Management

Alliances 461
Do they want the joint enterprise eventually to grow into a separate, autonomous
venture? Do they agree from the start that it will be allowed, perhaps even
encouraged, to compete with one or all parents? If so, in what products, services, or
markets?
In the marketing alliance where each partner sells to a different market, there
needs to be similar clarity about the objectives. Is the agreement to be limited to
one particular product or service? Or, if the alliance works, will it eventually be
extended to include more of each partner’s products or services? Should profits be
plowed back into the alliance, or should they be remitted as fast as possible?
Should the offspring develop its own research, or should it contract for its research
exclusively with one or both parents?
In the research alliance, there needs to be agreement as to who gets to patent
the research results. Will patents belong to the university scientist who made the
discovery? Or will they belong to the university itself? Or will they belong to the
company or companies that are funding the research?
Such objectives should be reviewed and revised every few years, particularly if the
alliance succeeds. There also has to be careful thinking about who will manage the
alliance. Regardless of what specific form it takes, the alliance has to be managed
separately. And the people in charge have to have the incentives to make it successful.
How should the alliance be managed? Should the partners run it by joint committee,
or should one of the partners assume full responsibility?
The alliance, whatever its legal form, has to be managed by its own management.
Not a committee—a committee only means that no one is accountable.
If it’s a joint venture, it requires its own separate management; and these people,
wherever they come from, are the management of the joint venture and accountable
solely for the joint venture’s results, and measured solely by the joint
venture’s performance.
The one thing that must never be said about an executive who manages a joint
venture: “John doesn’t do too well in his assignment. But he sure looks after our
interests and is no pushover for our partners.”
In fact, in a joint venture, one of the management’s most important duties is to
say no to the parents if the management thinks that the parents’ demands are not
in the best interest of the joint venture.
In the other alliances, too, there has to be clear management responsibility. The
woman manager of an outsourcing firm who manages the maintenance and cleaning
contract for the hospital is responsible.
Sure, she wants to satisfy the hospital management; after all, maintenance and
cleaning expenses are almost 30 percent of the typical hospital’s budget, and the
standards of maintenance and cleanliness are even more important for the hospital’s