Strategic Alliance Magazine Q4 2017 - 49

GETTING FIT

participant. For example, it is not uncommon for a
contract to dictate that partners cannot develop products
that compete with the allied product for the duration
of the alliance and for some specified period afterward.
Individually, these restrictions may seem logical and manageable. Taken together, however, these restrictions can,
like the Lilliputians of Gulliver's travels, tie down a giant a
single thread at a time until the giant can no longer move.
Similar to the predicament encountered by Gulliver, an alliance's strength can be sapped by limitations on activities
multiplied by the total number of a company's alliances.

Value inflection points

Every alliance value inflection point is permeated with the
three types of alliance risk (business risk, human risk, and
legal uncertainties) and is subject to all types of alliance
inefficiencies, including alliance adjacencies. Any alliance
process or activity that is a "triple threat"-that is, one
that has high alliance risk, high inefficiency, and is a
major value inflection point-is by definition the core
work of an alliance manager.
In summary, a skillful alliance manager can bring great
value to an alliance by:
1. Prioritizing efforts where they matter most-around
key alliance value inflection points

Value inflection points are instances in the alliance process
where more value can be added or destroyed than at other
times or in other areas. The greater the degree of inflection, either positive or negative, the more important the
value inflection point. For example, a bit of sand and some
rare earth metals that are worth at most a few cents are
processed into a computer chip worth hundreds or even
thousands of dollars. The steps that transform the sand
and metals into a chip add value to the product, but each
step in the process does not necessarily add the same value.
Said another way, value creation and destruction in an alliance is not linear, as some steps have the potential to create
or destroy more value than others.

2. Managing the three basic risk categories associated with
alliances, specifically prioritizing efforts around key
alliance value inflection points
3. Reducing alliance inefficiencies to an acceptable level
by managing alliance inefficiencies, inefficiencies
created by ordinary alliance processes, or by alliance
adjacencies issues. n
David S. Thompson, CA-AM, is chief alliance officer at
Lilly and is a member of the ASAP board of directors.

VALUE

VALUE-DESTROYING
INFLECTION POINT

VALUE-CREATING
INFLECTION POINT

INFLECTION POINTS:
alliance value
creation is not linear

TIME
49
Q4 * 2017 | STRATEGIC ALLIANCE MAGAZINE



Table of Contents for the Digital Edition of Strategic Alliance Magazine Q4 2017

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