Simple Rules for Making Alliances Work, by Jonathan Hughes and Jeff Weiss, Harvard Business Review, ‘Onpoint’ - Fall 2012

These special 'OnPoint' editions of the Harvard Business Review are obviously a way of recycling previous articles and generating revenue, but they are usually good value.  You get the best selection of articles from recent times and this edition has a number that are worth reading.  I chose this article because I think is the best and the review will therefore, by my standards, be highly positive.

It is about alliances and joint ventures between companies, which are becoming an increasing feature of corporate life these days.  Indeed at MTP this is featuring increasingly on the learning agendas of our clients, for instance we were recently asked to include this topic in a programme for Finance Business Partners of a major international client in the energy sector.  It is interesting that the messages in this article are very much in line with the best practice that our client asked us to emphasise, based on their long experience of managing joint ventures.

The messages of the article are simple and to some extent counter intuitive.  Alliances and JVs are an increasing feature of corporate life - increasing by 25% overall - yet the authors’ research shows that 60% to 70% don’t work.  This is because the conventionally regarded best practice does not seem to work; most companies would work to these guidelines:

·        -  Define the right business arrangement

·        -  Create metrics of end performance

·         - Eliminate differences

·        - Establish formal systems

·        - Manage external relationships

The counter-intuitive message is that these guidelines are not key success factors in practice and, in many cases, they are the cause of failure.  Instead attention should be paid to the polar opposites of these guidelines, which can be summarised as:

·         - Developing the relationships

·        - Creating metrics of means rather than ends

·        -  Embracing differences

·        - Enabling collaboration

·        - Managing internal stakeholders

What makes the argument even more powerful is the research backing, quoting quantitative data and examples of major companies who have seen the light and are willing to admit their past mistakes, including Aventis and Schering Plough.  It was also impressive that the authors (presumably) persuaded HP and Microsoft to bare their souls and admit how their alliance initially failed to work because of different perceptions of each other’s strengths and weaknesses, for example:

·        -  HP perceived itself as taking a long term mature approach; Microsoft saw this as slow and bureaucratic

·        - Microsoft perceived itself as entrepreneurial and fast moving; HP saw this as excessively competitive and confrontational

Only when they started to discuss the relationship, the differences and the need for collaboration was the alliance put on the right track.  The message was - let’s use our differences to create value rather than allowing them to destroy the alliance.

The arguments seem to be sound and very much in line with the messages we would deliver on our courses, with one exception.  Perhaps it’s my financial background but I could not quite go along with the second message - to measure means rather than ends.  The argument here is that there can be too much focus on revenue, costs and profit at the early stages, when the emphasis should be on how the relationship is working and how far agreed milestones have been achieved.  My criticism of that approach is that, like it or not, alliances will eventually stand or fall on financial performance and it should be possible to agree financial milestones, as well as for the softer targets.  It should not be seen as ‘either/or’.

But overall, an impressive piece of research and an excellent read, challenging conventional thinking as all good business articles should do.  There should be more of this kind.

Theodore Roosevelt CEO by Alan Axelrod, published by Sterling 2012

I decided to review this book as it is the latest in a series by the author, a historian who makes the bold attempt to use historical figures to illustrate learning for modern business leaders.  I chose Roosevelt because I am interested in American history and knew him to be a fascinating and controversial figure; but if you prefer more of a UK orientation you can choose Winston Churchill or Elizabeth I.  And even further afield in country and period, there are similar books on Ghandi and Julius Caesar.

The structure of the book is clever.  You receive a potted history of the life, followed by a series of chapters in which several learning themes are explored, while producing lots of anecdotes and examples to build on each theme.  In the case of Roosevelt (this is Theodore who was president at the beginning of the 20^th century, not his cousin Franklin who was President in the Second World War) you read the potted history and cannot help going ‘wow’.  How did he do all that? He became President by accident following the assassination of his predecessor McKinley and proceeded to change America in all sorts of ways, some good, some more questionable.

But this review is not to provide a history lesson but to answer the question, does this combination of history and business learning work in this type of book?  The answer is yes, it works to a certain extent for those who are interested in both.  It is a relatively painless way of improving your knowledge of history while developing your thinking about successful leadership in business.  I think, however, that the reader should have an enquiring mind when reading the lessons for today’s business world, because some seem too contrived and simplistic.

Though I liked the structure of the book into seven chapters - each showing an aspect of his life - I would have liked the lessons to be more nuanced and less didactic.  By the end of the book we had lesson number 136 and the text and tone resembled too much one of those tiresome American books on personal self-improvement.  I would also like to have seen more caveats about the applications to business and the lack of these gives the impression that the author is more of a historian than he is a business guru.

Yet there are some clear parallels that convinced me of the relevance to modern leadership.  Roosevelt was a risk taker who constantly referred to risk as a positive factor in decisions, looking at the opportunities rather than the pitfalls.  ‘There is no reward without risk’ was his constant message.  And he was an early exponent of the ‘Management by Walking Around’ theory, rejecting organisation charts and talking to people at all levels.  He reformed the New York police in the early phases of his career by walking the streets of the City, gaining the respect of the lower levels and gaining the knowledge and determination to break the bureaucracy.

As I read through the chapters I began to wonder where I had heard these messages before and it came to me towards the end; the book is quite similar to the style and content to ‘In Search of Excellence’, the all-time best selling management book of the 1970s by Peters and Waterman.  Their approach was to look at how successful business organisations behave; these books look at how successful historical figures have behaved, albeit in a different time period and context.

The outcome is very similar.  You learn a lot more about the world, your thoughts are stimulated but there is no automatic transfer to the secrets of success in modern business.  But I guess that applies to any management book.  In Search of Excellence went out of favour because many of the featured companies fell from grace and were only successful for a limited period;  at least the reputations of Roosevelt, Churchill, Ghandi et al have stood the test of time. 

Buy the book;

http://www.amazon.co.uk/Theodore-Roosevelt-CEO-Alan-Axelrod/dp/1454901705/ref=sr_1_1?ie=UTF8&qid=1351762198&sr=8-1