IBMInstituteforBusinessValueLeveragingknowledgemanagementacrossstrategicalliancesAlliancebuildinghasseveralstages,andthemanagerwholeverageshisorganization’sknowledgethrougheachstagecreatesthefoundationforasuccessfulpartnership.ThisarticlewasoriginallypublishedinIveyBusinessJournalMarch/April2002.Reprint#9B02TB13.Formoreinformation,visittheirWebsite:“makeversusbuy”decisionthatonceconfronteddecisionmakershasexpandedandisnowamorecomplex“makeversusbuyversuspartner”decision.Alliancemanagersmustmakedifficultdecisionsaboutwhentopartnerandwithwhom,aswellashowtostructureandmanagethepartnership.Managerswhocanleverageinformationandknowledgeacrosseachstageoftheallianceprocesswillfindthataknowledge-basedapproachiscriticaltothesuccessofanypartnership.Inthisarticle,wediscusstheimportanceandeffectivenessofsoundknowledgemanagementpracticesinthecontextofanalliance.Anydiscussionofaknowledge-basedapproachtoalliancemanagementmustbebasedonseveraltruths.•Ifmanagedcorrectly,alliancescansignificantlyincreaseacompany’sfinancialreturns.Asarecentstudypointedout,companiesexpectthatby2003,35percentoftheirrevenueswillcomefromalliances,upfrom21percentin1998and15percentin1995.1,2Butalliancesdomorethancontributetoafirm’sbottomline.Firmscannolongerdevelopalltheresources,technologiesandproductstocompeteintoday’sdynamicmarketplace,andsomanyofthosefirmsusealliancestoacquirethecriticalskills,knowledgeandcapabilitiesthattheylack.•CompaniesformR&Dalliances,notsimplytoreachshort-termfinancialmilestones,buttoobserve,learnandinternalizetheknow-howoftheirpartners.InU.S.-Japanesealliancesinthepast,forexample,Japanesecompaniessawthesepartnershipsasawaytolearnfromtheirpartner,whiletheirU.S.counterpartsusedthesealliancesasasubstituteformorecompetitiveskills,ultimatelyresultinginanerosionoftheirowninternalskills.3Therefore,withcompaniesthatlookonalliancesasawayoflearningfromtheirpartners,practicesthatenableknowledgesharing,creation,disseminationandinternalizationbecomecritical.•Anallianceknowledgemanagementcapabilityisbothanimportantcomponentofalliancesuccessandadifferentiatingfactor.Managingknowledgeresourcesinanallianceisextremelychallenging,anditisaprimaryreasonforhighfailureratesinknowledge-basedpartnerships.Alliancesuccessratesoflessthan50percenthavebeencitedinthemanagementliterature.Contents1Introduction3Thestrategicalliancedefined4Phasesofanalliance7Applyingknowledgemanagementsolutions8ThebuildingblocksofalliancemanagementStrategicalliancesStrategicalliancesIBMInstituteforKnowledge-BasedOrganizations2However,recentevidenceshowsthatusingaknowledge-basedapproachtoalliancesiseffective.Companiesthathavegreaterallianceexperienceseemtoenjoyhighersuccessrates.Thisimpliesthatcompaniesshouldlearnfromtheirpastandinstitutionalizetheirknowledgeratherthantakeanad-hocapproachtoalliances.Inarecentstudy,thosecompaniesthatlearnedfromtheirallianceexperience,andthensharedanddisseminatedtheknowledgethroughouttheirorganization,hadgreatersuccess.4Basedoninterviewsweconductedwithalliancemanagersinseveralcompanies,wenoticedawidevarianceinanalliancegroup’sknowledgemanagementcapabilities.Thosecompanieswhoemployedstandard,effectiveallianceprocessesorsystematicallycapturedallianceandpartnerinformationweremoresuccessfulthanthosecompaniesthatdidnothaveaknowledgemanagementcapability.•Havinganallianceknowledgemanagementcapabilityallowscompaniestodealwiththeincreasingcomplexitythatmanagingaportfolioofalliancepartnersentails.Mostcompaniesareinvolvedwithmanagingmanypartnerssimultaneouslyandareoftenworkingonseveralallianceprojectswiththesamepartner.Itiscriticalthatindividualalliancemanagersshareinformationwithothermanagers,sincethealliancesareofteninterdependent.Forexample,alliancemanagersoftenindicatedthat,iftheyhadknownthattheircompanywasalreadyinvolvedinanexistingalliancewithPartnerA,theywouldhavestructuredthepartnershipwithPartnerBdifferently,giventhatPartnerAandPartnerBwerecompetitorsincertainmarketsegments.Also,havingknowledgeaboutotherpartnersintheportfoliocreatesnewopportunitiesbycombiningthecapabilitiesofmultiplepartners.Therefore,mechanismsthatallowalliancemanagerstoaccessinformationabouttheotherallianceprojectsandpartnersintheircompanyareimportantforalliancesuccess.•Finally,researchhasrevealedthatdifferenttypesoflearningoccurinapartnership.Itisimportanttodistinguishamongthedifferenttypessinceeachonemayrequireadifferentknowledgemanagementpractice.Contentlearningisperhapsthemostcommontypeoflearningandinvolvesacquiringthepartner’sskillsandknow-how.Partnerlearninginvolvesbuildingsocialcapitalwiththepartner.Theintentistounderstandthepartner’scultureandworkroutines,andusethisknowledgetocontinuouslybuildaneffectiverelationshipwiththatpartner.Theintentwithallianceprocesslear