Why Don’t IT Alliances Work Out?

You would think that the more alliances that your company / IT department makes with other firms, then the better that they would become at making them. After all, practice makes perfect – doesn’t it? It turns out that this is not always the case.

Koen Heimeriks has spent time studying 200 firms that had formed more than 3,400 alliances. What he has found just might surprise you.

He found that those firms that had the most experience striking up alliances actually had worse results when compared to those firms who had moderate experience.

Why the difference? It turns out that there are two problems that develop in firms that already have  a number of alliances:

1. they have a tendency to become overconfident in their alliance building skills, and
2. they can develop learnings about alliances that are in actuality based on unsupported ideas about cause and effect.

So what can make an IT department’s alliance with another firm actually work out well? It turns out that it’s the methods and procedures that the firm uses to create alliances that will determine their eventual success. Established firms that already have many alliances will probably have rigid and inflexible business processes for making decisions and selecting partners.

However, IT departments with fewer existing alliances will have more flexibility built into their processes. An example of this would be where employees who have worked on previous alliances share information with the employees who are trying to create a new alliance. This type of discussion can lead to experimentation and allows novel approaches to each alliance opportunity.

So in the end, what does all of this lead to? Heimeriks reports that the larger firms who had many alliances and a more rigid alliance creation process had an alliance success rate of around 50%. Those firms that had fewer alliances and a more flexible alliance creation process had an alliance success rate of around 71%. Sure looks like flexible processes are the key to successful IT alliances!

Does your IT department have any alliances with outside firms? Would you say that you have a lot or a few of these alliances? Are they generally successful or not so successful? Do you feel that your alliance creation processes are fixed or flexible? Leave me a comment and let me know what you are thinking.