There is a significant variety of numbers that may be found in the literature on alliance success and failure.
Failure rates of alliances can be anywhere from 20% on the low end to 80% on the high end. This high alliance failure rate of 80% is hard to believe.
With a 4 out of 5 risk of failure, why would a company put money into it? Ipsen’s Chairman and CEO.
Marc de Garidel, stressed the need of alliances in his keynote address at the ASAP Pharma Council in Basel in 2011.
Ipsen’s affiliations account for more than 40 percent of the company’s income. If the actual failure rate is 80%, it will be impossible for Ipsen to accomplish.
Reasons Why Alliances Fail
The analysis found that ineffective merger implementation, rather than a lack of strategic resources, was to blame for the failure to reap the gains first anticipated.
Over half of the responders (58%) cited poor communication as the primary issue. Inadequate strategic thinking, the lack of master plans.
A lack of momentum, a lack of top management commitment, and a lack of speed in implementation were also cited as issues by survey respondents.
There are numerous additional causes for partnerships to fail. The real reasons for a failed alliance, however, are not always obvious.
This works best when one partner’s expertise is difficult to learn or replicate because it is embedded in a complicated organisational structure.
And the other partner’s expertise is easy to replicate because it is represented in unique individual machines or drawings.
Conclusion
Strategic partnerships are difficult to put into action. Careful deliberation, meticulous preparation, and genuine cooperation are the backbone of any productive strategic relationship.
At the same time, these relationships can be very fruitful with the right match and proper execution.
And as I discussed in this earlier piece, not all strategic alliances have to be massive projects for both parties to profit.
You do need to be careful to avoid some common pitfalls, and here are five common missteps.
