Observation of this phenomenon raises three questions. Why do companies behave so thoughtlessly when forming alliances? What are the impediments to a more strategic approach to configuring effective alliance portfolios? And, finally, what’s the way out — that is, what systems and processes should organizations adopt that will enable them to optimize the value of their alliance portfolios?
Understanding the counterproductive incentives that skew alliance formation allows us to propose a new decision-making process that we believe will encourage companies to shift from the currently prevalent ad hoc approach to a smarter approach. In particular, companies should manage their alliances not as stand-alone arrangements but much more strategically, paying far more attention to how their various partnerships interact with one another.