Management

Alliances 459
joint ventures through which American and European companies got into the
Japanese market in the 1960s and 1970s. The market was there and it was growing
fast. But first the Japanese government made it very difficult for Westerners to get
in without a Japanese partner—though those Westerners who persisted in the face
of government foot-dragging eventually did very well, as a rule.
But there were also language difficulties. Few Western firms had Japanesespeaking
executives. Above all, it was almost impossible to hire experienced Japanese
middle managers and professionals. They had to be supplied by a Japanese
joint-venture partner with whom these people enjoyed lifetime employment.
The Different Types of Alliances
Alliances can take many different forms. There is the joint venture, where two or
more companies agree to work together toward achieving a single goal. There is
also the minority-holdings agreement, where one or both companies take a small
stake in their alliance partner. With the cross-holdings alliance, a type of minority-holdings
agreement, each partner owns the same small percentage of the
other.
But increasingly alliances are being formed without any ownership stake. This
was the case in the Intel alliance with the Japanese manufacturer mentioned
above. There is the alliance to jointly market a product or service, with each partner
serving a different market. There is the outsourcing alliance, where the outsourcing
operator actually becomes a part of the organization for which it provides a
distinctive support function. There is cross-licensing.
What all alliances have in common is that two or more organizations, each
maintaining its separate identity and management, agree to work together in one
area. They agree to become partners.
With so many different types of alliances, which ones tend to be most successful,
and in what situations? Alas, that’s like asking what kind of marriage is
likely to be a happy one. There is no answer. But all alliances have four things in
common.
First, they are different from the ownership-based organization. They are, in
the words of a very old and very famous French novel, “dangerous liaisons”—exceedingly
satisfactory when they work, but vulnerable and easily damaged.
Second, they all have the same problems.
Third, they all require the same basic behavior on the part of both partners.
And fourth, and perhaps most important, alliances are usually easy and work
well as long as the going is difficult—that is, in their early stages. But unlike the
businesses with which most executives are familiar, they tend to get into trouble
when they are successful.