Insights on alliance management, accountability, Sarbanes-Oxley, marketing theory and leadership competencies

European Business Forum, Spring, 2005 by Angela Andal-Ancion, George Yip, Ben Kedia, Somnath Lahiri, Al Lovvorn, Dermot Williamson

Dilemma 4: how do you build trust among actual and potential competitors?

Developing trust is important in any business relationship. The five founding partners of Star Alliance set the example for openness and trust. Members appointed credible leadership for its projects, and delivered continuity in project management. The marketing of the alliance was a case in point. The marketing committee needed strong leadership to create and launch a global brand from scratch. The task fell to Louise McKenven, head of marketing communications at Air Canada when she was appointed to chair the committee. Air Canada brought a level of trust and credibility to leading the Alliance marketing effort. As Air Canada was the 13th-largest carrier in the world, the other alliance partners saw it as non-threatening and neutral.

Top management involvement also helps to build trust. Corning is renowned for its expertise and success in managing alliances. James R. Houghton, Chairman of Corning Glass Works, has talked about the importance of top management participation (Parkhe, 1998). He cited a personal example in which his company created a joint venture with Ciba-Geigy and where he insisted that both bosses be part of the new board. Their visibility signalled to employees in both firms the importance each partner placed in the joint venture.

Another key success factor to an alliance is the lever of social relationships among mid-level executives who do the bulk of alliance-related work. Investing time in formal and informal activities helps build personal and business relationships among members. This level of trust can be critical when the alliance has no physical structures, such as offices of headquarters, as was the case in Star Alliance's early days.

Solutions for expectation dilemmas

* Ascertain members' motivations for joining the alliance by defining their mission, vision and strategic objectives

* Keep communication lines open internally within the organisation and externally with fellow alliance members

* Establish strong leadership from day 1

* Cultivate trust by ensuring continuity of management teams

Content

Dilemma 5: how do you create a separate identity for the alliance while maintaining the individual identities of members?

Star Alliance carefully negotiated and enforced a series of common branding devices, and gradually increased them over time. Star Alliance intended to be a brand in its own right that would enhance and complement the member airlines' brands. Preserving individual identities, through staff, surroundings and service, was paramount. Members believed their individual brands functioned best at the level of point-to-point travel, whereas the Star Alliance brand was more relevant for multi-sector travelling using a number of airlines. Star Alliance compiled a set of guidelines for members. The 'Member Communication Requirements' became an essential marketing tool for airlines to promote the Star Alliance brand in a consistent way.

The process of collectively building the Star Alliance brand was long and hard. However, the carriers quickly derived some halo effect from the Star Alliance association, especially smaller carriers. Being affiliated with quality airlines like Singapore Airlines and Lufthansa is a big boost to a small player like LOT Polish Airlines. Even for Singapore Airlines, another relatively small player in the global airline industry, being a Star Alliance member means global reach and brand exposure.