Strategic Alliances: How Collaboration Goes Wrong

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“Strategic alliance” isn’t just a buzzword. It’s a way to multiply the resources and reach of your fitness or wellness business far beyond your own company’s efforts.

Let’s start with a definition: a strategic alliance is simply a relationship between two businesses or organizations who agree to share the work of pursuing a common goal.

For example, we partnered with another business to offer a yoga trends seminar. Our joint goal was to increase awareness of our businesses among the mind/body community. We split the work required to put on the seminar: handling registration, sending a pre-survey, writing the social media posts and emails announcing the seminar, and so on.

“Partner” in this context is just another word for “collaborator.” We’re talking about “strategic partnerships” that further both companies’ big-picture interests, not legal partnerships where each party shares ownership of the company.

Collaborative relationships have powerful potential for health and wellness businesses.

Yet they often disappoint both parties.

Why does something with so much potential go so wrong?

Watch out for these six gotchas:

1. Conflicting visions

Both businesses need compatible visions of how their businesses will succeed, separately and together.

We advised a business that had developed a really clever health product for older adults. They felt strongly that the right way to market the product was direct to consumers through infomercials, ads in AARP’s monthly magazine, and other mass media outlets. They had a strategic alliance with another company that sold its products through medical products distributors who then fulfill orders from retailers like Walgreens.

However, selling directly to consumers is entirely different from selling to distributors who then turn around and fulfill orders from retailers. Imagine the difference in the customer service calls you get! And that’s just one difference.

We also talked recently with two solo practitioners who are partnering together to grow their businesses. One’s a dietitian specializing in morbidly obese kids who gets her referrals from pediatricians. The other’s a personal trainer who provides online corporate wellness coaching. There’s just not much overlap between their practices, which makes it tough for them to work together.

Ask yourselves whether your business strategies are compatible. Do you work with similar kinds of customers? Similar sales and marketing strategies? Common operational or day-to-day needs?

What to do

  • Identify areas where you and your prospective ally might compete. How will you handle those situations?
  • If and when you decide to stop working together, how will that affect the way customers see you both?

2. Conflicting values

What creates a trusted relationship? We think it’s being able to predict what the other person will do in a given situation. What lets you accurately predict their behavior? Knowing how they think about the world – what’s right and wrong, what’s acceptable and what’s not.

We worked with a healthy living program recently whose strategic partner suggested that they use marketing materials that had actually been created for another company. It instantly created fear that they’d be victims of the same behavior.

Another wellness coaching client partnered closely with a local therapy practice. They co-located their offices, planned joint marketing efforts, and shared an office staff. Things fell apart when the therapist got a fabulous media opportunity and didn’t include the coaching business in the interview.

What to do

  • Look for baby steps – small opportunities to work together that give you a chance to build trust.
  • Don’t “open your kimono” until you’ve actually experienced what it’s like to work together.

3. Unequal resources

We often see situations where one strategic partner feels that they’re doing all the work. Despite good intentions on both sides, this can happen when the other company has limited resources or capabilities.

What to do

  • Stay objective about what your strategic ally can bring to the party. You can like them just fine as people – it doesn’t mean your businesses should work together.
  • Make a list of each partner’s strengths and capabilities. Strong alliances combine complementary strengths (thereby closing gaps!) and avoid duplication of strengths (or weaknesses!).

4. Unequal rewards

Successful alliances offer meaningful rewards to each partner that justify their commitment of resources to the alliance.

We’ve seen so many one-sided partnerships, where one collaborator did a ton of work or contributed the most valuable resources, while the other party was likely to reap most of the benefits. 

For example, if you handle all the marketing responsibilities, what’s your strategic partner bringing to the party? Perhaps they’re offering expertise that your customers value.

What to do

  • Before you agree to collaborate, make a list of the benefits you each expect from the relationship.
  • Share the list with your strategic partner.
  • Periodically compare the results you both hoped for with the results you actually got.

5. Unequal risk

Skin in the game – everyone needs it. The worst alliances we see are usually those between a very small company and a much larger company. What typically happens is that the little guy pours blood, sweat and tears into making it work, while the bigger company views the relationship as just one of many things they’ve got going on. Deadlines slip, the quality of the work falls short, the people you work with constantly change…and on and on.

However, the larger company can actually have greater risk under certain circumstances. For example, sometimes smaller businesses and individual practitioners over-commit and then fail to deliver on their promises, leaving the bigger company holding the bag.

We worked with a large and established health club several months ago who had partnered with a regionally-popular health speaker. When the speaker dropped the ball at the last minute, they had to scramble to avoid infuriating several hundred members who had already signed up for his seminars.

What to do

  • Develop a Plan B that describes what you’ll do if your strategic partner doesn’t deliver.
  • Think about the worst case scenario if things don’t work out with the other business. Can your business bounce back?
  • Consult an attorney for advice on how to document your relationship with the other business. That’s especially important if you’re sharing confidential information or intellectual property like program design and content.

6. Decisional imbalance

Often, a single “no” is all it takes to kill an alliance even when a majority of those involved support it.

Here’s an example of a business model that’s common in the health and wellness industry:

Business #1 is orchestrating a wellness program that it hopes physicians would essentially market to their patients. Businesses #2-6 are all unpaid solo practitioners, subject-matter experts contributing tons of time and knowledge to the program’s design and development. The idea is that they contribute sweat equity AKA knowledge equity and eventually earn revenue by delivering the program when patients signed up for it. 

Business #1 changes the program’s direction multiple times and eventually bails entirely, much to the disappointment of the solo folks. 

What to do

  • Don’t put  your participation on autopilot. Actively assess whether progress is actually occurring.
  • Watch out for excessive rework and constant backing-and-forthing on direction.
  • Be prepared to courteously step away if the reward is becoming more elusive