Robert S. Kaplan, David P. Norton, and Bjarne Rugelsjoen

Why do alliances fail so often? The prime culprit is the way they are traditionally organized and managed. Most alliances are defined by service level agreements (SLAs) that identify what each side commits to delivering rather than what each hopes to gain from the partnership. The SLAs emphasize operational performance metrics rather than strategic objectives, and all too often those metrics become outdated as the business environment changes. Alliance managers don’t know whether to stick to the original conditions or renegotiate. By that time, the companies’ leaders have returned to run their own organizations and haven’t followed up to ensure that their vision for synergies is being realized. The middle managers coordinating the alliance, who have no clear way to translate their leaders’ vision into action, simply focus on achieving the operational SLA targets instead of working across organizational boundaries to make the alliance a strategic success.

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