior Management Change: this is an obvious caution sign. New CEO’s often bring in teams that are more closely aligned to their past history and strategy. If your new partner CEO had a closer relationship with your competitor for instance, that could easily spell trouble, especially if your relationship is not well secured. On the other hand, change in upper management could just as well be a plus for you if the tenor of the new team has a positive past with you or your company.

Internal Turnover: always be on the look out for internal changes, especially when it comes to either the key people you deal with or other key influencers on your partner’s team. On the other hand again, if you’ve been stagnating lately with some of your partner’s counterparts – a change could be just what the doctor ordered.

Customer Complaints: perhaps the number one area of caution is when a joint customer is undergoing issues with your partner or their products or services, particularly if those problems also impact you and that same customer. Nothing seems to derail a partnership more than a customer with problems. On the other hand, solving customer issues with your partner quickly can be a powerful force for your future joint efforts and forge an enduring bond.

Significant Market Condition Changes or Major New Competitors: we’ve seen a lot of this occurring over the past 12- 18 months. Many companies quickly righted their ship while others slowly struggled and muddled through these business situations. Most importantly, negative economic and competitive situations will always arise. It’s how you work through them with your partner that ultimately matters most and getting through some tough and trying situations usually builds character and a lasting relationship in the long run.

Let me know what your favorites are.