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Strategic Partnering:
Managing Joint Ventures
and Alliances
Thought Leadership Roundtable on Digital Strategies
February 28, 2006 - Raleigh-Durham, NC
hosted by Cisco Systems, Inc.

CIOs and other senior execs from Bechtel, Cargill, Cisco, Dell, Eastman Chemical, Hasbro, IBM, and McKinsey were joined by academics from Tuck and Columbia for this roundtable.

Press Release
PDF (81K)

Agenda
PDF (98K)

List of Participants
PDF (69K)

Discussion Guide
PDF (142K)

Photos

Overview Article
PDF (229K)

Joint ventures have long been recognized as a potentially rewarding way to do business. What could be better than a strategic partner that brings capabilities that your company is missing? On paper, partners often have very complementary competencies, management skills, or other resources to bring to the table, but fully leveraging them is not as easy as it may appear to be. Almost 50% of joint ventures fail.

What are the right reasons to enter into a joint venture or strategic alliance, and the best ways to think about process, structure, and goals for these partnerships?

In this roundtable, the participants' experiences and views yielded the following insights (see the Overview Article for a complete summary):

  1. Strategic alignment of the partners is crucial to the success of JVs and contractual alliances. Only consider working with partners who have complementary business goals and capabilities—and in the case of JVs, only on ventures with clearly articulated longer-term synergies (such as new market entry, product innovation, or capital investments risk-sharing).

  2. Joint ventures require thorough up-front long-term planning and rigorous, disciplined ongoing management. It's crucial to be as explicit and specific as possible on the front end of the deal about strategic alignment, governance and control, operating plans and roles, remedies for potential problems down the road, and exit strategies.

  3. Non-equity contractual alliances, by contrast, require a strong focus on the present and on maintaining a more-or-less balanced distribution of value to keep the relationship on course.

  4. IT plays a key role in strategic partnerships, enabling greater performance and control, but must be managed with a clear understanding of the partnership's business goals and probable outcomes. CIOs should get involved in partnership discussions early to proactively deal with key issues including controls, cost, talent, and security.

  5. There are great potential benefits to developing repeatable partnering capabilities and processes that can be replicated across multiple ventures. Areas to consider include team building and talent management capabilities, the ability to rapidly deploy IT-shared services externally, and extended enterprise risk management capabilities.

  6. In contemplating Chinese partnerships, executives should view IP risks pragmatically, treat China as a heterogeneous market, and understand and plan for China's rapid pace of change.


The evening before the roundtable, Daniel Rosen from the China Strategic Advisory gave a presentation to the participants entitled "China Briefing: Drivers, Trajectory, and Business Environment." In this presentation, Rosen addressed topics such as demographics and urbanization as business drivers, business level competitiveness, and foreign investment structures.

"Harnessing the Power of Partnerships," M. Eric Johnson, Financial Times
"Collaborative Product Generation" - A Thought Leadership Summit on Digital Strategies