"Like marriages, business alliances involve people. People can be trusting, optimistic and tolerant but also weak, overbearing and devious" (Hill, 2011). The merging of two businesses is not unlike that of romantic relationship. The partnership is built on hopes, dreams and promises of the future (Kanter, 1994). However, like many marriages the partnership is at risk for dissolution and can result in bruised feelings of disappointment. Between two thirds and one half of all business alliances fail (Hill, 2011).
When entering into a business alliance should be done with the same caution of entering into a marriage. It's easy to get caught up in the excitement of partnership and dream of all the great things the two partners are going to do and achieve together. Curbing over-optimism is a good start (Hill, 2011). This is a business venture, and like a romantic relationship, there is a possibility it won't all work out in the end and a break up is highly possible.
It is also a good idea to pay attention to past behavior. Just as one would most likely not marry someone who has a track record of infidelity, a business alliance should not be formed with a company that has a reputation of flawed or failed previous merger attempts. For example, Mr. Diniz is known to be extremelty controlling and restless (Hill, 2011). Casino should have noted this and realized they would not be "the one" to change Diniz. Diniz's infidelity should have come of no surprise to Casino.
The selection process for corporate alliances should mirror that of the selection process for a romantic partner.
- Each partner should know themselves and be comfortable with what they are bringing to the table (Kanter, 1994).
- There should be good chemistry, rapport and a feeling of good will on both sides (Kanter, 1994).
- Common ideals, values, philosophies and direction for the future should be in place (Kanter, 1994)
References
Hill, A (2011), Corporate marriages often end in divorce. Financial Times, 1-3. Retrieved from http://www.ft.com/cms/s/0/2d8bd966-b6f5-11e0a8b8-00144feabdc0.html
Kanter, R. M. (1994), Collaborative aadvantage: The art of alliances. Harvard Business Review. Boston, MA: Harvard Business School Publishing
Hi Lisa,
ReplyDeleteI could not agree more with you, Kanter and Hill on the selection process of a "partner". By asking a few questions in "social networks" about your potential partner you should be able to learn if moving forward makes sense (Gulati, 1998). The trustworthiness of your potential partner can help you determine the risks and if necessary, with your eyes wide open, you can enter a relationship with a "semi-strong" form of trust (Barney & Hansen, 1994) that will require a detailed pre-nuptial contract. If on the other hand, you find the ideal mate whose "hard-core trustworthiness" (Barney & Hansen, 1994) is evident, then the contractual requirements won't be necessary and you will engage in a long-lasting and meaningful relationship.
This would have been a great comparison for our Valentine day's post last week:) Thanks for sharing and outlining such a great analogy.
Adriana
Interesting post, Lisa. Adriana brings up some good points about trust. How can an organization appear trustworthy to potential partners? What other types of signals can an organization use to recognize a perfect 'mate'? Do social networks play a role in this?
ReplyDeleteHi Adriana and Courtney,
ReplyDeleteThank you both for replying and for the good questions. This was fun to explore and write about. Yes, I think social networks can play a vital role when organizations are choosing a 'mate'. Like people, firms can benefit from social networking when searching for an alliance (Gulati, 1998). I liken this opportunity to that of being set up with a new romantic partner by a friend. Your friends know you. They know what you like and what you don't. You trust them, and they have a pretty good idea of what your expectations are. Corporations can also benefit from this type of matchmaking, for the same reasons, by turning to their existing partners and alliances when seeking a new relationship (Gulati, 1998).
I compare this to internet dating. eHarmony, Match, and others like them, claim to get to know subscribers on a personal level and match them up with others who are similar. This is not to say that claim is not true. Perhaps they do get to know people well through their personality tests. However, it cannot be ignored that selection bias will play a big role in this assertion. How many people are going to answer the questions honestly 100% of the time? One is going to put their best face forward when seeking a mate. It's not until later do the less-desirable traits start to show. The same can be said for corporations. When courting a partner they will only present what they want the other to see. If matched up by an existing, trusted friend or alliance, much of the "mask" is removed.
