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, creating a substantial risk of negative surprises. We believe that every corporate manager, including CFOs, should be well tuned into the performance of their alliances. In our work with more than 500 companies around the world, we have found that fewer than one in four alliances have adequate performance metrics in place.² As a result, alliances tend to be run by intuition and with incomplete information. Partners may not agree about the progress of their ventures and senior management can't intervene quickly enough to correct problems. In many companies, 30 to 60 percent of alliances are underperforming—and three to five major deals are in desperate need of restructuring. Unfortunately, management does not really know where the problems lie or how it should best invest its time. To get a better grip on performance, companies must develop a more structured approach...