A L L I A N C E    N E W S

A Guide to a Successful Strategic Alliance

The Value of a Cultural Assessment

Mergers, acquisitions, joint ventures and alliances are taking place at a staggering rate, yet the success rate of such ventures is dismal. Why? Most organizations are merely using financial and legal due diligence as the determining factors when deciding to pursue a corporate relationship.

By only conducting a legal and financial due diligence, the parties are ignoring many of the key elements that are critical to the success of an organizational relationship. "If we were to use this strategy in our personal lives, this would amount to seeing a person on the street, asking your accountant to obtain that person's tax returns for the last three and having your attorney conduct an asset search to find out what the person owns. If those two things are acceptable, a relationship is born," says Scott Romeo, Senior Partner with the Institute for Collaborative Alliances. We would ignore all of the personal attributes of the person such as lifestyle, education, etc. Relationships are not built based upon merely a legal and financial due diligence.

Many cultural assessments are self-completed surveys and reviews of written materials. A more accurate cultural assessment involves direct interviews with key people at all levels of the organization that will have an impact on the alliance or who will be impacted as a result of the alliance. Each interview must be cross-referenced with other interviews and then compared with a review of secondary or

supporting materials, and most importantly, direct observations.

"We have found that what people tell us on self-assessments is rarely an accurate portrayal, and what they tell us in direct interviews often slightly contradicts what is found in the mission statement, strategic plan, operations manual, and actual behavior," states Dr. Thomas E. Ollerman, Senior Partner with the Institute for Collaborative Alliances.

Sweat the Small Stuff. ICA has discovered that alliances fail not because of major obstacles that have been overlooked, but a culmination of smaller, cultural issues that have not been addressed.

Most recently, ALCATEL and LUCENT broke off alliance discussions as both parties were arriving at the St. Regis Hotel in New York for the press conference. They began to realize that they had not worked out issues such as Board seat appointments, stock valuation, writing off past investments, morale, varying profit margins, and a host of other issues.

A comprehensive cultural assessment could save millions of dollars by identifying key alliance issues from the very beginning.

-- Scott A. Romeo

Institute for Collaborative Alliances
1749 South Westwood
Mesa, AZ 85210 USA
800-820-4854
www.icalliances.com

 

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Last Updated: January 1, 2005