"You never listen to me."

"The workload around here isn't equal."

"You made that decision without consulting me."

"You're not taking my needs into consideration."

Those comments sound like complaints from people in a troubled marriage, but the partners in this relationship are companies, and it's their corporate alliance that is failing. With strategic alliances becoming the US pharma industry's "mode of operation"-the number grew from 121 in 1986 to 712 in 1998-it is critical that companies learn good partnership skills. This article describes methods developed by Procter & Gamble Pharmaceuticals (P&GP) that can help companies assess the health of their corporate relationships and avoid becoming another corporate divorce statistic.

Depending on Each OtherIn today's competitive environment, many companies lack the skills, resources, or technologies they need to maximize their business. Rather than developing or acquiring those missing elements, they depend upon an alliance partner. Yet, despite their importance to innovation, industry experts estimate that more than two thirds of pharmaceutical/biotech alliances fail to meet their original expectations.

A marriage is the perfect analogy for a strategic alliance. Unlike a merger or acquisition, in which the parties become a single new entity with one set of systems and one culture, a strategic alliance must somehow join two independent entities with different backgrounds, cultures, and ways of working to form a unit that functions effectively-and endures.

Like other companies, P&GP lacks the luxury of developing or acquiring all the capabilities needed to develop new products. Its success has been-and will continue to be-heavily dependent upon the ability to create and sustain successful corporate alliances. With the divorce rate for industry alliances routinely exceeding the 50 percent rate for personal marriages, P&GP management committed significant effort and resources to studying alliance effectiveness. It examined in detail the characteristics of both successful and failed or failing alliances through interviews with industry consultants and its own executives who have been involved in day-to-day alliance activities. The objective was to create a systematic method for evaluating the health of P&GP alliances, so that the company could improve each partnership by acting on the strengths and weaknesses uncovered.

The analysis identified nine key elements that are present in successful alliances and missing in failing ones. Consider them marriage counseling for corporate relationships.

1. Senior InvolvementSenior management commitment may be the most critical element for alliance success. In fact, 50 percent of respondents in one survey indicated that poor leadership was the main reason for failure. Not only can senior managers anticipate and resolve fundamental issues between the companies, but the involvement of senior managers also sends a strong signal to their respective organizations that the alliance is a corporate priority.

Top Qualities to look for in a licensing partner: Cambridge Pharma Consultancy's recent survey of 39 senior biotech and pharma executives found that the level of commitment to a deal was the most important of five factors considered in choosing a licensing partner.

Senior managers can use many avenues to establish and maintain relationships in support of the alliance. For example, the presidents of the companies forming one recent new alliance participated visibly in the kick-off meeting, clearly demonstrating both their personal commitment and the importance of the alliance to both companies.

Senior managers need to be informed and kept up to date about the partnership's progress, both good and bad. That accelerates decision making, because senior managers can quickly intervene on an issue without the delay of being brought up to speed.

2. Start With the Right StuffOne of senior management's most important jobs is to get the people and budgets right the first time. Success requires having sufficient funding and staffing in both parties to get the work done. Not just any staff will do. People assigned to alliance work need to have strong technical expertise, but they must also have excellent collaborative skills as well. One of the biggest mistakes a company can make is to use a partnership as a dumping ground for people who are hard to get along with!

When assigning staff, P&GP starts with establishing a clear understanding of the work that needs to be accomplished, then assigns-and dedicates-its best people to the project. Most important, it requires finance managers from both parties to meet and agree on how money will flow. Finance groups must present one financial "voice" to the alliance.

When the right resources are assigned, good things happen. For example, both parties in one P&GP alliance assigned top regulatory experts, who then delivered a creative and synergistic regulatory strategy.

3. Aligning the StarsTo be successful, even the best people need clear direction, and alliances are vulnerable to the force of entropy. Companies must prioritize and regularly update the partnership's objectives, plans, and priorities. Employees from both parties are a critical part of alliance planning, and leaders should regularly seek input and share direction with internal functions. It's critical that there be only one shared work plan for the alliance.

As one new P&GP alliance was being formed, the responsible team found that it needed to quickly revamp a Phase II clinical trail that was just being initiated. After clarifying the companies' shared objectives, the team saw that the existing clinical design just wasn't right and fixed it before further effort was wasted.

Direction and planning are so important that, as a major milestone approached for one of P&GP's biggest alliances, the key managers from both parties and from all functions met for a week to clearly define priorities, issues, and strategic plans for the next 18 months.

Having a plan is one thing; executing it well is another. P&GP's project management group has applied many of its planning tools to facilitate execution, including project management software and critical path tracking. The group has found tracking action plans and milestones especially useful. But even with great direction and specific plans, it is still possible for companies to disappoint each other if they are not clear about their responsibilities and expectations.

4. Who Does WhatLots of marriages fail because the partners have unrealistic expectations, and that problem is common in corporate alliances as well. Clarifying responsibilities and expectations helps avoid misunderstandings, allows people to focus on getting their work done, prevents surprises and delays, and lets both parties contribute to the joint mission in important and unique ways.

The approach works. In the manufacturing component of one of P&GP's partnerships, for example, the leaders took the time to work out clear responsibilities and operating principles. They routinely revisited those to make sure things were working. The resulting alliance team delivered spectacular results, beating all time, quality, and cost expectations.

The company uses some good, simple tools here. It encourages pairs of counterparts from the two companies to spend time discussing and developing their expectations of each other. Kick-off or join-up meetings are great for clarifying responsibilities. In such meetings, participants share the reason for the alliance, describe the work ahead for the near term, and discuss cultural issues and opportunities.

Perhaps one of the most powerful tools a partnership can use is co-location. There is no substitute for spending time in each other's facility. It doesn't have to be a permanent move for either party. In one case, P&GP had experts from both companies co-locate for several weeks to finalize a registration dossier, allowing the team to work together in a focused way and deliver a quality dossier in spite of very aggressive timing.

Setting expectations up front is critical, but if parities stop there, the alliance will be in trouble. Partnering companies need to make it easy for their people to stay in touch with the work and each other.

5. Talk, Talk, TalkFrequent, collaborative communication between all work groups is extremely important. A multiple channel approach is most effective both vertically (within each company) and horizontally (between companies). Some useful channels are internal "town meetings," joint monthly issues reports, e-mail, team web spaces, and video and teleconferencing. Having regular management team meetings forces the various working groups to talk to each other to prepare for the meetings.