The word partnership is essential in both romantic and corporate relationships. Just like a person cannot, or should not, be owned by another. Organizations, when entering into partnerships, should make sure that the balance of power is equal and seek strategic interdependence (Gulati, 1998).
Trust, social networking and careful selection are essential when choosing a partner. Even with the best research and recommendations from the most trusted alliances, relationships can break apart. Like failed marriages, age, growth in different directions, competitive differences and autonomy can damage corporate relationships (Gulati, 1889). There is no guarantee, in love or in business, that a partnership will remain blissful. However, risk, coupled with research and a little help from trusted friends, bliss is possible.
References
Gulati, R. (1998). Alliances and networks. Strategic Management Journal, 19, 293-317.
Lisa,
ReplyDeleteI appreciate how you took Kanter's marriage symbolism to the next step with Hill's article - divorce. I do believe that the factors Hill lists for consideration are only necessary for a true alliance. For those alliances that are nothing more than a contract for goods/services, the strong form trust referred to by Hill and explained by Barney and Hansen (1994) is not necessary. It is more difficult in these low-risk situations for either party to exploit the other.
Your response about an organization's social network is also on target. As a result, while strong form trust may not be necessary for all alliances it may be good form to ensure the integrity of a partner organization to ensure that your own organization's reputation stays in tact.
Great thoughts!
Lisa,
ReplyDeleteInteresting post. I enjoyed reading it, especially how you led it with examples of companies that maybe "should have dated longer" before they got hitched. Like Mr. Suzuki might have learned much more than he imagined, but like relationships, its sometimes a good learning experience to have a bumpy ride here and there.
Kanter (1994) speaks to involvement and collaboration necessary by leadership (and employees) at all positions within the company hierarchy. If organizations these days seek to be strategic and responsive, its people must be willing and able to seek the necessary collaboration and identify differences between each other.
They have to "work" on their relationship as long as their together if the are looking to improve their chances of achieving their specific goals, and their alliance's mutual ones.
REFERENCES
Kanter, R. M. (1994). Collaborative Advantage: The art of alliances. Harvard Business Review. Boston, MA: Harvard Business School Publishing
Your post struck a chord with me. Some of our good friends from college bought a bar in the town of Lubbock, TX. Before they bought it, it was an OK place to go. But after they bought it--with another set of their friends--it was THE place to be. Over time, though, the two couples started arguing about who was doing more of the work, who was giving away more free drinks and whose turn it was to mop the floors. Several years later, our friends bought out the other set of partners, and their friendship is completely ruined now.
ReplyDeleteSo, in addition to having the three compatible characteristics you listed in your post, do you think not going into business with friends or family should be a cardinal rule? Or do you think that the three characteristics are hardly discussed before opening a business with friends or family, leading to the ultimate demise of the business and the saying that you should never go into business with them?
Thanks for the responses, Brenda, Al and Lauren!
ReplyDeleteBrenda, I appreciate you recognizing that tie-in. It was fun to write this and I enjoyed putting the analogy of corporate "marriages" and "divorces" together. Integrity and values are such important things. We certainly try to recoginze those qualities in our personal partners, but I hadn't really thought about, or understood, how important it is in business relationships.
I couldn't agree more, Al. It takes "work" for any relationship, professional or personaly, to be successful. Clearly defined goals of where they want to go together is equally important.
Lauren, that's a great question. I'm sorry to hear about the business relationship runining your friend's relationship. It does, however, speak to an important element of joining forces. Boundaries and responsibilities have to be set before the partnership is solidified (Kanter, 1994). I don't think not going into business with friends and realitives is a hard and fast rule, but I do think careful attention must be paid to what happens if the relationship fails. Not that that will completely nullify hard feelings. How many of us have said, "No matter what we'll still be friends" when in a romantic realationship. Yet, very few acutally stay friends. That being said, if the ground rules and expectations are laid out in the engagement phase (Kanter, 2009), I think the chances of survial increase.