The Alliance Economy
Think back 30 or 40 years: business was dramatically different. Companies grew through acquisition and became massive, fully-integrated value chains—from production to customer.
Today, the business environment requires a different model.
The pendulum has been swinging toward disaggregating large companies into highly specialized, focused entities — creating value for customers in very specific market niches.
Fragmentation has come to every part of business.
Cloud and API technologies have advanced to a point where you can form and run a company without capital outlays, and by leveraging business component services that have fully replaced the function of what used to be entire departments.
Market forces have driven business in this direction.
Disaggregated businesses are more agile, more competitive, and more able to react to changing market trends.
Rather than growing through acquisitions, organizations can form “loose ties” with other organizations through strategic alliances to take advantage of market opportunities quickly.
And when the market changes again, they can form a new alliance and shift investment to the business or relationship — to go after the new opportunity with speed and agility.
Too much worry.
If you’re locked into a value chain, you can die when the market is transformed. Brick-and-mortar stores are the embodiment of this phenomenon.
Every day, you read about a new retail chain like Toys-R-Us, The Limited, Radio Shack, or Payless Shoes closing their doors because of the capital outlays and fixed investments that have them stuck idle in the market. Who wants to be in their (Payless) shoes? 😉
The market today is a hyper competitive, consumer-oriented economy. Power has shifted from producers to consumers.
The Alliance Economy.
Buyers have an unlimited array of information on product capabilities, competitive offerings, consumer feedback, alternative pricing, channel options, and more.
This has made consumers buyers very demanding — products must be easy to buy and available at the most convenient locations. It’s also made them fickle. If you’re not delivering, they’ll switch to your competitor. If your product is not at the point of purchase or point of decision, you’re toast. This dynamic has driven innovative brand tie-ups like:
- Spotify becoming an offering with Hulu for college kids
- Showtime offering their content to Netflix viewers
- Starbucks opening stores inside Safeways, Targets, and other retail outlets
- HBO putting their shows on Amazon Prime for greater distribution and access
- Lyft aligning with Allscripts to let 180,000 doctors call rides for their patients
- Lyft adding a “Taco Mode” button to have drivers stop at Taco Bell along a passenger’s route. Not to mention, there are Doritos Tacos on the menu.
The list goes on. More and more alliances are being announced every day. And the wave is growing!
Thirty years ago, less than 2% of revenue for a typical company came from alliance relationships. Today, 30–40% of revenue is driven by alliances — and in some organizations — as high as 75–80% of revenue.
Alliances are on the rise, delivering higher revenue and not going anywhere!
Why is this happening?
Alliances help companies meet the demands of competitive markets. Here are just a few of the benefits of working with alliance partners:
- Innovation to combine solutions in ways never dreamed of before
- Flexibility to change as the market changes (and it’s always changing!)
- Access to new customers through alliance routes to market
- Growing geographic boundaries creating alliances with established presence
- Focusing on your specialty with your alliance partners focusing on theirs
- Access to specialized skills you don’t intend to invest in
Competition never slows.
Competition for customers is fierce, and competition has created a cycle of constantly increasing and changing expectations on the part of consumers.
A decade ago, who would have thought an online order could be delivered reliably in one hour? But that’s the standard today with Amazon PrimeNow. I’m sure you can think of examples in your industry that are just as challenging. How do you compete with that? In a word: Alliances!
We’re seeing the rise of the Alliance Economy.
A new wave.
Companies that are winning have figured out how to be agile, how to be where customers are buying, and how to shift at a moment’s notice to new markets, new technologies, new offerings, new channels, new geographies, and new skillsets.
Hyper competitive markets and ever-increasing expectations from customers are accelerating this trend to new heights. But we’ve only scratched the surface.
The Alliance Economy is taking off.
…But it’s becoming more and more unmanageable.
IT systems have been optimized to handle business processes occurring inside the company. This is true for everything from HR to sales automation.
There have been no effective means of managing business relationships, approvals, workflows, and funds together with your alliance partners across company boundaries.
Alliance leaders have been hamstrung—trying to grow and manage their alliance revenue using spreadsheets, emails, and conference calls. Ugh.
WorkSpan is changing that.
WorkSpan is The Go-To-Market Network enabling the Alliance Economy at scale.
WorkSpan helps companies create and run alliances, managing shared business processes across company boundaries so they can offer all the awesome joint products and services we’ve been talking about.
The WorkSpan Go-To-Market Network allows companies to engage, manage, measure, and report on alliance activities to optimize their alliances across the network.
Surf the Alliance Economy wave now!
Alliances are the only way to surf the next wave of go-to-market — and yet — we’re only seeing the tip of the iceberg.
Companies that recognize this trend are building thriving ecosystems and capturing more market share.
Companies that deploy a bold alliance strategy with a system to operationalize will be more agile than their competitors, and first to market with the next industry-shattering innovations.
In companies that learn how to operationalize alliances, CEOs recognize that a robust alliance strategy is critical to their success.
This means we’ll start having Chief Partner Officers in the leadership teams and boardroom to drive growth, agility, innovation, and revenue.
Stay ready so you don’t have to get ready.
Born in this age, companies like Twilio already recognize the critical importance of alliances and have a Chief Partner Officer in the leadership team.
The Alliance Economy is taking shape — companies will win or lose market share based on their alliance efforts.
Where is your company on the curve?
