United we stand

Entrepreneur, April, 1998 by Heather Page

Key questions to ask: How are decisions made? How controlling is management of its employees? At what pace do employees work? How competitive or aggressive is the company?

Honestly answering these questions leads to a better match, Hagberg says. Some companies, for instance, are known for their tight reign on employees or the long hours they keep; if your work style isn't similar to theirs, you could be headed for problems. Similarly, companies such as Intel are legendary for their aggressive style, Hagberg says. If you're considering an alliance with such a company, you must feel comfortable with their tactics. In the end, it's a matter of considering all the information and deciding if you can all get along.

BUILT TO LAST

An alliance is rarely a match made in heaven. Misunderstandings, compromises and disagreements are natural. Developing methods for clear communication and conflict resolution will put you on the path to creating an enduring partnership.

Early on, establishing key objectives and goals that reflect what both parties expect to gain from the alliance is critical. Clearly outline your objectives. Be sure they are realistic based on the amount of resources both parties are willing to put forth, and make adjustments as necessary. When Liquid Audio first entered into an alliance with BMG Entertainment, the parties developed grand plans - one involving software bundling - that needed to be brought back down to earth. "We didn't want to create expectations that were too difficult to meet," says Flynn, "so we scaled things back to make sure what we were trying to accomplish was possible."

Disappointments and misunderstandings can be avoided by establishing an effective process for working with your partner. Assess each company's strengths, and define responsibilities along these lines - especially in the area of management. Many alliances fail because of poor management relationships, so clearly document what's expected.

Also consider all the accounting, tax and legal ramifications of the alliance. Form a game plan for how the alliance will operate from the beginning to the end of the relationship.

Strike a balance. Nothing sours an alliance faster than the notion that one party is giving everything while the other is getting a free ride. "I think both sides have to feel as if they're being treated fairly," says Flynn. "In some strategic relationships we've developed, there was the feeling we were getting everything we wanted, but we had to give up so much in return that we didn't necessarily feel good about the partnership."

This is particularly important when forming an alliance with a large firm. For example, when Liquid Audio began its relationship with Microsoft, it wanted to make sure its needs were considered. "Microsoft is a huge company that puts fear into some people's hearts, and when we negotiated the relationship with them, we wanted to make sure we didn't feel we were giving too much away," Flynn says. "So we kept renegotiating the deal until there was equal consideration. For everything we're giving them, they're giving back."