As corporations have evolved from command-and-control structures with sharply defined boundaries into loosely knit organizations, corporate alliances1 have become central to many business models. Most large companies now have at least 30 alliances, and many have more than 100.
Yet despite the ubiquity of alliances—and the considerable assets and revenues they often involve—very few companies systematically track their performance. Doing so is not a straightforward task. In our work with more than 500 companies around the world, we have found that three problems typically bedevil efforts at measurement. The first is a failure to measure the performance of individual alliances rigorously. Our experience suggests that fewer than one in four of them has adequate performance metrics.2 As a result, alliances are run by intuition and incomplete information; partners may not agree about the progress of their ventures; and senior management can’t intervene quickly enough to correct problems. Companies frequently have three to five major alliances in desperate need of restructuring—but don’t know which ones they are.
Second, companies often fail to recognize performance patterns across their alliance portfolios—patterns concerning particular deal structures, types of partners, or functional tasks. A failure to spot and fix such recurring problems...